The push by companies to build their own private exchanges is being driven in part by the need to have a single Web hub for e-business, autonomous from public marketplaces, according to the report. Other analysts agree that more companies are looking to automate the procurement and collaboration processes between themselves and their supplier partners by utilizing private exchanges. AMR describes a private exchange as the application system on which a company builds its trading interface to both suppliers and customers via the Internet. One of the earliest makers of software used to build private marketplaces is Malvern, Pa.-based Atlas Commerce, which sells technology that enables companies to automate their sourcing processes, the management of supply and demand for their products and integrate commerce transactions with their suppliers' online systems. Some of our clients play in both areas, but private exchanges are where our clients see the most high value.
Public exchanges have had problems with providing a real value proposition, industry watchers say.
Some have made some headway in aggregating industry information and some supplier and manufacturer collaboration and transactions, but many public exchanges have struggled recently in gathering momentum. Among that select group, only about 50 suppliers have learned the fundamentals and have agreed to participate. Covisint is working to pull in more participants and is continuing its search for a chief executive. Analysts said many suppliers have had problems integrating their systems with the new auto exchange, showing that even the most well planned marketplace venture is having difficulty getting fully off the ground. Private marketplace advocates say their sites have the luxury of existing on a company's extranet, the network built inside a company that enables communication and collaboration between it and its customers, suppliers and business partners, thus removing some of the boundaries suppliers are facing with larger public sites.