When e-commerce is all business.

• Author: BORT, JULIE

TWO PATHS LEAD TO B2B E-TRADE

PHIL MUMFORD

By now you might have heard the numbers: New York-based eMarketer Inc. says the worldwide use of business-to-business systems will grow by 70 to 85 percent annually through 2003, and companies' spending on B2B Web sites will hit $366 billion in 2001, then leap to $1.26 trillion by 2003. Jupiter Research expects U.S. B2B revenues to reach $6.3 trillion by 2005, with online B2B commerce growing from today's 3 percent of the U.S. total to 42 percent by 2005. Any company that wants to remain a player, no matter its industry, had better log on. In the coming year, e-commerce will shift from experiment to mainstream. In the following two years, it will become the foundation of business administration.

B2B is fundamentally different from having a Web site that allows your customers to get information about your company or to buy your products. In that situation, you control the rules of engagement. Add partners and suppliers to the equation, and things get more complicated.

Issues jump out, from application and data integration to security and business processes/policies. Linking networks -- no two are ever alike -- becomes a problem, especially in a day when many companies are just figuring out how to get their internal applications to work with each other.

Expect some growing pains as you figure out exactly how to make this new form of trade work. Getting computers to work together remains a sticky point, despite new Internet technologies created to address the problem. Moreover, areas like managing complex databases that span thousands of vendors and tens of thousands of products will trip up many a B2B site, as will issues like password management.

So how do you turn your bricks-and-mortar business -- or even your B2C (business-to-consumer) Web site -- into a successful B2B operation? You start from the beginning. Companies must understand the choice between the two basic models now emerging: e-marketplaces and extranets. That decision is the first of many you'll make, and it is a key one. Extranets are usually private, custom-built and maintained by one of the involved parties; e-marketplaces are generally public, pre-fabricated and owned by a third party, usually a for-profit company.

EXTRANETS

Extranets allow companies to use the Internet to complete a range of transactions. They allow you to sell to customers, dealers and distributors, buy from suppliers and manage contract laborers. Larger companies tend to build their own extranets while others tap into those built by business partners. Generally, an extranet is built for a large company, and its suppliers and customers are granted access to it through passwords.

"[Most companies] get 70 to 80 percent of the benefits by going to the cookie-cutter implementation," said...