by Jean-Philippe Massin, contributing author, eMarketect

We live in a world where technology is becoming a commodity. Being truly high-tech no longer depends on simply having the technology -- it's what you do with it that counts. And as we've all witnessed in recent years, having a bright idea, a bit of marketing knowledge and a killer IT infrastructure is no substitute for truly understanding your industry, your customers and the forces at play that determine commercial success or failure.

Sure, eCommerce is simply better business, or at least it has that potential. And eProcurement supports and enables eCommerce by providing the systems that allow buying organizations to collaborate with strategic partners and suppliers to buy goods and services over the Internet in a marketplace that limits neither choice nor quality. But lots of electronic marketplaces do that. So why have so many crashed and burned while others like Eutilia in the utilities sector, the RubberNetwork in the rubber industry and ChemConnect in the chemicals sector are not just alive but succeeding?

The answer lies in the question. These companies are all specialized marketplaces and in most cases staffed by people steeped in their culture and dynamics. In other words, they have specific industry knowledge and they are all involved in creating communities that share this knowledge quickly and easily. Not only that, but they can create buyer and supplier value by enabling marketplace participants to access and leverage that knowledge for their own benefit, with the end-result of helping them become more competitive through increased revenues and reduced costs. In other words, eMarketplaces are long- term, strategic solutions with lasting positive impact. They are not the "'quick fixes" that at one time so many observers took them for.

Today, for the first time, eProcurement (and particularly eTransactions) enables an organization to obtain real knowledge about their industry -- knowledge that benefits the business in hard cash terms. How do I define knowledge? In the case of a company wanting to streamline its supply chain, I would define it as anything that adds to the company's store of information about how it or its suppliers behave. Here, the marketplace acts as a central hub that makes such information transparent and relevant, accelerating its transfer between multiple buyers and suppliers

In my view, this is a critical factor in the future success not just of the marketplaces but also of the companies using them. It's quite simple. The answer to who will survive across Europe lies in the way we buy. A clever company will buy from the supplier who meets the most important criteria, and that is not always just cheapness. If time of delivery is paramount, then the buyer may want to sacrifice low cost for timeliness. Across Europe, the landscape is littered with the corpses of those marketplaces that sacrificed everything else for what they thought their customers wanted.

The survivors, and I think those left standing now can be categorized as survivors, are the ones who went out and did something really quite clever for the eCommerce sector, earning themselves the right to win business from founders, other buyers and suppliers. And they did this by asking the correct business questions based on their own specialist understanding of the industries they were seeking to serve. They asked about the business problems buyers and suppliers were encountering. They asked what types of solution would be best -- and most of all they concentrated on fulfilling business needs and answering business problems. In short, they delivered on customer needs in a user friendly way.

Quite naturally, the key issues uncovered revolved around profit and Return on Investment (ROI). You can quote all the Europewide statistics you like about the growth of eProcurement at any number of pan-European companies and they still won't lift a finger to set the process of eBusiness in motion. But if you can prove the impact it will have on ROI and their entire supply chain, then they do tend to sit up and listen. The eProcurement companies that are thriving across Europe are those who are helping their clients understand their supply chains by sharing information with them and so enabling faster ROI.

This process starts with helping them understand they don't have to make huge capital outlays in equipment. The day of the application service provider (ASP) has finally arrived. The next step is to demonstrate that they can only gain if they share information, not with competitors but suppliers. The days when information was hoarded and used to "get one over" on the supplier are long gone. Cost cutting is only a very small part of the equation. Besides, the reduction in internal costs alone should be a key mover to eProcurement. The secret is to marry the correct buyer to the correct supplier. In a fragmented market where it's hard to identify and qualify suppliers offline, it's only at an eMarketplace that you will get that depth of information -- and only at such a marketplace can you calibrate the match so well.

As an example, European utilities are finding, as they use marketplaces like Eutilia more often, that they can take much of the slack out of their supply chains and that they can do so in a totally neutral environment. A good marketplace looks to match buyer and supplier according to agreed criteria. There are no other hidden qualifiers. They can use sophisticated sourcing optimization services to make a detailed list of all qualified suppliers, helping buyers better design and plan their procurement operations.

Suppliers, meanwhile, gain from the reduced costs that result from changed buyer behavior. Just as important, they will gain new revenues through increasing their market share. This is the primary benefit of a marketplace that includes players from both the buy and supply sides. Many buyer-only communities have failed through failing to offer compelling value to suppliers, but by collaborating to strip out costs through simplifying and standardizing unnecessarily complex procedures and systems, both parties can engineer a true win-win position.

The benefits of this approach, in my view, are so compelling that companies who choose to ignore them are gambling with the very future of their businesses. After all, marketplaces can achieve headline savings of up to 30 percent on certain transactions, and average some 15 percent across the board. The true savings in "man years" of using cross-supplier research tools that eradicate the need to thumb through multiple paper-based catalogs and compare parameters across the products and services of many different suppliers are harder to quantify than headline costs alone. But they are often even more substantial.

What's more, a European marketplace like Eutilia can support and reinforce the European Union's tender fundamentals of market transparency and equality, occupying a neutral position in the supply chain where buyers and suppliers alike are involved through close collaboration with both.

Get it right, and being in the electronic marketplace business is a good place to sit. In August 2002, AMR Research published an extensive report on the top 17 vendors in the strategic sourcing space. They declared that the Compound Annual Growth Rate (CAGR) of the market would be 40 percent by 2006, driven mostly by the realisation of the ROI benefits. Their research showed that interviewees had saved 10-15 percent in direct goods and 20-25% in indirect goods and services while also dramatically "slashing" (their word) cycle times. They warned those waiting for the Enterprise Resource Planning (ERP) vendors to catch up to take specific action now to gain what they called "the long-term quick fix".

A truly appropriate solution is one that fits into your overall business plan, seamlessly, painlessly and effectively. By that definition, an electronic marketplace is highly appropriate for virtually any organization with industrial-weight procurement needs. Clearly, early adopters have already gained competitive advantage. They have the ability to make better decisions, based on valuable content knowledge that others find hard to replicate. What's more, they've had the luxury of being able both to get their teething difficulties out of the way and set the best practice "'rules" within their industries.

Those companies scrambling to catch up, meanwhile, may puff and wheeze like an out of condition person running for the last bus of the evening, but the opportunities are still open to them. After all, it's never too late to get fit!

Jean-Philippe Massin is CEO of Eutilia, a marketplace for European utility companies.