Public vs private exchanges

The benefits of private B2B exchanges in maintaining long-standing relationships have to be weighed up against the advantages of...

The benefits of private B2B exchanges in maintaining long-standing relationships have to be weighed up against the advantages of public exchanges in saving costs.

Mark Lewis


Two Evening Standard headlines caught my eye as I journeyed home on the London Underground from a meeting last week. "20-year search for GI father ends after 20 minutes on Net", headed up a tale of online genealogy by a Gravesend taxi driver. And "Traded like cars across a continent", described the ongoing tug of war between two sets of parents for babies sold on the Net. Together, the headlines encapsulated all that is good and bad about the online world.

On one hand, the Net is seen as a caring, sharing environment, where information and communication are just a click away. On the other, there's the dark and unforgiving Net, ungoverned and ungovernable, where nothing is quite as it seems.

We all value the grasp and reach of the Internet, but we want to be able to trust it.

The meeting had been with Greg Darmohray, director of European operations at Webridge. We'd been discussing B2B exchanges. More specifically, we'd been talking about how organisations might use private exchanges to tap into the positives the Web has to offer, but in a secure environment.

Public B2B exchanges have also had their share of the headlines. Once the inevitable shake-out comes, the select few that survive will offer an efficient means of realising cost savings in areas of procurement where decisions are based purely on commodity pricing.

But not every corporate relationship boils down to carrying out transactions at the lowest possible price. When it comes to maintaining long-standing relationships with valued business partners it can pay to go private. By drawing together your intranet and extranet into a co-ordinated hub spanning key suppliers, customers and collaborators, you can create a secure trading environment that you alone control.

In practical terms, public B2B exchanges hinge on the transactional side of business. Transactional functionality can be built into a private exchange, but the real value-add comes in the areas of content and collaboration.

We're not talking about how to buy a toilet roll here. Private exchanges reflect the dynamics of human interactions and business relationships. If e-mail has automated communication, then private exchanges will automate collaboration. How do you securely share information with trading partners? How do you communicate inside and outside the enterprise? As ever, it's a question of automating existing processes to increase efficiencies - of doing the same things, only better.

If one of the benefits of a private exchange is that you own it, then one of the drawbacks is that you have to manage it. The challenge for the IT department is to learn to let go. It's rare for an IT manager to happily devolve responsibility for IT applications to the lines of business. On the other hand, private exchanges have to be living, dynamic environments, in which business managers can, as Darmohray puts it, "click and build" as the corporate landscape changes.

On a private exchange, e-mail is a notification mechanism, not a delivery mechanism. All data sits on the exchange, meaning varying the levels of access is essential. You need to establish and maintain a watertight security policy so the business can proactively add elements to the exchange, but only according to set parameters. Do that, and you are empowering, not devolving.

Choosing which business partners to embrace in your private exchange should be simple: if you have a complex, ongoing relationship with an organisation, there'll be value in buddying up, online.

A word of warning: don't try to automate relations with your most valued partners overnight. First launch a pilot project, canvass its users and tweak accordingly, before involving your valued trading partners.

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