Management Considerations for B2B Online Exchanges

Information systems that link businesses for the purpose of inter-organizational transfer of business transaction information (inter-organizational information systems, or IOIS) have been in use since the 1970s (Lankford & Riggs, 1996). Early systems relied on private networks, using electronic data interchange (EDI) or United Nations EDIFACT standards for format and content of transaction messages. Due to their cost and complexity, the use of these systems was confined primarily to large companies, but low-cost Internet commercialization has led to much more widespread adoption of IOIS. Systems using the Internet and the World Wide Web are commonly referred to as B2B (business-to-business) systems, supporting B2B electronic commerce. Technological innovations have led to several forms of B2B Internet implementations, often in the form of online exchanges. These are virtual marketplaces where buyers and sellers exchange information about prices, products, and service offerings, and negotiate business transactions. In addition to substituting proprietary lines of communication, emerging technologies and public networks have also facilitated new business models and new forms of interaction and collaboration, in areas such as collaborative product engineering or joint offerings of complex, modularized products. During the years 1999-2001 a number of online exchanges were introduced, but many of these failed (Gallaugher & Ramanathan, 2002), due mainly to an inability to attract participating business partners. Those that have survived are often owned by companies or consortia that are also exchange customers or suppliers. The objective of this overview is to describe the evolution and the characteristics of B2B Internet implementations, and to discuss management considerations, the evaluation and adoption of B2B applications, and the technical infrastructure supporting these systems. We also indicate some of the open issues that remain as the technology and its adoption continues to evolve. BACKGROUND