May 11, 2004' Call in at 12:55 pm Eastern Time

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May 11, 2004. Call in at 1255 pm Eastern Time
2
B2B eCommerce still growing
4,500
4,000
3,500
3,000
2,500
2,000
1,500
1,000
500
0
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
Extranet/Private eMarket
Public eMarket
3
Online buying of both direct and indirect
materials growing
14
12
10
8
6
4
2
0
2001 Q1
2001 Q3
2002 Q1
2002 Q3
2003 Q1
2003 Q3
Direct materials, all
Indirect materials, all
Source Forrester/ISM Survey
4
But mostly between large companies
5
B2B buying driving B2B selling

• Eager B2B buyers
• Large companies investing in eProcurement and
  eSourcing solutions to reduce cost of goods and
  services purchased
• Reluctant B2B sellers
• Most small and midsize companies scared of online
  sales due to fears of becoming commoditized
• A few early adopter leaders, especially large
  companies and those in technology

6
Online buying activity still lags
Percent of all firms

• Average percent of spending
• Indirect materials purchased via the Net
• Direct materials purchased via the Net
• Percent of companies
• Purchased goods through an online auction
• Used an eProcurement application
• Used the Net as part of an RFP process

12
13
24
44
69
Source ISM/Forrester Report On Technology In
Supply Management Q3 2003
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But large firms doing more
Firms with more than 500 million in spending

• Average percent of spending
• Indirect materials purchased via the Net
• Direct materials purchased via the Net
• Percent of companies
• Purchased goods through an online auction
• Used an eProcurement application
• Used the Net as part of an RFP process

19
20
54
67
80
Source ISM/Forrester Report On Technology In
Supply Management Q3 2003
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A glass floor for eProcurement and eSourcing
of direct materials bought online, Q3
2003 32 16 14 10 7
Mainly large enterprises have adopted
eSourcing and eProcurement
Fortune 200
Large (1B-10B)
Upper mid-tier (0.5B-1B)
Smaller companies have limited leverage over
suppliers (for deals, participation)
Lower midtier (50M 500M)
Small (Under 50M)
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Large companies dominate B2B buying
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B2B buying key mistakes

• Buying a product before changing the processes
• Starting with eProcurement instead of with
  eSourcing
• Underestimating supplier enablement gap
• Viewing B2B buying as a one-time solution instead
  of a repeated process
• Failing to participate in B2B eCommerce

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Road map to success

• Implement P-Cards to get process savings, process
  changes, initial data on MRO spend
• Use spend analysis tools to get granular detail
  on MRO spend, savings opportunities
• Use eSourcing for high-spend categories to get
  better deals from fewer suppliers
• Use eProcurement to get employee compliance with
  sourcing policies
• Repeat Step 2 and Step 3

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Organizing for spend management effectiveness

• Best when CFO is executive sponsor
• For spend analysis and sourcing, organize
  centrally, deploy geographically
• For MRO eProcurement, set standard centralizing,
  deploy unit and geography
• For services procurement, deploy department by
  department using global platform

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eProcurement and eSourcing vendor landscape
Elance, Fieldglass IQNavigator
Ketera, Perfect Commerce, ePlus
SSA GT (Baan), Lawson

Ariba, PeopleSoft
SAP, Oracle, ICG Commerce
eProcurement
i2
ATKPS, B2eMarkets, Emptoris, FreeMarkets,
Frictionless, Global eProcure, Procuri
Iasta
eSourcing
Softface, Zycus
Spend analysis
Services
General indirect
Direct materials
Acquired by Ariba in 2004
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B2B selling three channels

• Via sales forces
• Salespeople place their orders online
• Direct sales
• Customers place their orders online
• Via partners
• Distributors or sales partners place their orders
  online

Sales
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B2B selling key mistakes

• Ignoring impact of B2B Web site on other channels
• Launching a B2B Web site before enabling sales
  people to place orders online
• Failing to understand requirements and needs of
  channel partners
• Underestimating catalog management requirements
• Failing to integrate Web site with telephone call
  center
• Focusing on small/midsize customers instead of
  larger ones
• Failing to participate in B2B eCommerce

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B2B selling Key requirements

• Have an electronic catalog
• Be able to receive and respond to electronic
  purchase orders in standard formats
• Customize catalog per contract requirements
• Personalize content by company and by employee
  roles and authorities
• Integrate directly into buying system of
  strategic customers

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B2B selling Process changes

• Sales force channel
• Provide online order-placement Web site
• Train and motivate sales force to use
• Direct online sales channel
• Get sales force onboard first
• Implement commerce server solution
• Address channel conflict issues
• Redesign production and fulfillment systems for
  online orders
• Channel partner/reseller channel
• Understand partner interest and needs
• Address channel conflict issues
• Implement partner relationship management
  solution
• Train and motivate partners to use Web site

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The importance of catalog management
Suppliers
1
Sellers Web site
Change stream
2
Procurement portals

Aggregate
Extract
Cleanse
Distribute
Distributor site
3
XML stream
eMarkets
4
Load product information
Syndicate product information
Normalize product information
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Commerce server market by size and price
Blue Martini
BroadVision
ATG
Siebel
PeopleSoft
SAP
Ironside
HAHT
BEA
Oracle
Microsoft
IBM
Under 50K
Over 500K
50K-100K
100K-250K
250K-500K
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Partner relationship management market
Partner relationship-focused

• MarketSoft
• Onyx
• Pivotal
• Webridge

• Channelwave
• Click Commerce
• Comergent
• PeopleSoft
• Siebel
• Oracle
• Onyx

• SoftAd
• InfoNow

• IBM
• Azerity
• Firepond
• Trilogy

• Web Collage

• HAHT

Brand management focused
eCommerce focused
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Conclusion

• B2B buying and selling via the Internet are
  becoming essential
• But the Internet coexists with other channels
• Applications are becoming more mature, part of
  larger application offerings
• For B2B buying, procurement, and sourcing process
  changes are key factors for success
• For B2B selling, sales channel management is key
  for success

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Summary

• Companies are increasingly purchasing online
  because of the real savings
• Process changes produce the greatest savings
• Successful online buying is an eight-stage cycle
• Repeated cycles create sustainable supply
  management

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Thank you
Andrew Bartels abartels_at_forrester.com www.forreste
r.com