B2B Fundamentals : Terms Explained

B2B Fundamentals : Terms Explained (Source: CommunityB2B – http://www.communityb2b.com)

1. Net Markets The term Net Markets is used generically, to describe all on-line marketplaces where buyers and sellers congregate to exchange goods and services for money. One descriptive term that has been widely adopted is Butterfly Market or Butterfly Hub. Imagine that one wing of the butterfly is made up of buyers and one wing is made up of sellers; where they meet -the body of the butterfly - makes up the hub. Here, fat is good.

Also known as: B2B, infomediary, metamediary, electronic markets, e-markets, Internet markets, I-markets, digital marketplace, net hub, virtual store front, virtual marketplace, vertical hubs, e-hubs, butterfly markets, vortex businesses, digital exchanges, online exchanges, fat butterflies, vortal, vertical exchange, and horizontal exchange. It is important to note that Net Markets can be organized either horizontally or vertically.

Horizontal markets cut across many industries, typically providing a common service, such as financial services, benefits management, and MRO (maintenance, repair and operating) equipment procurement process management. Popular examples are Ariba Network, Commerce One's MarketSite.net, EmployEase.

Vertical markets concentrate on one specific industry such as agriculture and chemicals and seek to provide all of the services needed by that industry. Popular examples are VerticalNet, Ventro and Covisint.

Before you participate in a Net Market, it is wise to investigate who holds the cards. There are three common models currently on the Net: A. Buy-Centric Markets are the exact opposite of sell-centric markets. Here a few big buyers join forces to build a marketplace where small fragmented sellers can sell their goods. This is great for buyers since it permits quick and easy price comparison-shopping.

 Popular examples are BizBuyer.com, SupplyMarkets.com, FreeMarkets.com and Covisint  Also known as: buy-side, procurement hub, many sellers, 1 buyer  Automating Technologies: Fulfillment, Procurement, Purchasing, Reverse Auctions

B. Sell-Centric Markets are markets where one or a few big sellers work together to build a marketplace for many, small fragmented buyers. Typically revenues are derived from ads, commissions on sales, or fees for delivering qualified leads to suppliers. Buyers beware of rising prices; the sellers hold all the power here.

 Popular examples are: IMark, DoveBid, GoFish.com, GlobalFoodExchange.com, AdAuction, TradeOut.com  Also known as: lead generation, sell-side, auctions, 1 seller, many buyers  Automating Technologies: Auctions, Catalog Management, Content Management, Personalization

C. Neutral Exchanges appear where both the sellers and buyers are fragmented. In this environment, a third party creates a neutral exchange and performs the transactions through a bid/ask system. The middleman or "Net Market Maker" here cause "disintermediation" for which they receive a cut or transaction fee for each deal. The most important success factor for these exchanges is to reach "liquidity" or critical mass of both number and size of the transactions running through the exchange.

1  Popular examples are: NASDAQ, Altra, Paper Exchange, Arbinet  Also known as: digital exchange, online exchange, catalog aggregator, dynamic exchange, dynamic trading exchange, many buyers, many sellers, independent Trading Exchange (ITE)  Automating Technologies: Market Clearing Software, Collaborative Commerce, Payment Services

2. Automating Technologies The ability to conduct business to business electronically has been around for years, but the industry has recently experienced an explosion of web-based applications and technologies to automate B2B over the Internet.

Here we discuss applications and technologies that automate Net Market's functionality. While we could neither list nor explain all of the possible technologies available to plug into Net Markets; we hope this list helps make sense of all of the many components and supporting services that create marketplaces.

 Agents - intelligent software that can be used by Net Markets to monitor prices and conditions on behalf of both buyers and suppliers. Agents can automatically execute trades.  Auctions and Reverse Auctions - take your traditional antique auction of one seller and many buyers and throw it on-line; prices move up. Reverse Auctions mix up the roles by having only one buyer and many sellers bidding; prices move down.  Campaign Management - Planning on sending electronic newsletter, product updates, etc to your member base? Campaign management software makes this a lot easier and helps you rise above the noise.  Catalog Aggregation and Management - software applications that normalize product data from multiple vendors for easy comparison.  Collaborative Commerce or C-Commerce - software that aggregates fragmented buyers and/or sellers to increase a market's efficiencies beyond the exchange of goods. C-commerce moves beyond that level of support to enable multiple enterprises to work together online within a dynamic trading community.  Community Tools - polls, discussion forums, chat rooms, round tables - these applications enable sites to create community features, build stickiness, and loyalty within their membership base.  Content Management - Originally developed for in-house use, Allaire, Vignette, and Broadvision now provide others with great content management solutions to develop workflow, manage content and run web sites.  CRM, PRM, ERP and e-Customer - an extremely large category of IT applications, Customer Relationship Management (CRM) systems enable customer facing sales and marketing functions, Partner Relation Management (PRM) systems enable partner facing functions, while Enterprise Resource Planning (ERP) systems allow large companies to manage inventory and integrate into back-end processes. This category warrants it's own DCI website www.crmcommunity.com.  Extra/Intranet - Private webs that provide one-to-one connections either over the Internet or within individual companies. Unlike e-marketplaces, these networks are only available to those invited to the party.  Fulfillment - Fulfillment software executes tasks such as bill of materials, order management, shipping management, returns and status tracking.  International tools - By definition B2B is global. From its inception your site must be prepared to deal with international issues such as localization, currency conversion, letters of credit, trade, legal and language differences.

2  Logistics and Shipping - Logistics and shipping applications help sellers get the right products to right place in the right quantity at the right time to satisfy customer demand.  Marketing, Measurement, and Ad distribution - Joining an ad network or using a third party provider to sell and buy advertisements, measure response rates and update your ad campaigns is becoming increasing popular.  Market Clearing Software - Exchange models create value by synchronous matching of supply and demand. They require a real-time, bid-ask matching process, market wide price determination, as well as a settlement and clearing mechanisms.  Payment and Settlement Services - Simple concept, tough execution. You need the ability to receive secure payments on your site if you are selling goods.  Personalization and Analytics - Applications being built into Net Markets to remember users, provide personalized experiences, and decrease transaction times. Analytics help site owners analyze past activity on the site in order to uncover crucial aspects of visitor's activities. Often tied to a content management solution.  Platform Solution - Starting from scratch? Want to avoid integrating all of these component pieces? Consider buying a platform solution that integrates all the components for you.  Portals - Web ports that serve as a front ends by creating, installing and hosting personalized applications for customers or employees.  Procurement - Procurement refers to routine on-line purchases such as office supplies, travel services, or computers needed to run a business but not central to the business's output.  Purchasing - Buying in the larger sense, applications can enable spot purchasing (using exchange or auction) or systematic purchasing (catalog mechanism).  Search Engines - An on line index that allows customers to find what they are looking for on your site. Build it yourself, or buy one and plug it into your site.  Security and Encryption - Required for Internet commerce, this technology allows secure transactions over the web.  Streaming Media - Video clips that illustrate content on websites. Very complex and prone to failure. Whether you are looking to host live web seminars, or to archive past conferences on-line; consider outsourcing to specialists this piece.  Syndicated content providers - Helps to ensure that customers return to your site. Good content (text information) helps hold readers. Both "Sticky" and "magnetic" are good, and keeps your audience coming back to learn. There are several content companies on the web who will plug fresh content into your site daily.  Virtual Private Networks - A private marketplace enables approved suppliers to bid on a large buyer's business or permits more cost-effective transactions under negotiated terms. This can be a hosted extranet or a feature on a larger Net Market.  Wireless Logistics - Mobile commerce is the next frontier for B2B. Building the tools and infrastructure is today's challenge.

3. Integration and Infrastructure Do you want to build a Net Market for your company's web site or join in someone else's site. Imagine that your CEO sees other businesses increasing their bottom-lines by moving to the web, and asks you why your organization isn't on the web? Your biggest challenge in moving your business to the web will be making all your brand new automating technologies work together. Which leads us to Integration and Infrastructure! Infrastructure here refers less to the physical hardware, and more to the interconnection of hardware and software - everything that supports the flow and processing of information.

3  Application Servers - a three-tier integration application that ties together your graphical user interface (GUI) server, application (business logic) server, and database.  Application Service Providers (ASPs) - outsourcing specialists for software applications that offer individuals or enterprises access over the Internet to applications and related service. These complex applications would otherwise have to be located in your own personal computers or enterprise servers - minimizes the headache of buying, installing, managing, and maintaining the software.  Back-end Integration - Allows companies to take full advantage of all that B2B has to offer; back-end integrates with IT chains - inventory management, accounting, shipping, etc.  Connectivity - Internet Service Providers (ISPs) offer businesses their connections to the web.  Data, Directory, Document & Knowledge Management - Managing your data is even more important now in the days before the Internet. Companies now open their databases to their customers and suppliers - you had better get some good management systems in place.  Designing and Building - Lack the management and IT staff to design and build your own site? Many companies outsource this step or set up multi-discipline task forces within their organizations.  EDI - Electronic Data Interchange (EDI) is moving aside to make room for eXtensible Markup Language. EDI allows businesses to talk to each other over the Internet, but was extremely costly and lacked standards.  Hosting and Caching - Fed up with servers going down at 2am requiring a midnight ride to restart? Many companies chose to outsource the hosting of their web sites. These hosting companies also provide caching and content distribution services to either keep or push content closer to customers.  Messaging - Messaging allows programs to share common message-handling code, to isolate resources and interdependencies, and to easily handle an increase in message volume. Messaging allows programs to communicate across different programming environments (languages, compilers, and operating systems) since the only thing that each environment needs to understand is the common messaging format and protocol.  Standards - Making the web work for everyone requires the creation of specific protocols so software from different vendors can interoperate. Most discussion about e-commerce standards today is about XML  System Integrators - Integrating organizations' old "legacy" systems, or connecting them to new Net Markets is their industry. Also known as EAI (Enterprise Application Integration) providers, Integration architects, and data integrators.  Middleware - Any programming that serves to "glue together" or mediate between two separate legacy programs.  Supply and Value Chain Integration - these concepts have been around forever, today we tie them into the web. Supply Chain Integration strictly helps companies move products and services out the door, while Value Chain Integration, a critical prerequisite for success in the digital economy, extends across - and beyond - the enterprise.  Workflow - Tracking collaboration services for complex, iterative, multi-party projects. Creates an information-sharing network that gives buyers and sellers a view of the project.  XML - eXtensible Markup Language is a meta-language that allows businesses to talk to each other over the web. The most important factor in XML's success is that it includes standards that allow back-end systems integration.

4 4. Project Management CommunityB2B understands that our members vary greatly in their readiness for electronic business to business. To accommodate all members, and make our site more personalized; we have tagged our content according to the implementation phases of project management.

 Planning and Investigating - Just getting started? These articles and research papers discuss different types of vendor's solutions and the methodology you should consider to help in your selection.  Implementing and Deployment - Now that you have chosen your solution(s), this information helps you plan your implementation and deployment strategies.  Change Management - Just because you have implemented and deployed a solution does not mean that you will automatically see ROI. This stage of project management is critical to your success.  Maintaining and Upgrading - The Internet has enabled maintaining and upgrading B2B applications much easier. But don't upgrade every point release - learn here what you should do.

5. Regional Interests Business to business on the Internet is by definition global in nature. Even so, we thought it might help to break down our site into geographic regions.  Global  North America  South America  Europe  Asia and Pacific  Africa  Australia

6. Partnerships Because being truly B2B savvy involves knowing who is partnered with whom; understanding partnerships deserves its own category. Content, discussions, and education in this category cover the following types of partnerships:

 Business Development and Alliances - From "press release marketplaces" to strategic business alliances, it is important to know who is working with whom.  Technology and Integration - Companies are with complementary applications are joining forces to offer customers a complete solution.  Service and Supplier - Partnerships that provide technical skills, business expertise, training, and proven methodologies to ensure that customers receive the most advanced service and support.  Channel - Companies that partner vertically to complete the value chain end to end.

5 7. Vertical Industries As we know, some technologies and marketplaces are organized horizontally, while others are vertical. A B2B site would not be complete without covering vertical issues and industries. We have divided the field into 32 super-vertical categories:

 Aerospace  Agriculture  Banking, and Financial Services  Carriers  Chemicals  Communications  Education and Training  Energy  Engineering and Construction  Environmental  Government and Military  Healthcare  Insurance  ISPs  IS Consulting Services  Legal  Manufacturing and Automotive  Marketing and Advertising  Media Entertainment  Non IT Consulting Services  Non Profit  Pharmaceutical  Reseller and Distributor  Retail  Sales and Marketing  Software Development  Systems and Network Integrator  Telecommunications  Trade Association  Travel and Transportation  Utilities  Web and eBusiness