COMPASS MAGAZINE #13
COMPASS MAGAZINE #13

B2B marketplaces play a key role in digital transformation

B2B digital marketplaces are reshaping industrial markets and supply chains. Experts say the disruption of traditional business models offers companies across the supply chain an opportunity to expand and create innovative new customer experiences.

Two decades ago, I participated in research on an exciting new tech sector known as “Internet Marketplaces” or “Trading Exchanges.” These websites applied B2C e-commerce technologies and strategies to the procurement challenges of industrial B2B markets.

 

When the dot-com bubble burst, many of the companies we were researching closed and the study was shelved. However, Covisint, an auction site for automotive parts and components created by a consortium of Detroit automakers, and Ariba, an e-procurement site for manufacturing, survived through acquisitions and adaptation. A few others, including Alibaba and its early B2C counterparts Amazon and JD.com, became global powerhouses.

Now, enabled by what IDC refers to as the Third Platform convergence of big data analytics and cloud, social, and mobile technologies, a new generation of B2B marketplaces has emerged. These cloud-native marketplaces provide new business opportunities for companies of all sizes and niches and, more importantly, a means of accelerating digital transformation.

TYPES OF MARKETPLACES

At the highest level, these marketplaces, both old and new, can be sorted into two broad categories: experiential and product. Experience-based marketplaces enable open ecosystem innovation in the customer experience. They are generally data-centered platforms that use open APIs to engage partners, internal teams, entrepreneurs and even customers in extending and enriching a company’s offering. Examples include Intel’s Developer Zone and Panasonic’s VIERA Developer Portal.

Product marketplaces connect buyers and suppliers of physical goods. They can be broken down into four basic types: commodities procurement, standard parts catalogs, marketplaces for configurable products, and custom manufacturing portals.

Commodity platforms were established before the advent of the World Wide Web. These platforms used Electronic Data Interchange (EDI) systems to facilitate trade in a wide variety of commodities, from cattle to natural gas to iron ore. Today, these platforms are being reinvented and reinvigorated through Third Platform technologies, and their improved accessibility is in some cases enabling companies to source raw materials directly.

Online catalogs have progressed from manufacturers and distributors posting catalogs online in PDF format to HTML displays and online databases. Today, the best online catalogs serve as sourcing marketplaces. They provide easy, machine learning-enhanced search, direct uploads or downloads of 3D multi-CAD files, extensive product and supplier metadata, and direct ordering links.

Configuration marketplaces are an extension of standard product catalogs. They provide dynamic systems for selecting, configuring and ordering standard but configurable products, like computers, from a wide range of suppliers. Going a step further are custom product and service marketplaces. They enable buyers to solicit custom services or products in one or more industries, and suppliers to respond to these RFP or RFQs.

These marketplaces can help businesses of all sizes reach new customers and geographies, discover new or better suppliers, save time, and shop for better values. It is worth every company’s time to explore which marketplaces could benefit its business.

CAPITALIZE ON THE EVOLUTION

While immediate rewards are motivation enough, many businesses overlook how marketplace participation can speed their global digital transformation.

“FOR CUSTOMER EXPERIENCE, MARKETPLACE INTERACTION WITH A BROAD ECOSYSTEM HELPS COMPANIES SHIFT FROM ‘INSIDE-OUT THINKING’ TO FRESH ‘OUTSIDE-IN THINKING.'”

ROBERT PARKER GROUP VICE PRESIDENT, IDC

At IDC, we define digital transformation as an enterprise’s use of Third Platform technologies to create value and competitive advantage through new offerings, business models and relationships. Today’s B2B marketplaces are transformative because they use these technologies to go far beyond traditional process digitalization and make the benefits almost instantly accessible to all. What’s more, the transformation extends to their users’ central business functions, including development of customer experience, supply chains and procurement, and sales and marketing.

For customer experience, marketplace interaction with a broad ecosystem helps companies shift from ‘inside-out thinking’ to fresh ‘outside-in thinking.’ It also helps meet customer demand for smooth, omni-channel buying and fulfillment.

For supply chain management, it provides a rapid way to achieve what I call a "3D" supply chain: demand-oriented, data-driven and digitally executed. These qualities are integrally linked to key dimensions in IDC’s maturity model for digital transformation.

Specifically, B2B marketplace participation addresses:

Leadership: provides strong evidence of executives’ top-level commitment to (and progress on) digital transformation.
Omni-experience: fulfills the promise of delivering experiences through the most convenient channel in a continuous, consistent and relevant manner.
Information: advances the goal of evidence-based management through marketplace data and analytics.
Operating Model: helps transition manual, hierarchical operating models to agile, autonomic ones.
WorkSource: helps management navigate the transitional workforce and evolving supply chains.

Embracing B2B marketplaces also frees IT from time-consuming support of legacy systems to focus on advancing digital transformation. B2B marketplace strategies also align with broader IT trends toward data center consolidation and shifts to agile, mobile-first, cloud-based solutions.

PREPARE FOR THE FUTURE

For all of these reasons, B2B marketplace growth will be very strong over the next few years, and I believe many companies will engage in more than one type of platform and occupy multiple roles within them.

This increasing participation, in turn, will drive improvements in B2B marketplaces. Companies will demand greater, more standardized visibility into products and suppliers. This represents an opportunity for suppliers to educate buyers, something they historically have struggled with – and that would be a step toward real value-based selling.

We’ll also see demand-driven innovation in data security and IP protection through technologies like blockchain. And, I believe we’ll see the emergence of project-based marketplaces, wherein the platform supports end-to-end project collaboration from project bid to project completion.

Through all the evolutions that may come, though, I hope companies remember that while marketplaces can play an important role in digital transformation, digital transformation is ultimately not a technology initiative – it’s a business strategy. It is through the lens of global business strategy that companies should shape their marketplace roadmap.

PROFILE

Robert Parker is a group vice president at International Data Corporation (IDC). He is responsible for the global research direction of four industry practices – Retail, Energy, Manufacturing and Financial Services. Additionally, he leads IDC's research on digital transformation, coordinating IDC’s research strategy across all groups and regions.

by Robert Parker Back to top
by Robert Parker

For more information on IDC’s Third Platform:
http://go.3ds.com/nnRi