Study Sees Future in Electronic-trading Networks

By Michael Rold, ITworld |  Opinion

A new report has concluded that the providers of Electronic Trading
Networks (ETN) are most competitive over, and often share different
opinions on, three areas of ETN services: Speed of implementation;
services provided, including overall service and integration
management; and product applicability to small and medium-size
enterprises.

Giga Information Group Inc. teamed with the Center for Digital Commerce
(CDC) at the School of Information Studies at Syracuse University in
New York to conduct a survey and write the subsequent report on the
current state and future prospects of the ETN market.

ETNs offer features including managed network services in support of
business-to-business (B-to-B) integration data exchanges, improved
security, guaranteed service levels, command center support, reporting,
and auditability, according to the report.

ETN service providers cited various areas in which they claim they
differentiate their services from the competition. However, there are
areas where no one provider lays claim to a competitive advantage. For
instance, when it comes to security and product reliability, ETN
customers have to come to view those as "expected basic product
elements" or achieving "some degree of established uniformity across
different products," the CDC's report said.

Service providers were also questioned on the prices of their ETN
services. The CDC determined that each company had a different way of
charging customers. For instance, the price for CommerceQuest Inc.'s
service is based on the "complexity of integration, estimated number of
transactions, (and the) hardware and software costs," according to the
report. IPNET Solutions Inc., however, determines its fee based on its
total number of trading partners, the report found.

While each provider may have a different system in place for charging
customers, the CDC states that "each (company) justifies its pricing
policy and claims that it works out in the best interests of their
users."

ETNs make it easier to manage data and networks compared to previous
systems "due to the simplicity, openness and transparency of the
medium," according to the report. There is little need to train
employees to use ETN systems due to the ability of companies to "use
and build over the existing technology," the report said.

There are caveats, however, because the ETN market is a relatively new
one. Firms should use caution when selecting a vendor, the report said.
Customers are encouraged to carefully study a vendor's track record.

The CDC concludes its report by stating that although the market is
still in its early stages, "the underlying logic and functionality of
ETNs makes sense and will find its justified place among firms needing
the services of an ETN provider."

The study was conducted by the CDC during the spring semester of 2001.

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