- 2 - The Lifecycle of B2B Portals: We are at the Second Stage Mario Caputi, Sept 2000 © 2001 Sixhills Consulting Ltd & Author FIRST STAGE: In the first stage of B2B portals this business window has been exploited by the start-ups - usually a young and aggressive management team backed by VCs. They have been working with a simple plan and business model:  Invest in technology and quickly develop a technological platform with standard functionalities and standard software (Commerce One, Ariba, SAP etc)  Invest in branding to gain speed to market  Achieve liquidity trying to convince the traditional old brick and mortar companies (BAMs) to join/use their platform for their traditional purchases  Keep control of information about end-customers needs and prices  Extract T-taxes from each intermediated transaction  Give away a percentage of the T-tax to software houses as a partial payment for technological development The start-ups, by utilising the information and the payment flows of the supply chain, have increased the dependency of the manufacturers on their platforms. This business model has forced the BAMs to give away to the start-ups the control of their key relationships, i.e. customers and suppliers, the information related to them (i.e. transactions, prices and discounts) and more importantly - a percentage of their traditional profit margins. This is an illogical monster not acceptable to any person with a good sense of business. SECOND STAGE: The second stage of the lifecycle of B2B portals sees a counter attack of the traditional BAMs. They possess the liquidity (purchasing volumes) that often constraints start-ups and can stay alive if competitive. They have a high degree of knowledge and understanding of their current industry but may, however, not be as aware of the intricacies of doing business in the digital domain. The main challenge facing the BAM’s is their ability to respond and react at Internet speed. By directly jumping into the B2B business and building their own B2B portals BAM’s only better exploit their assets. One of their biggest assets is the ability to encourage (i.e. force) current suppliers to trade through their portal thus creating immediate liquidity. If two or more BAM’s join these efforts this effect can only dramatically increase. The portal customers would also be motivated to increasingly utilise this platform due to the higher level of utility. This liquidity results in better prices and the broadest product selection and is hence one of the key measures of success for B2B portals.
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