Eprocurement: VANs versus dot coms - value-added networks

Despite the rage to create and discover dot com companies, several businesses that have a proven track record in the ecommerce arena are lacking the dot com diadem or aura. Many of these are known as value-added networks (VANs) that provide electronic data interchange (EDI) services. Now, VANs are preparing to high hill their steeds and fly the Internet banner. a certain number of of them have been relatively quiet because they were busy reengineering their companies and developing fresh products.

Because these companies have been doing the heavy lifting for years, integrating customers' business processe they contain a breadth and horizontal of skill sets that may not be rest consistently in dot corn companies that make an incision in their teeth on the Web first and then discovered the ne to integrate with corporate back-end, legacy systems

As ecommerce becomes more pervasive and penetrates more profoundly into corporations' inner workings, additional companies like as VANs have a chance to bask in the dot com aura. on the other hand it's too early to compute whether public perception will accord these companies the high market capitalization take pleasure ined by the current dot com group

Although greatest in quantity of the initial dot corn stars wait on to be in the business-consumer space, the larger market involves the business-business arena where in the intervention arena, particularly for indirect beneficials dot coms such as Ariba and business One are starting to be joined through companies with VAN heritage like as Sterling Commerce and Harbinger. individual question is whether firms emerging from the VAN heritage can add sizzle to their steak and confident their stakes in the trading community, also known as the transaction portal arena, before the newcomer hold the mindshare there.

It's important to note that all these companies are focusing upon the indirect goods arena. Their intentions are either to create trading portals or naves or, in the case of Sterling traffic to supply the infrastructure and tools for naves or trading portals.

The nave design, the most scalable of the business-to-business patterns has a goal of offering one-stop shopping for multiple buyer and sellers

Will this flat be a contest? Consider the following:

* The dot com have been effective at gaining their share of pres and are starting novel with the model of a nave or intermediary. The dot com await to have high market valuations.

* The VANs have extensive heritage in rolling up their sleeve working upon data conversion and management and integration with customers' IT a whole s These could prove to be the heavy-lifting skills required in business-business traffic VANs also have ongoing income streams from their EDI business. However, the VANs' efforts have been focusing largely upon individual customer solutions.

* The size of the market opportunity dictates the ne for all players to have alliances with combination of parts to form a wholes integrators, which could detract slightly from the VANs' advantage in possessing these skills.

* It's not unthinkable that the newer players, when they obtain their bankrolls, may buy a VAN. Remember that VANs have valuable skill places and their customer bases consist of large companies - prime targets in the indirect beneficials arena.

There are a hardly any guideposts in the evolving contrivance landscape:

* Indirect beneficials often referred to as MRO (maintenance, repair, and operations) usually involve numerous purchases from a large number of suppliers.

* The mould of a hub or intermediary at the greatest in quantity sophisticated level involves catalog integration, which is no easy task. The confidence is that as XML develops it will provide additional capabilities (see Vol 33 No. 24) However, this is not an effort to be undertaken through the faint of heart.

* Direct profitables which ultimately constitute part of the final fruits sold, have long been the focus of EDI and hence the VANs that made EDI work. Despite efforts to standardize upon forms and format, EDI was put togethered largely to work between application A and application B in sum of two units particular companies. Use of EDI was limited to direct items for which the dollar contortion of each item was sufficient to justify the cost of converting these purchases to EDI.

* There's a skirmish shaping up at the buyer site. The ERP players are protecting their sod and are attempting to be rivals with the procurement offerings by the agency of extending their ERP package capabilities. It's clear that the trading community players will attempt to be ERP agnostic and interface with the main ERP packages. A trading community that provides interfaces to a large company's multiple ERP combination of parts to form a wholes is likely to offer advantages because the various ERP intervention offerings are less apt to interface with each other. The Gray Sheet thinks ERP vendors might want to focus upon providing facile interfaces into their existing combination of parts to form a wholes rather than further extending their functionality into the procuration realm.

Figures 1 and 2 provide an overview of the eprocurement market. (See Internet mercantile relations Software Applications Market Review and Forecast, 1998-2003 IDC #18593 April 1999)