» VIEW ALL POSTS Feb 20 2008   5:03PM GMT

The Customer Ecosystem: On Hold



Posted by: JackDanahy
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SAP

Last week reader Chris Young of B2BSX made the following comment:

“I am interested in your perspective on how customer to customer exchange of custom development may impact both the rate of innovation in the community of companies using SAP and also the total cost of deploying and operating SAP…I see a tremendous opportunity to leverage much IP around the landscape.”

The tremendous opportunity in what Chris calls customer-to-customer exchange in the business-to-business arena (C2CXB2B, anyone?) has been apparent since the heyday of e-marketplaces in the 1990s, when so many people were awestruck by the Web’s ability to disintermediate business relationships. The idea of disintermediation was hot in B2B because people had already seen how the consumer Web successfully encroached on the turf of once-unassailable middlemen such as travel agents and brick-and-mortar stores.

I see a direct link between the e-marketplace paradigm and the Web 2.0 paradigm to which Chris is making an oblique reference in his comments. Both are do-it-yourself (DIY) paradigms that emphasize the way in which traditionally real-world interactions — such as partner discovery, negotiation, and sales — can be ported to the Web and de-emphasize the role of gatekeepers. As it turns out, however, the customer-to-customer idea behind these paradigms has had only partial purchase in the B2B world. Despite the presence of any number of startups out trying to convince VCs that the business Web will go the way of Facebook, the business world has stubbornly resisted the idea.

Salesforce.com’s AppExchange is an excellent case in point. Some years ago, Salesforce.com took a visionary direction, deciding that its future lay partly in becoming a platform for applications that customers created, shared, and sold to each other. AppExchange never did as well as its analogues in the B2C world — iTunes, for example — and Salesforce.com is still, in revenues and perception, overwhelmingly a CRM provider. To me, that proves that the time is not right for customer-to-customer exchange in the B2B world. Most of the customers still prefer dedicated mediators between themselves and the products they buy; in other words, customers want to deal with vendors, systems integrators, and consultants, but not necessarily with other customers.

If you’ve spent any time in the world of open source, it’s apparent why this is the case. When you buy something from another customer, there’s little control and less support. The fate of your module (or whatever you’ve bought) could depend on finding a long-buried technical post on some obscure open source website. Coders don’t answer phone calls. Forums are only sporadically updated and maintained. The person who created the code leaves the company. Whatever the case, the bottom line is that buying technology or technology customizations from your own peers isn’t a predictable experience. You get what you get, and a lot of enterprise buyers simply don’t want to take that shot in the dark. It’s not a good risk management move. Of course, the economics change downstream, where risk management is outweighed by budget constraints. But if you’re a larger company, why not spend the extra money getting customization straight from the vendor or from a vendor-approved partner?

I don’t necessarily agree with this dynamic, because I am an enthusiastic user of open source who loves the idea of disintermediation, but I do think that it exists, and it is the reason behind very slow enterprise adoption of customer-to-customer, Web 2.0, or any other flavor of the DIY Web. I’d welcome a debate on this topic, especially now that SAP is making noises about exposing its underlying SOA to community-designed custom mini-apps and interfaces. Leave your comments here or email them to dbarlas@techtarget.com.

Demir Barlas
Site Editor

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  • JackDanahy
    Demir, Sorry for my much belated response but I appreciate your feedback and dialogue. My business is B2BSX, the very exchange of speak of above. What I see here is not an exchange that replaces the certified solutions provided by SAP or by other ISV in the SAP space, but an exchange of non-certified, sold "as is" last mile solutions (any of the RICEF objects: reports, interfaces, conversions, extensions, forms) where the buyer is effectively buying an accelerator, an 80% that the buyer must support. Where the value comes in the exchange of knowledge, at a compelling price. If the assets is sold at 30% of development costs, and time to value is accelerated, then does the 80% fit custom solution, which may also leverage some of the authoring companies' core competency and expertise, becomes very attractive? You mention risk... always an issue when enabling the process backbone of the company. If the asset includes both the documentation and a free trial period, is the risk sufficiently diminished? The choice is between developing the custom asset one self, or getting a solution at 75-90% at less than 1/3 the cost, now. Demir, does that model change your perception? Thanks for your interest, and either respond here or write me at christopher.young@b2bsx.com. Chris
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