Consortium trading exchanges (CTE) are changing the e-market landscape. India too could be heading the same way, though past efforts of CTEs in the automotive segment have not taken off. The US-based AMR Research, an industry and market analysis firm specializing in e-business strategy and infrastructure, identifies the top challenges facing such exchanges and offers recommendations to compete against private exchanges

Major concerns may plague CTEs in the next 12 months:

• Too aggressive in promising functionality: CTEs often make promises about delivery dates without selecting a technology platform, resulting in difficulty in the delivery of procurement material

• Expected delays in the delivery of collaborative commerce applications: With most of the applications still being in the design phase, collaborative planning forecast and replenishments have yielded relatively few production sites

• Lack of consensus on where functionality should reside: There is a debate among the CTEs as to whether applications should stay proprietary behind a firewall or non-proprietary in front of a firewall

• Cost to integrate back-end system: Very few CTEs have an accurate perspective on the time and expense required to integrate their existing systems into the trading exchange

• Need to budget for the total cost of the exchange: CTEs need to demonstrate a clear path to profitability given the ambiguity over the delivery schedule when compared to the expected costs

• Supplier recruitment, participation, and integration: Given the current skepticism of suppliers, CTEs will need active supplier support to achieve the liquidity or level of buying and selling activity that will justify the cost of membership

• Competition among the best-of-breed vendors: Most CTEs being built by combining the best of software from different vendors. But with CTEs integrating applications with different schemas and interfaces there is a potential conflict possible when former software partners turn competitors

• Immaturity of standards: Despite emerging standards like XML, there has been no integration of industry-wide standards

• Marketplace-to-marketplace integration: The issue of integration of different marketplaces on the same software platform is yet to be stress-tested

• Political infighting: Politics played out within companies and CTEs may lead to problems

• Competing against private networks: CTEs stand to lose if member companies form their own private exchanges

To compete with private exchanges, CTEs need to:

• Be realistic: Articulate the technologies to be deployed with a timeline that members can use to coordinate their individual investments in B2B applications

• Offer quick wins: CTE operators can offer horizontal applications, such as a business registry service that contains e-commerce information on current or prospective trading partners, or industry-specific applications, such as trade promotion management in consumer goods and retail. ASP models can be seen as a means of offering services with distinct value

• Focus on profitability and liquidity: Profitability and liquidity reinforce that the CTE has effectively met community expectations. Forget notions of elevating the industry to a new level of commerce. The CTE is an untested business model, and survival is anything but assured. Profitability must guide technology decisions, services offered, and compensation plans. To be an equal amongst the community created, one has to be measured by the same standards