Business Today Net Special

Interview/ Mark Beistman

B2B electronic commerce software provider Commerce One (NASDAQ: CMRC) is reaching into Asia with its "Many Markets, One Source" tagline. The Indian version has been in operation for six months, and is seeking to become the pure play market maker in the B2B segment. On his first visit to India to give a further push to the Indian operations, Senior Vice-President Worldwide (Sales & Marketing) Mark Beistman spoke to BT's Ashutosh Sinha and Vinod Mahanta

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Interview:
Deepak S. Parekh

Q. What kind of companies will succeed in making B2B exchanges a success?

A. In a short period of time, the market has been reduced to 3 or 4 players. That's Ariba, i2 Oracle and us. So it's a kind of technical cleansing process. What kinds of models are going to work? We believe the most sustainable and open model will be the one that will allow buyers, suppliers, and value-added service providers into a network that makes room for commerce to happen. We want to play the role of an e-commerce infrastructure provider that has partners in providing different services. We want to build a model that is specific to a market like India. It's clear to us that local requirements especially issues like tax and business laws are very specific to Indian markets. The model that will work here is one that is prepared to embrace these unique differentials.

Knowing the vagaries of the Indian market, what kind of B2B opportunity do you see in India?

We have been very measured with our investments in India and are trying to analyse the space, both with our partners on the ground as well as from the feedback we picked up from the studies jointly conducted by Nasscom and Mckinsey. It appears to be very strong market for growth. In specific, there are key verticals that are of interest to us. The grouping together of eight pharmaceutical companies and the automobile industry, for example, are of interest to us. We are very optimistic about the potential of the Indian market.

But India is very fragmented market and small and medium enterprises (SMEs) are large in number? How do you see yourself tackling that?

I think we can generalise from what Europe is. Southern Europe is a very decentralised market, with 90 per cent of the market consisting of small and medium enterprises. I think we have already encountered markets that are highly SME-oriented and where power comes from the small (companies). But huge businesses would be the major drivers for B2B. It also changes the dynamics of opportunity. What India offers is similar to Spain and Italy.

Some exchanges in India are not more than bulletin boards. What kind of value-added services will you provide for the Indian market?

The value-added services we are looking at may be insurance, payment gateways, credit-rating services and others. What we feel is, for the export market in particular, the overseas buyer has more problems. We have come up with a new form of service wherein we rate the suppliers on the basis of their performance. We are facing problems in India and we need a logistics partner. We are trying to bring in four to five large companies. The insurance sector is also opening up, but we will have to do a lot of developmental work. In the area of credit rating, no company is in a position to rate 100,000 companies. The business practices have to be mapped according to the needs of the company. This kind of value-added service will have to be developed by us.

What kind of first-mover advantage exists in the B2B space?

A lot. The first-mover advantage that we have is in the area of infrastructure. We are trying` to capture the first-mover advantage in the B2B space. Our approach and our model are to be market-ready for business. It's a service delivery approach rather than a sales approach. The first mover has to be legitimised with an actual working model.

There are varied interpretations of what B2B is. Can you spell out what you mean by it?

Automating procurement is not B2B. You can go to a company and take their paper-based system and easily automate the process behind a firewall. B2B, according to me in a purchasing context, is when a purchase order can read that firewall automatically, interact with the suppliers, check the inventory status to make a buying decision, and conduct the entire transaction without talking to any customer service person or the suppliers. The buyer benefits from the efficiency and reduced purchase costs. The supplier benefits by reducing servicing costs and by being exposed to a larger market. The economics behind the pure play B2B should adhere to this.

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