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Conklin
- 1. Global B2B eCommerce Adoption: The Business Perspective
Presentation to The Information Technologies
Group at the Center for International Development
Harvard University
by Jeff Conklin
Founder and CEO
May 2, 2001
Copyright ©2001, Ozro Inc. US Patent 6,141,653 Other patents pending 1
- 2. Introduction
Context for global B2B eCommerce
What is driving adoption of global B2B
eCommerce?
What companies are looking for in B2B
eCommerce solutions, and why?
Issues and forecasts for global adoption
Copyright ©2001, Ozro Inc. US Patent 6,141,653 Other patents pending 2
- 3. Context
B2B eCommerce is complex and contract based
B2B supply and distribution chains are international
Buy-side, or procurement focus in this presentation
Copyright ©2001, Ozro Inc. US Patent 6,141,653 Other patents pending 3
- 4. Complexity of Contract eCommerce
Buy-side Requirements Inter-enterprise Requirements Sell-side Requirements
Service Level Agreements
Management Management
Contract negotiations and transactions
Services Procurement Sales Services
Contract
Contract
Document
Document Financing Factoring
Banking
Legal Info Finance Finance Info Legal
Escrow
Credit, Payment Terms
Ts & Cs
Engineering Logistics Logistics Engineering
Schedule, Delivery Terms, Returns
Manufacturing Manufacturing
Warranties, Schedule, Quality
Form, Fit, Function, Quality
Business Rules
Trade Practices Inter-enterprise Data
and System
Valid Commerce and Non-Repudiation
Requirements
International
Copyright ©2001, Ozro Inc. US Patent 6,141,653 Other patents pending 4
- 5. Complexity of Procurement Cycle
Operations Sourcing
Negotiation Fulfillment
Planning (RFx)
Vendor Evaluation and Feedback
Key Activities
Forecasting Supplier identification Terms negotiation Purchasing / ordering
Operations/ RFI, RFP, RFQ (e.g., BOM, payment, Order management
delivery, T&Cs)
production Vendor short list Physical delivery /
planning Vendor selection Materials management
Vendor selection
New product design Agreement renewal Payment processing
Respond to changes Financial settlement
Journaling / archiving Reconciliation
Copyright ©2001, Ozro Inc. US Patent 6,141,653 Other patents pending 5
- 6. Market Magnitude
Contract-based goods commerce represents approximately
$13 trillion of business in the US, and $52 trillion globally
- US Goods Commerce ($ Trillions) -
B2B Spot
Market Indirect
($3) Goods
($2)
B2B Under
Consumer
Contract
Direct Goods
($13) ($11)
Total - $20 Trillion Contract-Based B2B - $13 Trillion
Sources: CAPS Procurement Survey Ratios, U.S. Department of Commerce data and Morgan Stanley analysis
Copyright ©2001, Ozro Inc. US Patent 6,141,653 Other patents pending 6
- 7. Company Spend Analysis
Communications & Hi Tech Industry Spending Benchmarks
100%
85%
18%
75%
Spot Buying
67%
Percent of 8% Indirect
Company 50%
Revenues 67%
Contract- 59%
Based Direct
25%
0%
Procurement Contract-Based
Spend Procurement
Sources: CAPS Procurement Survey Ratios, Accenture and Ozro Analysis
Copyright ©2001, Ozro Inc. US Patent 6,141,653 Other patents pending 7
- 8. What Companies Want
Supply Chain
Best Practices
Tactical Solution Strategic Solution
1
Obtain Competitive (1 time, per event )
Purchase Price
2 Reduce Total Cost
of Ownership
3 Improve Supplier
Performance
4 Motivate Early
Supplier Involvement
1st Generation, 2nd Generation,
VS.
Reverse Effective
Auction Negotiation
Copyright ©2001, Ozro Inc. US Patent 6,141,653 Other patents pending 8
- 9. Continuous Improvement
eCommerce Virtuous Circle
• Inform Multiple Business
Inform Processes of Key Terms
• Coordinate Internal
Groups
• Negotiate Lowest
• Manage External
Total Cost Terms Continuous
Negotiate Partners
• Respond to Changes Improvement
• Re-negotiate or
Renew Agreements Monitor/Report on:
• Vendor Activity
Monitor • Organizational Activity
• Vendor/Customer
Performance & Feedback
• Compliance Reporting
Copyright ©2001, Ozro Inc. US Patent 6,141,653 Other patents pending 9
- 10. Why
Companies spend 5% of revenues managing contracts
eCommerce software can cut this to 1% - 2.5%
eCommerce software can also reduce total purchase
costs as much as 30%, and sourcing cycle times 50%
Direct materials savings flow through COGS; even small
savings create significant impact on profitability
Sources: Goldman Sachs estimates and Ozro Analysis
Copyright ©2001, Ozro Inc. US Patent 6,141,653 Other patents pending 10
- 12. Issues in Global Adoption
Internet access and infrastructure
IT infrastructure
Payment processing
Security concerns
Competitiveness
‘Red Herrings’
Copyright ©2001, Ozro Inc. US Patent 6,141,653 Other patents pending 12
- 14. Worldwide eCommerce Growth
$ Billions
Sources: Forrester Research, Inc.
Copyright ©2001, Ozro Inc. US Patent 6,141,653 Other patents pending 14
- 15. Summary
Countries that have invested in competitiveness will
lead global adoption
86% of Singapore’s exports sold to computing and
electronics industry/US supply chains
eCommerce hyper growth in 2002
.3% of Turkey’s exports tied to US supply chains
eCommerce ramps in 2006
‘Red Herrings’ stall supporting policies
Tax collection
Customs
Security
Financial controls
Money talks in B2B…
Copyright ©2001, Ozro Inc. US Patent 6,141,653 Other patents pending 15