B2B: 2B or Not 2B?

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B2B: 2B or Not 2B?. NetMarketMakers. San Francisco Hilton. June 27th, ‘00. Jamie Friedman Vice President, Sr. Equity Analyst Menlo Park, California 1-650 234-3341 jamie.friedman@gs.com. Investors Go For Big Bucks. B2B = Big Bucks!. $1,221. B2C. B2B. ($ in billions). $858. - PowerPoint PPT Presentation

Text of B2B: 2B or Not 2B?

  • B2B: 2B or Not 2B?Jamie FriedmanVice President, Sr. Equity AnalystMenlo Park, California1-650 234-3341jamie.friedman@gs.comNetMarketMakersSan Francisco HiltonJune 27th, 00

  • Investors Go For Big BucksB2B = Big Bucks!

  • 199819992000E2001E2002E2003EWorldwide e-CommerceThis Is What Wins Investors Attention:

    B2C Is Hugebut B2B Is Gigantic!

  • B2B Goes At The Crown Jewels of the Economy

  • Macro View of B2B Market Opportunity. Thats Thousands of Billions, Baby!

  • The tidal wave of Internet venture capitalcontinued thru 1Q 00 (20% LTM Is B2B) $639$914$1,026$1,304$1,234$1,679$1,787$2,260$3,087$5,470$6,224$11,813$14,972144161181197175251249288327498520827698$0$2,000$4,000$6,000$8,000$10,000$12,000$14,000$16,0001Q972Q973Q974Q971Q982Q983Q984Q981Q992Q993Q994Q991Q0001002003004005006007008009001000Up 385%vs. a year ago

  • The Empire Strikes Back Through Consortias

  • List of Announced Consortia, continued

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    List of Announced Consortia

    ConsortiumIndustry ParticipantsTechnology Providers

    1Aerospace ConsortiumBoeing, Lockheed Martin, BAE Systems, RaytheonCommerce One, Microsoft

    2Airlines ConsortiumAir France, American Airlines, British Airways, Continental, Delta, United AirlinesUndecided

    3AutoExchangeGM, Ford, DaimlerChrylserCommerce One, Oracle

    4CattleinfoNetEastern Livestock, Jordan Cattle AuctioneMerge Interactive

    5CoNextAriba, EDSAriba, EDS

    6Consumer Products Consortium (GMA)General Mills, Heinz, Kelloggs, Nestle, P&G, Sara LeeUndecided

    7Cotton ConsortiumDunavant Enterprises, Allenberg Cotton Co, Cargill's Hohenberg division, Plains Cotton CooperativeUndecided

    8Energy ConsortiumRoyal/Dutch Shell, BP Amoco, Conoco, Dow Chemical, Equilon, Mitsubishi, Occidental Pete, Phillips Petroleum, Repsol, Statoil, Tosco, TotalFinaElf, UnocalCommerce One

    9e2open.comIBM, Toshiba, Nortel Networks, Solectron, Matsushita Electric Industrial, Hitachi Electronics, Seagate Technology, LG ElectronicsUndecided

    10Global Transport eXchangeHutchinson PortOracle

    11GlobalNetXchangeSears, CarrefourOracle

    12Health Care Distributors ConsortiumAmeriSource Health, Cardinal Health, Fisher Scientific International, McKesson, HBOC, Owens MinorUndecided

    13Health Care Suppliers ConsortiumJohnson & Johnson, GE Medical Systems, Baxter International, Abbott Laboratories, MedtronicAriba, i2, IBM

    14Health Care InsuranceAetna, Pacific Health CareIBM, Oracle

    15High-Technology ExchangeCompaq, Gateway, AMD, Hewlett Packard, Hitachi, NEC, Infineon, Quantum, Samsung, SEI Systems, Western Digital, and SolectronUndecided

    16Hospitality ConsortiumHyatt, MarriottGo Coop

    17Hospitality ExchangeHilton (Hilton, Doubletree, Embassy Suites, and 7 other brands)PurchasePro

    18Hospitality ExchangeStarwood Hotels & ResortsZoho

    19iStar ExchangeToyotai2

    20Intellectual Property ConsortiumIBM, ICGEUndecided

    21MetalSpectrumAlcoa, Allegheny,North American Stainless, Olin, Reynolds, Thyssen, Vincent Metal, Atlas Ideal MetalsUndecided

    22Meat and Poultry ProcessorsIBM, Cargill, Smithfield Foods, Tyson Foods, Gold Kist, and Farmland IndustriesUndecided

    23MyAircraft.comUnited Technologies, Honeywelli2

    24Paper ConsortiumInternational Paper, Georgia-Pacific, WayerhauserUndecided

    25PantellosEntergy, American Electric Poswer, Cinergy, Cosolidated Edison, Duke Energy, Edison International, FirstEnergy, FPL Group, PG&E , Public Service Enterprise Group, Reliant Energy, Sempra Energy, Southern Company, TXU, Unicom, Carolina Pwer & Light, DTE EneCommerce One

    26PetrocosmChevron, TexacoUndecided

    27Plastics ConsortiumDuPont, Dow Chemical, BASF, Bayer, TiconaUndecided

    28Real Estate/Project ConstellationChase, Equity Office, Hick Muse, Jones Lang Lasalle, Kaufman & Broad, Simon Properties, Spieker, Trammell CrowUndecided

    29RetailersMarketExchangeChevron, McLaneOracle

    30Rooster.comCargill, Dupont, Cenex Harvest CooperativeUndecided

    31Rubbernetwork.comGoodyear Tire & Rubber, Continental AG, Cooper Tire & Rubber, Groupe Michelin, Pirelli SpA, Sumitomo Rubber IndustriesUndecided

    32Star AllianceAir Canada, Lufthansa, Singapore Airlines, SAS and othersUndecided

    33TransPlaceCarriers, Hunt, Swift, US Xpress, WernerUndecided

    34XferaFrance Telecom, Vodafone Airtouch (Orange PLC), Mobilcom AG, Vivendi SAUndecided

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  • The GoldmanSachs B2B Windmill in the Age of Consortia

    C:\TEMP\ConsortiumWindmill.ppt

  • How do we know that B2B will be adopted?

  • B2B Is Born in the Lineage ofSoftware and NetworksCommerce- eProcurement (ARBA, CMRC, FMKT, PPRO, PSDI)- eSelling (BVSN, VIGN, CLIC, OMKT, ALLR, ARTG)- eFinance (CKFR, HRBC, SE, SONE)- eMarketing/Advertising (DCLK, EPNY, BBSW, MSTR)Community- Collaboration (AGIL,PMTC)- Communication (KANA)- Support (SILK,PKSI, ASKJ)Content (ASDV, DNB, EPNY, MSTR, BBSW)- Marketing Information- Customer Information- Supplier Information- Product Information- Industry Information Enterprise Connectivity- ERP (SAP, ORCL, BAANF)- Supply Chain Planning (ITWO,PCOR)- Customer Management (SEBL,SLGX, PVTL)- Financial/Human Relations (PSFT, GPSI, HYSL)- Administrative (CNQR,PSDI)- Intelligence (ACTU, BOBJ, BRYO, INFA)

  • B2B Enables Small bs to Play With Big Bse-Market

    ContentCommunityCommerceDirect 1-to-1

  • Technology Is The ForceIt Creates Competitive Advantage By...Viewing the Supply Chain ClearlyOptimizing AssetsEspecially true for manufacturing intensive industriesReducing Cycle Times and Inventory Build to Order --> better demand forecastingInformation Is a Substitute for InventoryStreamlining Process Costs No more phone, fax, mail; reduced search time; process costs can exceed product costs in some industriesLowering Input Costs Dynamic pricing forces competition (auctions, reverse auctions, bid/quote, etc...)Better sourcing decisions (increased information)

  • Internetworks Are DynamicPropellers for Sale:Sample Results of a FreeMarkets Downward Price Auction

  • Industry Gross Margins

  • Cisco Systems Case Study:Winning With the Force of TechnologyCiscoGross Margin - 1999Why?64.8% 90% of orders booked over Web Enhanced supply forecasting - better component pricing and availability Enhanced demand forecasting - rapid shift to regional demand changes Outsourced manufacturing (build to order) Virtual Close - updates accounting on a daily basisIndustry Peers47.6% Just starting to adopt Web sales Longer lead times due to component shortages Slow to react to demand shifts In-house manufacturing (beginning to sell off manufacturing operations) Accounting updated weekly or bi-weekly Note: Industry peers comprised of COMS, JNPR, LU and NT

  • Spending Categories moving on-lineTypes of SpendDescriptionCommentsCurrent EfficiencyRaw materialsDirect inputs to production processesPulp for paperCoke for steel

    DirectMaintenance, Repair, OperationsIndirect (MRO)Tend to be recurring purchasesOften under long term contract Typically, vertically focusedDirect sales force involvementrequires hand holdingHorizontal in natureEveryone needs notepads and pencilsPermiscuousCreditLogisticsQuality assuranceFulfillment ServicesDDBHorizontal in natureOften higher margin

    htboughner\Overview of B2B4.ppt

  • Leisure Reading at Your Bedside!