The most important (and most under-reported) Internet story is what’s happening with business-to-business commerce. Forrester Research estimates online purchases for business will be a $1.5 trillion market in 2003, dwarfing the size of the business-to-consumer market that’s getting all the headlines.
You may recognize the man at the heart of this b2b revolution. You’ve seen him on TV many times. You’ve even laughed at him (if not with him). You may have even voted for him. His name is H. Ross Perot.
Perot’s Perot Systems Inc. has been hired for the biggest, and perhaps most important, system integration job ever attempted on the Internet. Under the name Order Zone six giant b2b distributors — W.W. Grainger, Marshall Industries Inc., Cintas, Corporate Express, Lab Safety Supply and VWR Scientific Products — are connecting all their offerings onto one super-site.
“This is the kind of stuff that’ll give you a migraine headache, if you’re a systems engineer, but it also goes you excited,” Perot said at the press conference announcing the deal. That may be an understatement. If the plan works, these distributors will not only increase their share of a huge, growing market and justify their roles as distribution channels, they’ll give a huge kick in the rear to American business productivity.
According to Grainger, which oversaw the Orderzone press conference, some 40% of b2b product costs cover the process of sales, not the actual production of the product. The cost of finding buyers and handling transactions is a huge portion of this cost. Businesses have a huge incentive to cut this cost, and the Internet provides a way to do it. By supporting open ordering, EDI, layers of approvals and other forms of business-to-business transaction processing, Orderzone can help businesses capture these savings.
It’s an audacious plan, one worthy of watching, and one worthy of Mr. Perot’s talents.
What do you think? Let’s talk about it.