Marketplaces are tough to build

Computerworld - Eventually, e-marketplaces are supposed to be faster, cheaper and more efficient than existing supply chains. But first, they must be built.
Many early movers are finding that's a far more complicated, time-consuming and resource-intensive process than they had originally figured. Immature technology, inexperienced implementation teams and unrealistic expectations are among the reasons.
"Nothing is coming out of the box," said Monica Morse, managing director of Minneapolis-based Cargill Inc.'s eVentures unit, which has invested in and incubated seven digital marketplaces, including Rooster.com in the agricultural market and Novopoint in the food ingredients industry.
Many of the software products for building marketplaces are akin to "Lego sets that you can build a lot of different things with," Morse said. "You're coding, and then you become a software house."
The upshot is that for now, the service offerings at many electronic marketplaces are pretty much limited to auctions and electronic-catalog listings that match buyers and sellers of commodity items. In contrast, collaborative services, such as enabling multiple trading partners to share demand forecasts and product development information or process payments as part of the marketplace transaction, remain largely in the pilot and even visionary stages.
"We're in the e-beta phase, where everything is still in this test mode," said Carl Lenz, an analyst at Gartner Group Inc. in Stamford, Conn.
"The [marketplace software] vendors are spread extremely thin," Lenz added. As a result, "we're going to see limited functionality [in electronic marketplaces] up until about 2005."
But technology isn't the only reason. In some cases, an exchange's targeted users simply aren't ready to make the big leap to conducting part or all of their business digitally.
The $180 billion retail convenience store industry is a prime example, said Nancy Reyda, president of Concord, Calif.-based RetailersMarketExchange, which was launched to serve the more than 270,000 convenience and small-business retailers in the U.S. So far, only 3,000 stores are doing business on the exchange, and all are affiliates of founding member Chevron Corp. in San Francisco.
In the construction industry, in contrast, firms are willing to collaborate and share information such as architectural drawings and schedules. But they aren't ready to buy and sell products online, said Jason Pratt, director of marketplace product management at San Francisco-based Buzzsaw.com Inc., an online exchange that serves the commercial construction industry.
As a result, "we've made a shift to customize our [Ariba Inc.] software platform for a slightly different purpose. We've taken their platform and modified it pretty heavily for a request-for-quote service that we'll launch late this