Living Through History: Tracing the Evolution of Marketplaces and Business Connectivity

There have been many periods in history that no doubt would have been a blast to live through (provided one survived): Watching the rise and fall of the Roman Empire; the birth of liberty and democracy with the Founding Fathers in America; the rise of factory production and the industrial revolution. All of these would have been more fun to watch from up close than afar. Yet with a view from the immediate looking glass, there’s no doubt that observing these periods of punctuated historical equilibrium would have created as many questions as answers early on, as events individually unfolded.

I feel the same way today about the rise of what I’ll term “marketplace 3.0” in the commerce, network and business connectivity space. It’s absolutely amazing how much progress we’ve lived through in the past two decades when it comes to the type of visibility and collaborative activities that buyers and suppliers have been ability to build together.

It’s miraculous in fact. We can know, for example, with a single click of a button or a swipe on an iPad, whether there is enough part-level inventory lower down in the channel to meet estimated demand fulfillment requirements regardless of whether suppliers are next door or around the world. And of course we can buy goods and services on a directed basis to do our jobs without overspending the corporate kitty.

Business connectivity and visibility today is amazing – and just the start. But let’s step back almost twenty years in time and look at how we got to where we are.

We can trace what I’ll call the time of “Marketplace 1.0” to the late-stage value added networks (VANs) of the EDI world (think GEIS before it became GXS) and version 1.0 of Ariba. That was a time when Commerce One had the vision and the folks up the road in Sunnyvale had the marketing and the acquisition speed (if not the smarts). In this infancy stage, VANs played a big role (in the area of finished goods, parts, components and materials aimed destined to be built and consumed – i.e., direct materials) in enabling communication between different companies, overcoming the limitations of “peer-to-peer adoption of EDI” as Wikipedia describes.

I can’t do a better job summarizing the services that VANs provided than the Wikipedia entry reference above: “A VAN acts as a regional post office. It receives transactions, examines the 'from' and the 'to' information, and routes the transaction to the final recipient. VANs may provide a number of additional services, e.g. retransmitting documents, providing third party audit information, acting as a gateway for different transmission methods, and handling telecommunications support.”

At the same time as companies were overcoming the limitations of machine-to-machine and peer-to-peer EDI with the broader adoption of these new types of networks, so too were companies just beginning to use tools to facilitate the buying and selling of non-production goods. And this is precisely where Ariba (Tradex), Commerce One, Intellisys and other early stage eProcurement and exchanges came into play. Unfortunately, because of the limits of application capability and supplier connectivity at that time (and the degree of customization that companies required, or thought they required), these early indirect procurement and selling enablers brought much more sizzle than steak compared with the meaty commerce taking place through EDI and VAN-based connectivity.

Although the early seeds of global commerce and visibility were sown during this time nearly two decades ago, there was no singular leap forward, especially when it came to enabling greater visibility within an organization for indirect spending (e.g., tying the majority of transactions and pending transactions to budgets)—let alone a broader retailing or manufacturing supply chain.

Still, I can assure you, watching it unfold up close was like having a seat to a big time game. Yet at the time, I had no idea I was watching the pre-game warm-up rather than the big event itself.

To be continued …

See also:

Extending Procurement Information Architecture to Provider Ecosystems (Part 1) 

Extending Procurement Information Architecture to Provider Ecosystems (Part 2) 

Extending Procurement Information Architecture to Provider Ecosystems (Part 3) 

Extending Procurement Information Architecture to Provider Ecosystems (Part 4) 

The Trouble With Tribbles and the Problem with Portals (Procurement Information Architecture Part 1)

Procurement Information Architecture Part 2: Portal Infrastructure

Procurement Information Architecture Part 3: Analytics

Procurement Information Architecture Part 4: Master Data Management

Procurement Information Architecture Part 5: Workflow (System of Process)

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