244 B2B E-Business Sullivan, L., & Dunn, D. (2004, February 9). The rules of the road still apply to Covisint. Informa- tion Week, p. 92. Survey: A market too far. (2004). The Economist, 371(8375), 12. KEY TERMS Back-End System: The support components of a computer system. It typically refers to the database-management system (DBMS), which is the storehouse for the data. Business-to-Business (B2B) E-Business: The sale of products or services, or an information exchange, among two or more businesses through electronic technology, usually involving the Inter- net, through a public or private exchange. Consortium: A group of companies within a particular industry establishing an exchange connecting each of them and their suppliers. E-Business (Electronic Business): The administration of conducting business via the Internet. This would include the buying and sell- ing of goods and services, along with providing technical or customer support through the Internet. E-business is a term often used in conjunction with e-commerce, but it includes services in addition to the sale of goods. Enterprise Application Integration (EAI): The process of coordinating the operations of vari- ous applications across an enterprise so they can perform as an integrated, enterprise-wide system. This term also refers to the set of commercial ap- plications designed to facilitate this process. E-Procurement: E-procurement is the busi- ness-to-business purchase and sale of supplies and services over the Internet. An important part of many B2B sites, e-procurement is also sometimes referred to by other terms, such as supplier exchange. Typically, e-procurement :HEVLWHVDOORZTXDOL¿HGDQGUHJLVWHUHGXVHUVWR look for buyers or sellers of goods and services. Depending on the approach, buyers or sellers may specify prices or invite bids. Transactions can be initiated and completed. Ongoing purchases may qualify customers for volume discounts or special offers. E-procurement software may make it possible to automate some buying and selling. Companies participating expect to be able to control parts inventories more effectively, reduce purchasing agent overhead, and improve manufacturing cycles. E-procurement is expected to be integrated with the trend toward computer- ized supply-chain management. Independent B2B Marketplace (or E-Mar- ketplace): An Internet destination where busi- nesses from around the world can come together to buy and sell goods and services in an auction format. Middleware: Software that sits between two or more types of software and translates infor- mation between them. Middleware can cover a broad spectrum of software and generally sits between an application and an operating system, a network operating system, or a database-man- agement system. Private B2B Exchange: An e-marketplace created by a single company to provide e-business capabilities to its business units and preferred trading partners. This work was previously published in Encyclopedia of E-Commerce, E-Government, and Mobile Commerce, edited by M. Khosrow-Pour, pp. 26-30, copyright 2006 by Information Science Reference (an imprint of IGI Global). 245 Copyright © 2009, IGI Global, distributing in print or electronic forms without written permission of IGI Global is prohibited. Chapter 1.17 Innovation and B2B E-Commerce: Explaining What Did Not Happen Steve New University of Oxford, UK ABSTRACT The massive wave of enthusiasm for B2B (busi- ness-to-business) e-commerce generated with WKH³GRWFRP´ERRPOHGPDQ\WREHOLHYHWKDWD IXQGDPHQWDOWUDQVIRUPDWLRQRIKRZ¿UPVERXJKW and sold products was just around the corner. The QHZ³ZLUHG´ZRUOGRIFRPPHUFHZRXOGOHDGWR U H D O W L P H , Q W H U Q H W G U LYH Q W U D G L QJ Z L W K V LJ Q L ¿ F D Q W implications for — amongst other things — the nature of buyer-supplier relationships, pricing, and the management of industrial capacity. De- spite the excitement, such a transformation has largely failed to materialise, and whilst there has been a limited uptake of B2B innovations (for example, the use of online reverse auctions), the fundamental character of B2B trade has remained mostly unchanged. Drawing on a multi-stranded empirical study, this chapter seeks to explain the divergence between the expected and realised degrees of innovation. INTRODUCTION The extraordinary rise and fall of the late 1990s technology bubbleZDVQRWWKH¿UVWVSHFXODWLYH boom of its kind — and presumably will not be the last. As with the successive 19 th century booms relating to the railways, the frenzy was accompanied by an astonishing explosion of rhetoric, folklore, and intellectual and manage- ULDO IDVKLRQ ² FUXGHO\ ³K\SH´ 7KLV OHG WR D VLJQL¿FDQW ÀXUU\ RI LQQRYDWLRQ SDUWLFXODUO\ LQ the founding of large numbers of Internet-based intermediaries³KXEV´RU³H[FKDQJHV´%DNRV 1991, 1998; Bloch & Catfolis, 2001; Barratt & Rosdahl, 2002; Le, Rao, & Truong, 2004). Inves- tors and organisations poured vast sums into these ventures and, for the most part, lost their money. Consultants and investment banks made shrill claims that interorganisational trade would be transformed, but the predicted revolution failed to materialise. 246 Innovation and B2B E-Commerce I address two central questions in this chapter. 7KH¿UVWLVWKHVLPSOHTXHVWLRQ:K\GLGWKHUHYR- lution not happen? The second is: What substan- tive ideas for business practice can be salvaged from the wreckage? This is an important task; to adapt George Santayana’s famous quip, those who do not understand the past are condemned to repeat it. 2QHIHDWXUHRISXEOLVKHGZRUNLQWKLV¿HOGLV that there has been relatively little solid empirical material; on the other hand, there has been a great deal of generalised comment and unsupported speculation regarding the causes and consequenc- es of the bursting of the B2B bubble. Day, Fein, and Ruppersberger (2003) present an analysis that HPSKDVLVHVWKHVLPLODULWLHVZLWKRWKHU³VKDNHRXWV´ associated with disruptive technologies. This chapter reports the results of a multi- stranded investigation into the extent to which organisations are prepared to make use of the Internet in buying and selling, and into the patterns of life and death of B2B exchanges. Unlike much of the literature in this area, which has largely focused on leading companies or the few success- ful hubs, this chapter concentrates more on the RSSRUWXQLWLHVDQGREVWDFOHVWKDWIDFH³RUGLQDU\´ organisations, and the innovations which failed. The logic behind this is that there is often much to be learnt about the process of innovation from the mundane and the typical. The purpose of this study was not to recount the organisational suc- FHVVVWRULHVRIOHDGLQJ¿UPV²RWKHUVKDYHGRQH that before, and the potential EHQH¿WV RI %% e-commerce are well documented (e.g., Sculley & Woods, 1999; Timmers, 2000; DeMaio, 2001; Raisch, 2001). For this study, the challenge was to understand the reality of organisations’ experi- ences, and to gauge the key issues and obstacles that they face. BACKGROUND: THE B2B PHENOMENON A simple starting point to the complex origins of the B2B e-commerce phenomenon lies in the well-established technologies of electronic data interchange(EDI). At the beginning of the 1990s, for many industries, the direct system-to-system transfer of data over proprietary networks follow- ing industry standard protocols had become a routine element of doing business. The technology DOORZHGVLJQL¿FDQWVDYLQJVIURPERWKLQFUHDVLQJ the speed and accuracy of data transmission, and in some cases was progressing to more advanced uses whereby buyers and suppliers could not only PDQDJHURXWLQHWUDQVDFWLRQVEXWDOVR³VHH´LQWR each others’ systems, facilitating such operational innovations as collaborative planning forecasting and replenishment, and vendor managed inven- tory. In addition, electronic linkages also were developing for the easier sharing of technical and GHVLJQGDWDHQFRXUDJLQJLQWHU¿UPFROODERUD- tion in technical design. The downside of these ³inter-organisational information systems” ZHUHWKHFRQVLGHUDEOH³KRRNXS´FRVWVLQFXUUHG by the parties involved, a fact which limited the adoption of the technologies by smaller suppliers, often faced with meeting the costs of linking their own systems with the non-matching requirements of several customers. In parallel, in the academic literature, there was a limited debate as to the ORQJWHUPHIIHFWVRIWKHVHWHFKQRORJLHVRQ¿UPV¶ switching costs, and good arguments could made for expecting both a reduction and increases in PDUNHW³VWLFNLQHVV´DQGWKHFRQVHTXHQWLDOVKLIW WR SXUHU ³PDUNHWV´ RU JURZLQJ ´KLHUDUFKLHV´ respectively (Malone, Yates, & Benjamin, 1987; Bakos, 1991). The debate was rather theoretical, and was rather neglected outside of a handful of learned journals. The arrival of the Internet, and its adoption by businesses as a serious tool for business, however, 247 Innovation and B2B E-Commerce radically changed the character of the debate. Three key features of the Internet and two innova- tions transformed the horizons of possibility. The Internet was ubiquitous, cheap, and — being built around the idea of a standard and simple set of WHFKQLFDOSURWRFROV²UHODWLYHO\HDV\IRU¿UPVWR adopt. The two innovations — the search engine and the online auction — opened up a range of new possibilities for online B2B trading. Over time, two basic connected perceptions emerged regarding the potential for a new approach. 7KH¿UVWRIWKHSHUFHSWLRQVZDVWKDWWKH,QWHUQHW could radically transform procurement and sales processes, collapsing the costs and timescales of trading. Prospective buyers could seek out pro- spective suppliers very rapidly, and suppliers could present vast quantities of searchable information on their products and capabilities. Furthermore, buyers could use Internet mechanisms to identify the cheapest supplier in real time using multilateral reverse auctions. Correspondingly, suppliers could be more responsive in their pricing. The scope for WKHVHQHZDSSURDFKHVWR\LHOGVXEVWDQWLYHEHQH¿WV was widely acknowledged. The second perspective, however, took these new potentials as heralding something far more VLJQL¿FDQWWKDQVRPHGROODUVVKDYHGRIIDGPLQ- istrative transaction costs. As Bill Gates (1995) VWDWHG WKH ,QWHUQHW ZLOO ³FDUU\ XV LQWR D QHZ world of low-friction, low-overhead capitalism, in which market information will be plentiful and transaction costs low.” This vision of the future initially fuelled enthusiasm for online business- to-consumer (B2C) retailing, but after a while many observers realised that the B2B market was of a vastly larger scale. B2B e-commerce was KHOGWRVLJQLI\D³IXQGDPHQWDOFKDQJHLQWKHZD\ capitalism works” (Prigg, 2000; Tapscott et al., 2000). A report by AT Kearney (2001) suggested WKHHPHUJHQFHRI³GLIIHUHQWLDWHGYDOXHQHWZRUNV´ WKDWZRXOG³UHGH¿QHHQWLUHLQGXVWULHVDQGYDOXH F K D L Q V ´ D Q G W K D W W K D W H P D UN H W V ³F D QG U D P D W L F D O O\ affect the power balance in today’s value chain.” Partly driven by an almost ideological faith in the QDWXUHRI³PDUNHWV´WKLVSRVLWLRQDVVXPHGWKDW supply markets for corporate purchasers would be transformed: The features which stopped industrial markets behaving like the theoretical, HTXLOLEULXP¿QGLQJ PDUNHWV RI WKH QHRFODVVL- FDOPRGHOVPDOOQXPEHUVFRQVWUDLQHGÀRZVRI information, high switching costs, high barriers to entry) could be removed by the new technol- RJ\UHDSLQJVXEVWDQWLDOHI¿FLHQF\JDLQV)RU these gains to be realised, however, new market LQVWLWXWLRQV ZRXOG EH QHHGHG WR DFW DV ³KXEV´ between buyers and sellers, and these — even if charging just a tiny fraction of the throughput — stood to reap phenomenal economic rewards. 7KHVHKXEVZHUHWREHWKH³NLOOHUDSSOLFDWLRQRI the B2B Internet revolution” (Sculley & Woods, $VDUHVXOWDQ,QWHUQHW³ODQGJUDE´HPHUJHG as entrepreneurs and existing market participants sought to establish themselves in the controlling positions in their chosen market or industry. As time has passed, many of these new inter- mediaries have fallen by the wayside — and their fate is examined later in the chapter. However, it is important to note that there is far more to B2B e-commerce than online exchanges and marketplaces, and some organisations have DFKLHYHGVLJQL¿FDQWDGYDQWDJHWKURXJKWKHXVH RIHSURFXUHPHQWDQGWKHXVHRIVRFDOOHG³SUL- vate exchanges.” However, many organisations have struggled to develop their e-procurement or e-marketing activities, and it is interesting to explore why this might be so. METHODOLOGY The investigation described here used multiple research methods. First, an e-mail questionnaire ZDVVHQWWRRYHU¿UPVZKRVXSSO\WKHPDMRU UK utilities, generating 240 usable replies that 248 Innovation and B2B E-Commerce provided information on these companies as both buyers and sellers. Second, follow-up telephone in- WHUYLHZVZLWKDGR]HQRIWKHVH¿UPVKHOSHGSURYLGH greater insight into their experiences. Third, this was complemented by nine case studies (involv- ing site visits, multi-informant interviews, and documentary analysis) involving a range of both public and private sector organisations. Fourth, the work used a database of 663 e-marketplaces and B2B hubs constructed by Meakin (2002). This ODUJHGDWDEDVHUHSUHVHQWVDVLJQL¿FDQWVOLFHRIWKH SRSXODWLRQDOWKRXJKWKHUHLVQRZD\RIGH¿QLWLYHO\ establishing what percentage it represents. Grubb (2000) estimated 1,400 B2B exchanges had been ODXQFKHG/HYDX[³HVWLPDWHGDWKRXVDQG or so.” Caspar (2000) cited an Andersen Consult- ing study that claimed there were 7,500 by late 2000. Day et al. (2003) claim a peak of 1,520. (For UHDVRQVGLVFXVVHGQH[WDOOWKHVH¿JXUHVPXVWEH taken with considerable caution). 7KHVDPSOHIRUWKHHPDLOVXUYH\ZDV¿UPV in the Utilities Vendor Database of the Achil- les Group — a B2B company whose activities concentrate on public and regulated procurement (see www.achilles.com). The pool of companies UHSUHVHQWHGDEURDGUDQJHRI¿UPVVXSSO\LQJWKH UK utilities sector. Our approach was to initially use a very brief questionnaire and to use the im- PHGLDF\RIHPDLOIHHGEDFNWRUH¿QHWKHVWUXFWXUH and examine the effect on response rates by adapt- ing the number and sequence of questions asked. The survey was administered in the autumn of 2001, and we e-mailed just over 4,000 organisa- tions, reaping over 240 usable replies (we asked ¿UPVDERXWHLWKHUWKHLUSXUFKDVLQJRUVHOOLQJRU both). However, due to our adaptive design, we did not collect data on all questions from every respondent. Participants were entered into a draw- ing to win a £50 gift voucher. The mechanism of the questionnaire was to send a plain text e-mail, for which the answers could be simply overtyped on the reply and returned. We did this to avoid using e-mail at- WDFKPHQWV ZKLFK PLJKW EH EORFNHG E\ ¿UPV¶ ¿UHZDOOVDQGWRDYRLGWKHQHHGIRUUHVSRQGHQWV to access a Web page (we knew that for at least VRPHRIWKHVPDOOHU¿UPVLQYROYHG ZKRVHDF- cess to the Internet was by standard telephone line, this requirement would be a disincentive). We also offered each participant access to the ¿QGLQJVRIWKHUHSRUWDQGDEULHIEHQFKPDUN- ing report comparing their response with other DQRQ\PRXV¿UPV'XHWRWKHH[SORUDWRU\QDWXUH of the research, we have not employed formal scaling or rigorous hypothesis testing in the in- terpretation of the data; the full analysis is still in progress. Here, we present an overview of the descriptive data, which in this case we believe is more instructive than looking for intricate correlations of scores. As we were dealing with non-anonymous returned questionnaires, we were able to additionally incorporate further public domain information about the organisations into RXUDQDO\VLVLQFOXGLQJ¿QDQFLDOLQIRUPDWLRQDQG (subject to data protection constraints) data from the original database. The median turnover of the respondents was £11m, with the median number of employees being 124. The qualitative aspects of the research entailed a series of visits to nine organisations with a view WR¿QGLQJRXWZKLFKLVVXHVDQGDVSHFWVRI%% e-commerce at the top of their agendas; we sought (within the time and budget available) as wide a selection of organisations as possible (large, small, public, and private sector), and sought to let managers and staff in these organisations largely steer the direction of the discussions. This rather unstructured approach meant that we did not (nor did we expect) to collect commensurate or matching data from these organisations; however, it helped us engage with some of the underlying issues regarding B2B and e-procurement, which we suspect would have been rather lost if we had framed the meetings too strictly in our own terms. We believe this trade-off to be particularly important given managers’ propensity to discuss aspiration in these areas as if it were current fact, and the way in which interviewees’ responses may 249 Innovation and B2B E-Commerce sometimes encapsulate that which they have read in professional magazines rather than the actual experience of their organisations. However, the serious downside to this approach is that much of the material generated is not directly relevant to issues at hand, and of course generalisations are even more problematic than with survey data. Methodological trade-offs also were needed in the analysis of the B2B hubs. Much of the writing on these initiatives has assumed that relatively few of them would survive, for example, Levaux (2001) estimated that only 200 would still be around by 2003. Drawing from the prior database, this phase of the research worked through 302 e-marketplaces with a highly structured search process which entailed examining the Web site (where available) and using two search engines (Factiva ™ and Lexis-Nexis ™ ) to collate news and PR-agency coverage (typically from trade journals). There are obvious problems with these secondary sources not being wholly accurate or reliable; on the other hand, for some of the ini- tiatives we examined, these reports are the only accessible information left. Where necessary and possible, e-mail messages were sent to the exchange to gain further information. This highly structured process allowed the systematic analysis of data regarding each of the initiatives and also allowed a rational deci- sion to abandon the search for information on a particular exchange and move on to the next one. This Taylorist approach to data gathering proved particularly effective, as experimentation showed that without a programmed cut-off point, a great deal of time could be spent searching fruitlessly IRUH[FKDQJHVZKLFKZHUHWKHHTXLYDOHQWRI³va- pourware” — initiatives which were announced in the press but subsequently disappeared without trace. A key aspect of the data collection process was WKHFODVVL¿FDWLRQRIWKH%%LQLWLDWLYHDFFRUGLQJ to a set of dimensions (such as type of exchange, industry, etc.). These included whether the site was alive, dead, or had a continued existence via merger with or acquisition by another initiative. Sites that appeared to be dormant were contacted via e-mail, but if the link was broken and the e- mail returned, it was assumed the operation had FORVHG,IWKHVLWHDSSHDUHGWREHLQDVWDWH³\HW to go live” it was left until the end of the project and then rechecked — if it was still pending, it was ignored. During the course of the data collection, it be- came clear that it was not easy to judge the level of activity or indeed in some cases the seriousness of intent of the initiatives. Many of the marketplaces described what they did in principle, but displayed no evidence that the site or the services provided were genuinely operational. This transpires to be a major problem when investigating organisations that may or not be viable, and which exist in a business context where it is not in the actors’ interests to be completely honest about their cur- rent degree of success. What was needed was an LQGLFDWLRQRIVXEVWDQWLYHDFWLYLW\²DQ³$FWLYLW\ Test.” We eventually settled on a simple proxy for EHLQJ³JHQXLQHO\DOLYH´ZKHWKHUWKHUHZDVDQ\ reported quantitative indication of the transac- tion volume (in number of transactions or dollar value) or throughput. These were deemed to be ³$FWLYHV´+RZHYHUWKLVGRHVQRWLPSO\WKDWWKH LQLWLDWLYHVZHUH¿QDQFLDOO\YLDEOHDQH[FKDQJH FRXOGKDYHWKURXJKSXWEXWQRWPDNHDQ\SUR¿W 7KHUHLVFOHDUO\DULVNRI³W\SHRQH´HUURULQWKLV FODVVL¿FDWLRQLQWKHFDVHVZKHUHDQ$FWLYHVLWH has simply not gotten around to releasing some indicative numbers, or there is some other strategic UHDVRQIRUREIXVFDWLRQ7KHUHLVDOVRD³W\SHWZR´ error for marketplaces that falsely declare activity. However, as there will be a general incentive for initiatives to publicise their vitality in order to at- tract participants, this seems a reasonable criterion to apply. Büyüközkan (2004) describes another DWWHPSWWR³VFRUH´WKHDFW LY LW \RIHPDUNHW SODFHV but, from the experience gained in the current VW XG\LWLVGLI¿FXOWWRVHHKRZKLVDSSURDFKFRXOG be operationalised in practice. 250 Innovation and B2B E-Commerce SUDDEN BIRTH AND LINGERING DEATH OF B2B EXCHANGES Figure 1 illustrates that — given the extensive reportage of the death of B2B — a surprising QXPEHU RI LQLWLDWLYHV UHPDLQHG ³DOLYH´ LQ WKDW there was still a Web presence of some kind. +RZHYHURXWRIWKHVWXGLHGZHLGHQWL¿HGRQO\ ZKRSDVVHGWKH³$FWLYLW\7HVW´RISURYLGLQJ quantitative evidence of any substantial kind of any kind of activity. Interestingly, the small difference between sites passing the Activity Test and those not was QRWVWDWLVWLFDOO\VLJQL¿FDQWXVLQJWKHFKLVTXDUHG WHVWDWWKHOHYHORIVLJQL¿FDQFH6RPDUNHW- SODFHVDEOHWRSXEOLVKWKURXJKSXW¿JXUHVVHHPWR EHQRPRUHOLNHO\WREHVWLOO³DOLYH´WKDQWKRVHQRW This can be explained by two ideas: The relatively ORZFDSLWDODQGRSHUDWLQJFRVWVIRU³SXUHSOD\´ Internet-based businesses (and the relative ease of fundraising during the boom years) can mean that sites with meagre levels of real activity may be able to sustain some type of Internet presence for some time as they simply burn off the initial LQYHVWPHQW 7KLV LV D VLJQL¿FDQW SRLQW 'D\ HW al.’s (2003) study uses the construct that a mar- NHWSODFH³H[LVWVDQGFRQWLQXHVWRRSHUDWH´²RXU work points to the fact that these two things are separable concepts. 6HFRQGRQHZD\RIDWWUDFWLQJVXI¿FLHQWEX\HUV and suppliers to participate in an exchange would be to charge minimal fees, or to offer attractive but expensive-to-provide services, thereby mak- ing continuing operations unviable. There are a very wide range of schemes for classifying different types of exchange. Here we adopt that proposed by Ramsdell (2000), which is summarised in Table 1. 7KHFODVVL¿FDWLRQRIH[FKDQJHVWUDQVSLUHVWR be a rather complex matter, as there are many instances of hybrid and unconventional ap- proaches. However, in this study we found that the total sample — where categorisation was possible — was split roughly equally between the categories as shown in Table 2. Figure 2 illustrates the status of these categories; again, Figure 1. Survival of B2B e-marketplaces — comparison of whole sample with those passing the ‘suc- cess test’ 0.0% 20.0% 40.0% 60.0% 80.0% Dead M&A A live Status A ctivity Test (N=27) Overall (N=302) 251 Innovation and B2B E-Commerce WKHUH LV QR VWDWLVWLFDO VLJQL¿FDQFH EHWZHHQ WKH types of exchange. The lesson that emerges here is that despite the widespread assumption in the prescriptive and speculating writing at the time, no one particular exchange model turned out to be dominant. The emergence of B2B needs to be understood in the context of the technology boom of the late Table 1. B2B marketplace types (after Ramsdell, 2000) Table 2. Breakdown of marketplaces by category Figure 2. Status of exchange types Type Typical Owners Type of market Description Product Suppliers or 3 rd Parties Fragmented Horizontal e-marketplace usually formed around a supply market that cuts several industries. E.g. MRO market Industry Buyers Buyer power dominated Vertical e-marketplace, usually revolving around an industry sector. E.g. Chemical Industry Function 3 rd Parties Non-fragmented Focuses on services and capabilities rather than products, such as Supply Chain Integration (SCI) or Project Management. Type Percentage Function 38% Product 35% Industry 27% 0% 20% 40% 60% 80% 100% Function Product Industry Type of B2B percentage Alive M&A Dead (N=231) 252 Innovation and B2B E-Commerce Figure 4. Birth and death of e-marketplaces (n = 193) Figure 3. Announcements of marketplaces 0 5 10 15 20 25 30 Jan-94 Jun-94 Nov-94 Apr-95 Sep-95 Feb-96 Jul-96 Dec-96 May-97 Oct-97 Mar-98 Aug-98 Jan-99 Jun-99 Nov-99 Apr-00 Sep-00 Feb-01 Jul-01 Dec-01 May-02 Oct-02 Time Frequency 0 1000 2000 3000 4000 5000 6000 price First Announcement (N=209) NASDAQ Composite Jan-94 Jul-94 Jan-95 Jul-95 Jan-96 Jul-96 Jan-97 Jul-97 Jan-98 Jul-98 Jan-99 Jul-99 Jan-00 Jul-00 Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Time DEAD MERGED/ A CQUIRED A LIVE 253 Innovation and B2B E-Commerce V DQG )LJXUH SORWV WKH GDWH RI ¿UVW DQ- nouncement against the value of the NASDAQ composite index. This pattern is illustrated in more detail in Figure 4, which illustrates the lifelines of exchanges by category. The data presented in Figures 3 and 4 points to some interesting speculation. On the one hand, the close match of announcements to the NASDAQ index is suggestive that much of the enthusiasm for B2B intermediaries was driven as much by the potential of making money from investors in the heat of the technology investment boom as it was by the desire to build genuinely viable businesses. Simply setting up some kind of intermediary B2B organisation is not in itself capital intensive (although making it really deliver value to buyers and suppliers may be). Therefore, it seems unlikely that the decline in the launching of B2B initiatives is completely explained by the GLI¿FXOW\RIUDLVLQJIXQGVDVWKHERRPVXEVLGHG If, on the other hand, the motivation for many of the enterprises was simply to get to the invest- ment markets quickly, then the sharp drop off in announcements between April 2000 and February 2001 makes more sense. Figure 4, however, suggests that the fate of the initiatives cannot be explained by looking at the launch date. A very cynical view might expect that those launched at or just before the frenzy might be the least likely to survive, being the most driven by fashion and being subject to the least rigorous degree of scrutiny. However, if this is the case, it is not clear from the data. Furthermore, it does not seem that the early initiatives were more or less likely to fail than the later starters. A key point in the consideration of this data is that many of the initiatives may well be alive, and yet not very active, and not generating very much or any revenue. As nearly all the initiatives are small SULYDWHEXVLQHVVHVLWLVJHQHUDOO\YHU\GLI¿FXOW to get convincing or informative data on their ¿QDQFLDODQGRSHUDWLQJSHUIRUPDQFH7KHIDFW KRZHYHUWKDWVRIHZSDVVWKH³$FWLYLW\7HVW´LV perhaps indicative that the task of bringing buy- ers and suppliers together is far more complex than many initially thought. To explain why this might be, it is sensible to begin by reviewing the LPSDFWRIHFRPPHUFHWR³RUGLQDU\´FRPSDQLHV — and this brings the discussion to the survey and case studies. EXPERIENCES OF B2B E-COMMERCE: INITIAL OBSERVATIONS Before we turn to the substantive data gathered by the survey and the cases, it is worth noting some incidental aspects of the research that we found interesting. First, an immediate feature of the survey was the large number of e-mails (roughly 10%) that were returned as undeliver- able — even though we had used contact e-mails SURYLGHGE\WKH¿UPVWKHPVHOYHVWRDGDWDEDVH to which they paid a fee. Following up these cases revealed several potential problems: Many ¿UPVKDGFKDQJHGWKHIRUPDWRIWKHLUHPDLO addresses; individuals had left the organisation; and a surprising number were addresses based on non-company e-mail systems (for example, Hotmail™ or Freeserve™), and the addresses were no longer active. For reasons we discuss next, ZHWKLQNWKLVLVDVLJQL¿FDQW¿QGLQJ$VHFRQG and surprising observation was that eight of the responses were returned by conventional post rather than by e-mail. For reasons of available space, we concentrate here on just three aspects of the substantive re- VHDUFK¿QGLQJVWKHLPSDFWVRIHFRPPHUFHRQ buying, selling, and the character of the buyer- seller relationship. %X\LQJ&RPPRGL¿FDWLRQDQG 6SHFL¿FDWLRQ We suspected that much of the hype surrounding B2B e-commerce was based on a naïve view of corporate procurement. For example, many of . each of them and their suppliers. E-Business (Electronic Business): The administration of conducting business via the Internet. This would include the buying and sell- ing of goods and services,. results of a multi- stranded investigation into the extent to which organisations are prepared to make use of the Internet in buying and selling, and into the patterns of life and death of B2B exchanges collaborative planning forecasting and replenishment, and vendor managed inven- tory. In addition, electronic linkages also were developing for the easier sharing of technical and GHVLJQGDWDHQFRXUDJLQJLQWHU¿UPFROODERUD- tion