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Conklin

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Conklin

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

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