Exchange future mixed

By Eugene Grygo, InfoWorld |  Business

Established relationships will be pivotal for many exchanges, says Owen Zidar, vice president of Freightwise (www.freightwise.com), an online exchange that come August will provide a hub for those companies needing and providing rail, steamship, and trucking transportation services.

"If you've already established a relationship, you're in an easier position," Zidar says.

Zidar and others also say that having heavy hitters from the buy-side and sell-side as founders is crucial to success.

Not so, says Karen Welsch, CTO of Houston-based WaterDesk.com, an online marketplace for maintenance, repair, and operations products and services for the water and wastewater industry. Neutral exchanges not only have their place but may be constitutionally better off.

"It has to be a true consortium effort [equally owned by buyers and sellers] to be a successful marketplace," Welsch says.

Exchanges that attract big names could attract the attention of the federal government, which is on the lookout for price-fixing and monopolies among the players.

Governmental agencies -- particularly the Department of Justice and the Federal Trade Commission -- may want to make an example of one of these exchanges, which makes it "an issue they all need to worry about," AMR's Covill says.

Although more exchanges are blossoming and beginning to move toward consolidation, there will be growing needs for private exchanges as well as "meta-exchanges," which are conduits for accessing multiple exchanges simultaneously, according to industry analysts and vendors.

As public exchanges grab the headlines, the private exchanges will be grabbing buyers and sellers to focus on specific parts of the supply chain, according to Covill. But the smaller, more contained exchanges are likely to be built around "channel masters," large buyers or suppliers who can establish the rules of engagement and invite the players.

As the exchange landscape becomes more complicated, the need for meta-exchanges willl become clear. The result will be a network of markets where "information can be exchanged freely -- if those marketplaces agree to participate," SAP Markets' Graf says.

The meta-exchanges will allow greater visibility into other digital marketplaces, according to analysts. In addition, meta-exchanges may help exchange founders get around charges of collusion because they would serve as wormholes of sorts in and around these marketplaces that would prevent the users from being locked in to a single transactional environment.

And those creating transaction environments are "not the usual suspects" from the IT industry, The Yankee Group's Williams says. She is seeing people from brick-and-mortar companies who, while bringing their business savvy to bear, are also building "a truly astounding variety" of digital marketplaces.

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