GE customers not yet sold on B2B marketplace

Last month, General Electric Co.’s Global Exchange Services (GXS) division gathered its biggest EDI customers in Orlando, Fla., in an effort to build momentum for what it hopes will someday be an electronic world trade centre.

But customers at the conference made it clear that they’re not rushing toward any public electronic marketplaces and that GXS will need to prove that it can find the right marriage between trade and technology.

GXS has been in the trade game for 35 years in different incarnations. It currently boasts 100,000 electronic data interchange (EDI) customers, who last year conducted one billion business-to-business transactions using the GXS service.

Yet GXS executives envision growing the company into a sprawling Internet marketplace by providing the direct sale of services and goods in real time. To do that, Fairfield, Conn.-based GE will need to prove that it can stand toe-to-toe with technology heavyweights like IBM and Microsoft Corp. in providing the applications and business management tools needed to navigate these new marketplaces.

“We don’t use [GXS] yet,” said Bill Breusch, vice-president of shared services at Princeton, N.J.-based pharmaceuticals firm Bristol-Myers Squibb Co. “And it’s the technology piece we’ll be watching most closely if we do join.”

One thing GXS has going for it is gravity. GE is one of the world’s biggest and best-run companies, and it gets noticed when it competes in any arena.

“Their reputation precedes them, and you have to take their size into account,” Breusch said.

GE Has the Clout

“You go where the business is,” said Jeremy Curtis, manager of e-commerce at Cincinnati-based produce company Chiquita USA, a GXS EDI user. “Wal-Mart has the dominance to create private exchanges on the retail end. General Electric’s certainly got the clout to draw a lot of companies to a public exchange.”

However, GXS CEO Harvey Seegers acknowledged that his company won’t be able to draw business on the GE name alone.

“We’re going to have to partner with best-of-breed providers to offer some of the things our customers are going to want,” he said. “There’s no way you can attempt to do it all yourself.”

Some of those partnerships, announced at the conference, include new business-to-business enterprise management applications from Pittsburgh-based Entigo Corp.

Despite a rush by many corporations during the past year to create on-line trading hubs, Seegers said he believes it will take years for GXS to become the kind of mega-on-line marketplace he envisions, thus giving the company time to make its case.

“Big companies aren’t going to change their trading patterns overnight – we’re already seeing that,” he said. “I think this is going to grow a lot less rapidly than some of the hype might suggest.”

Leo Lipis, an analyst at IDC in Framingham, Mass., said GXS will have to make wise strategic technology partnerships to keep pace with its EDI rival IBM, which can develop much of its electronic-marketplace technology in-house.

“Obviously, GE’s not going to sell people on being a tech giant, but they’re known for providing high-quality services in [the business-to-business] area,” he said. “It’s going to take a lot of customer focus for them to succeed in creating this kind of marketplace.”

Paul Wadley, a senior EDI analyst at toymaker Hasbro Inc. in Pawtucket, R.I., said his company’s history of using GXS for EDI transactions will be a plus as it considers entering public on-line marketplaces.

“You want to stick with the players that are out there and tried and tested rather than some sort of cowboy outfit that comes and promises you everything and delivers nothing,” Wadley said. “You want to be with someone who understands the new stuff and your legacy systems and who can help you fit them together.”

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