Supply-chain software vendor i2 Technologies Inc made its first foray into the vertical online exchange marketplace this week, signing partnerships with Compaq Computer Corp and Hewlett Packard Co to create a business-to-business trading community for the high-tech industry.
The exchange, called HiTechMatrix.com, is a portal site – owned and managed by i2 – that provides electronics manufacturers, distributors and their trading partners with a one-stop destination for online collaboration and trading, electronic procurement, spot buying, selling and order fulfillment services.
It will focus on direct material procurement, which includes any materials that a company uses to produce its products and services (in this case High-tech equipment) and which can often account for more than 50% of a hi-tech company’s total annual revenue, i2 said. Future service offerings in HightechMatrix.com are intended to include indirect material procurement (including configuration of items, such as PCs), customer and channel collaboration, internet order-fulfillment services and third- party logistics services, i2 said.
In terms of revenues, a spokesperson said i2 said it would charge a monthly transaction fee, based on a company’s trading volume, to each supplier. Unlike rivals, it won’t charge a basic subscription fee for signing up.
Greg Brady, i2’s president, said he estimates the company could channel at least $100bn of trade through the Exchange. Already, i2 has 72% of the supply chain market in the High-tech sector, he says, and nine of the 10 largest computer makers in the world have adopted i2’s products to optimize their supply chains.
As part of the announcement, Compaq CEO Michael Capellas committed to moving his company’s $25bn of trading onto the exchange and HP said it will run its material procurement deals and customer order fulfillment transactions through HightechMatrix.com.
The move comes as vendors from all fields – back office, front office, application integration – are clamoring to open vertical exchanges to cash in on the demand for collaborative online trading. Analyst group Forrester Research predicts the business- to-business online trading market will be worth $1.4 trillion by 2003.
Just this week, SAP announced a trading community for the chemical and pharmaceuticals industry and PeopleSoft set up a similar venture with Commerce One for fashion retailers. Oracle Corp opened its first exchange, with Ford Motors, in November and more are promised over the next few months.
i2 said it will offer free trials to hi-tech companies for up to 60 days. It added that HiTechMatrix.com is the first of several such vertical exchanges i2 plans to launch as part of TradeMatrix.com, the company’s B2B marketplace strategy, launched back in October.
