The human bottleneck in B2B

A funny thing happened on the way to the business-to-business "revolution": There were plenty of weapons built, but not enough people to fire them.

Over the past few years, hundreds of companies around the globe have devoted themselves to writing code and building enterprise-class e-commerce technology. Referred to by many as arms dealers, these companies--which include such well-known publicly held franchises as Ariba, Commerce One, BroadVision, i2 Technologies, Art Technology Group, BEA Systems, Interwoven, Vignette, Epiphany, WebMethods, PurchasePro, VerticalNet, Oracle and FreeMarkets--are responsible for building the underlying software applications that make B2B e-commerce possible.

Judging by the truly astonishing year-over-year and sequential revenue growth rates posted by many of the aforementioned companies in recent quarters, it seems clear that demand has been extremely robust for the "weapons," or technologies, they are developing--from buy-side procurement applications, trading platforms and content-management solutions to supply chain management resources, personalization tools and application servers.

What technology providers and enterprises are quickly discovering, though, is that the "arms" sales themselves are simply the beginning--not the end--of a long, sometimes excruciatingly painful process. For with most new B2B-related technology purchases comes a massive deployment, customization and integration cycle. Often requiring large teams of engineers, thousands of man hours, and millions of dollars to complete, this implementation effort is often as critical to an enterprise's overall long-term health as is the actual technology being purchased.

We prefer to think of the issue in these terms (with a little help from MasterCard):

New procurement application: $2 million
New content management layer: $1 million
New application server: $1 million
Seamless integration with existing business infrastructure: Priceless

And so, in an ironic twist, people--or a lack thereof--have actually become a major stumbling block in the release and adoption of B2B technologies.

As a remedy to this human bottleneck, "arms dealers" have aggressively allied themselves with leading professional services companies. Leveraging the intellectual capital and client relations of these consultants and systems integrators, B2B technology providers hope to drive more technology sales, faster technology launches, superior technology implementations and, ultimately, greater customer satisfaction.

Commerce One's recent acquisition of AppNet, a leading provider of Internet professional services, is perhaps the clearest example to date of this phenomenon. Consummated Sept. 14, 2000, this was a $2 billion stock-for-stock transaction done for apparently one reason and one reason only: to better manage the implementation cycles of Commerce One's marketplace and procurement technologies.

But Commerce One is by no means alone. As the chart below indicates, every flavor of B2B technology provider now boasts a healthy and growing roster of consulting and systems integrator partners.

Clearing the bottleneck through partnerships
Ariba	i2 Technologies	WebMethods	Epiphany
PricewaterhouseCoopers KPMG Consulting IBM Deloitte Consulting Arthur Andersen Andersen Consulting Computer Sciences Cap Gemini E&Y Unisys Proxicom	Andersen Consulting Cap Gemini E&Y Deloitte Consulting PricewaterhouseCoopers IBM Arthur Andersen Computer Sciences Cambridge Technology Partners Braun Consulting	Andersen Consulting EDS Cap Gemini E&Y Deloitte Consulting KPMG Consulting Lante BEA Systems EDS Computer Sciences IBM Infosys Unisys Braun Consulting	PricewaterhouseCoopers KPMG Consulting Cambridge Technology Partners Deloitte Consulting Cap Gemini E&Y Hewlett-Packard iXL Enterprises
Commerce One	BroadVision	FreeMarkets	Manugistics
AppNet (acquired) PricewaterhouseCoopers Andersen Consulting Cap Gemini E&Y PeopleSoft Cambridge Technology Partners Compaq Computer	Andersen Consulting BEA Systems Computer Sciences Cap Gemini E&Y Deloitte Consulting Hewlett-Packard Sapient iXL Enterprises	Deloitte Consulting Deloitte & Touche	PricewaterhouseCoopers KPMG Consulting IBM Deloitte Consulting Arthur Andersen Andersen Consulting Computer Sciences Cap Gemini E&Y Technology Solutions
Source: Company reports

We suspect the bottleneck is only likely to get worse over time. While it seems clear that B2B e-commerce technologies will improve dramatically in the next three to five years, we are only at the beginning of wide-scale global adoption of the Internet as an enterprise-class transaction medium. Layer on top of this the sheer volume of product introductions expected over the same time period, and it stands to reason that professional services firms will likely become an increasingly important facet of the B2B industry.

As of Dec. 8, 2000, WR Hambrecht + Co makes a market in the securities of BroadVision (BVSN), Cambridge Technology Partners (CATP), Infosys Technologies (INFY), Sapient (SAPE) and VerticalNet (VERT).

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