Study sees future in electronic-trading networks

A new report has concluded that the providers of Electronic Trading Networks (ETN) are most competitive over, and often share different opinions on, three areas of ETN services: speed of implementation; services provided, including overall service and integration management; and product applicability to small and medium-size enterprises.

Giga Information Group Inc. teamed with the Center for Digital Commerce (CDC) at the School of Information Studies at Syracuse University in New York to conduct a survey and write the subsequent report on the current state and future prospects of the ETN market.

ETNs offer features including managed network services in support of business-to-business (B-to-B) integration data exchanges, improved security, guaranteed service levels, command center support, reporting, and auditability, according to the report.

ETN service providers cited various areas in which they claim they differentiate their services from the competition.

However, there are areas where no one provider lays claim to a competitive advantage. For instance, when it comes to security and product reliability, ETN customers have to come to view those as “expected basic product elements” or achieving “some degree of established uniformity across different products,” the CDC’s report said.

Service providers were also questioned on the prices of their ETN services. The CDC determined that each company had a different way of charging customers. For instance, the price for CommerceQuest Inc.’s service is based on the “complexity of integration, estimated number of transactions, (and the) hardware and software costs,” according to the report. IPNET Solutions Inc., however, determines its fee based on its total number of trading partners, the report found.

While each provider may have a different system in place for charging customers, the CDC states that “each (company) justifies its pricing policy and claims that it works out in the best interests of their users.”

ETNs make it easier to manage data and networks compared to previous systems “due to the simplicity, openness and transparency of the medium,” according to the report. There is little need to train employees to use ETN systems due to the ability of companies to “use and build over the existing technology,” the report said.

There are caveats, however, because the ETN market is a relatively new one. Firms should use caution when selecting a vendor, the report said. Customers are encouraged to carefully study a vendor’s track record.

The CDC concludes its report by stating that although the market is still in its early stages, “the underlying logic and functionality of ETNs makes sense and will find its justified place among firms needing the services of an ETN provider”.

The study was conducted by the CDC during the spring semester of 2001. The school interviewed representatives of six ETN service providers to gather information concerning issues including but not limited to competition, flexibility, integration, pricing, security and future positioning.

The six providers interviewed were CommerceQuest, General Electric Co., GXS, IPNET Solutions, PFN Inc., Viquity Corp. and Slam Dunk Networks Inc.

Giga Information Group in Cambridge, Mass. is at