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  • 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, 2001Copyright ©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 adoptionCopyright ©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 presentationCopyright ©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 DocumentDocument 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 InternationalCopyright ©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 ReconciliationCopyright ©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 TrillionSources: CAPS Procurement Survey Ratios, U.S. Department of Commerce data and Morgan Stanley analysisCopyright ©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 ProcurementSources: CAPS Procurement Survey Ratios, Accenture and Ozro AnalysisCopyright ©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 NegotiationCopyright ©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 ReportingCopyright ©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 profitabilitySources: Goldman Sachs estimates and Ozro AnalysisCopyright ©2001, Ozro Inc. US Patent 6,141,653 Other patents pending 10
  • 11. Significant SavingsCopyright ©2001, Ozro Inc. US Patent 6,141,653 Other patents pending 11
  • 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
  • 13. International Timing, by RegionCopyright ©2001, Ozro Inc. US Patent 6,141,653 Other patents pending 13
  • 14. Worldwide eCommerce Growth $ BillionsSources: 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