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Behind The Marketplace

You can be a marketplace seller or buyer, or you can run the marketplace and be a market maker. The initial cost of participating in a marketplace as a buyer or a seller depends primarily on how much integration you want with your manufacturing, inventory, and accounting systems. Companies can start by ordering with a browser, mailing in product information on floppy disks, and accepting orders on a fax, but system integration allows companies to smoothly scale up their operations.

Integration isn't an easy job, but a lot of help is on call. For example, Ariba's Web site lists many system integrators and application service providers that will weave marketplace procurement with existing enterprise management systems. But customized integration projects can take months and run into tens or hundreds of thousands of dollars.

In contrast, these systems don't need much hardware. High availability is important, but the workload isn't heavy, so a couple of dual-CPU servers will do. As the size of the database grows a storage plan such as a storage area network becomes necessary.

Market makers have few if any system integration worries. Often they just outsource the entire operation through the software vendor. But they must know the industry and the important players.

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