B2B Exchanges : The Killer Application in the Business-to-Business Internet Revolution

From the Book: After his retirement from JP Morgan, my brother, Arthur, agreed to become non-executive Chairman of the Bermuda Stock Exchange which is where he and William Woods - with his extensive stock exchange experience - first started to work together on what has become a successful undertaking; to transform a sleepy, local island stock exchange into an Internet-enabled, global stock exchange. I wish I could say that I had fully appreciated five years ago how important Internet business-to-business (B2B) Exchanges would become. Yet looking at things today, it is obvious that business-to-business, and especially Internet, Exchanges where all kinds of commodities, financial instruments, intellectual properties, and various other goods and services can be electronically traded will be one of the most important pillars of the New Economy. What probably most distinguishes the New Economy from the past is the shift in power from producers to customers, who now are in control of everything. Customers can demand - and expect to receive the best quality, the best service and the lowest prices; they also want everything customized and they want it immediately. The Internet is enabling commerce to truly work on a global scale. Entrepreneurs can fundamentally re-invent how work gets done and give customers whatever they demand. It is no longer a competition between big and small, but between fast and slow. Innovation is highly rewarded, while traditional business size and stature is more often baggage than an advantage. Not since the invention of movable type over 500 years ago has the world experienced such a revolutionary change, but with one big difference; this time the change is many timeslarger and is happening many times faster than anything the world has ever experienced. Business-to-consumer companies certainly have grabbed the world's attention during the 1990s; however, many highly credible industry analysts have forecasted that the impact of business-to-business Internet companies will be many times larger than that of business-to-consumer. The first wave of web companies were based on unique enabling technologies such as browsers, search engines, auctions, e-mail, chat, and various portal services. Building highly recognizable Internet brands set the pace so it's not surprising that these first generation Internet companies were started by high-technology entrepreneurs and backed by well-respected high-technology venture capitalists. But as the Internet moves toward B2B, it is now clear that traditional, large companies have no choice but to get into the game. Over the coming decade, we will see most corporations rush to re-invent themselves. We will see great global service economy centers like New York, Chicago, London, and Frankfurt jockey for position to lead various sectors of the Internet B2B industries. Small nations and regions, such as Hong Kong, Singapore, Israel, Ireland, Taiwan, Scandinavia, Australia, and Bermuda, with their advantage of speed, are also racing to become players in the New Economy. We will see 13213 Exchanges becoming an important building block in the B2B global economy. The best new companies will be those which take advantage of the Internet's unique strengths. Real-time, interactive communications and transactions which can be executed on a one-to-one basis are good examples. The Internet's power lies also in its ability to track and build histories as well as dynamically form co-operative buying groups, transact auctions, and provide instant and up-to-date information for informed deal making. I have learnt a lot from my brother's experience in B2B Exchanges which we are now trying to adopt and apply in various derivative forms to some of our other Internet companies, both B2B and B2C. I think anyone who intends to build companies in the New Economy will find this book to be an extraordinarily useful and insightful guide. John Sculley, Partner, Sculley Brothers LLC