Published: Thursday, 25 October
2001
by Harald Thaler
 |
One of those
to survive and prosper
Along with many other industries, the power
generation sector embraced e-business in the year
2000. Both equipment suppliers and turnkey contractors
are looking to e-business to transform themselves
from traditional equipment and service suppliers
into leaner, Internet-enabled enterprises.
The power generation industry has witnessed the
emergence of a number business to business (B2B)
marketplaces, or exchanges, which function as centralised
exchanges where sellers and buyers can interact,
share information and transact over an electronic
network. Although such marketplaces first appeared
in the automotive, transportation and electronics
industries, the power generation industry eventually
also realised the potential cost savings associated
with this business model.
In this article, Frost & Sullivan looks at the
progress of independent electronic marketplaces.
Such marketplaces are not tied to a specific industrial
company but are traditional internet start-ups financed
by venture capital firms and key technology partners.
The Bubble Burst
Electronic marketplaces sprang up incredibly quickly
across a variety of industries. During 2001, however,
it became clear that such rapid expansion was not
sustainable and the end of the dotcom boom brought
with it a lot of pain for many electronic marketplaces.
Across all industries, the number of independent
marketplaces is expected to fall from over 1,000
last year to only a few hundred this year. The e-business
partners of many marketplaces are also in deep trouble,
with Commerce One, the leading operator of electronic
marketplaces, having announced recently that it
intends to reduce its workforce by a staggering
46%.
Overview of Key Independent Marketplaces in the
Power Generation Sector, 2001
| Marketplace |
Main Service & Focus |
Key Technology Partners |
Status |
| Freemarkets.com |
Customised Online Auctions |
Proprietary (BidWare) |
Operational |
| IndustrySuppliers |
Standard Industrial Equipment |
Oracle & Requisite Technology |
Closed |
| SourcingParts |
Engineered Components |
HP Invent |
Operational |
| sparesFinder |
Spare & Surplus Asset Management |
PavTech (NZ) |
Operational |
| RedSpark |
Sourcing & Collaborative
Engineering |
Autodesk |
Closed |
| GlobalPowerAssets |
Spare & Surplus Asset Management |
Entrade |
Closed |
GlobalEquipment
Exchange |
Spare & Surplus Asset Management |
Connexions |
Operational |
| ProcureZone |
Engineered Components |
Commerce One |
Operational |
Exchanges and marketplaces of interest to the power
generation industry can be divided into 3 groups:
- Independent marketplaces
- Energy-industry-drives marketplaces
- OEM-driven marketplaces
A recent failure among European marketplaces is
IndustrySuppliers. Established in France in April
1999 and specialised in transactions covering standard
industrial equipment and products, IndustrySuppliers
was the first marketplace of its kind to be created
in Europe and thus enjoyed first-mover advantage.
Although it lined up electricity giant EDF as a
customer, the market place never gained long-term
viability and has recently closed down.
Success stories among the independents
Such failures are not universal, however. One independent
marketplace that has prospered despite the dotcom
crisis is US-based FreeMarkets.com. The company
was established back in 1995 and has managed to
convince many power generation equipment suppliers,
including Foster Wheeler and Cummins Power Generation,
of the value of its services. Unlike many other
marketplaces, the company will achieve profitability
much earlier than expected - in the fourth quarter
of 2001. Having said that, the company is not immune
from the current downturn, with third quarter 2001
revenues only growing by 8% over the previous quarter.
FreeMarkets, which specialises in customised online
auctions, stated in September 2001 that it had driven
$2.5 billion worth of transactions in Europe to
date.
A number of other relatively successful independent
marketplaces are based in Europe, including SparesFinder
and SourcingParts.
SparesFinder is an inventory optimisation service
launched in 1999, which enables multi-site companies
to have
 |
Signed up
key European clients
complete visibility of the group's spares
assets. Additionally, the company matches buyers
with sellers and thus allows for the reduction of
spares surpluses. The service has been particularly
popular with turnkey contractors as they operate
in multiple locations and often have spare parts
from different projects running concurrently. From
its original client base of one power station SparesFinder
has grown to more than 250 sites across 50 countries,
including companies such as Alstom Power, Foster
Wheeler and Kværner Energy.
 |
37,000 suppliers
and 600 buyers
SourcingParts, meanwhile, unlike the defunct
IndustrySuppliers, is focused on complex built-to-order
parts for which the reverse auction model is not
suitable. This collaborative exchange, which connects
buyers and sellers through its interactive platform,
has shown impressive growth since it was launched
in September 2000 and now boasts a membership of
over 37,000 suppliers and over 600 active buyers.
This contrasts sharply with the fate of its erstwhile
competitor RedSpark, a US-based collaborative engineering
marketplace that had started marketing activities
in Europe in late 2000 but was closed down recently.
Frost & Sullivan conducts ongoing research into
e-business in the European power generation equipment
sector and has published a strategic report on e-business
strategies in this field, the details of which are
located
here.
Link to related articles:
Power
suppliers get e-nabled
OEMs
and Utilities Persisting with Marketplace Strategy
