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IBM's B2B e-commerce push

Big Blue debuts a new bidding service, called Component Knowledge, for sellers in the electronic components industry.

IBM is making its first major move into the business-to-business e-commerce market.

The company has debuted a new bidding service, called Component Knowledge, for sellers in the electronic components industry. The Web-based subscription service assists sales and marketing teams to identify, register, manage, track and collaborate on bids for electronic components, IBM said.

The move is one of the first attempts by IBM to get into the business-to-business game, where it has had problems in the past, said analysts.

"They've been late to the game," said Scott Latham, an analyst with AMR Research. "They're struggling to find a way to move their traditional global services model" to one that will fit well with a more procurement-based business-to-business model, he said.

Shares in firms that build the business services market have soared in recent months. And with good cause: the market for business-to-business transactions is expected to grow to $5 trillion by 2002, according to analyst estimates. Last month, research firm Gartner Group reported the worldwide business services market would grow from $145 billion in 1999 to about 7 percent of the predicted $105 trillion market for all global sales transactions in 2004.

An IBM spokesman said that although Component Knowledge is the company's first foray into the business-to-business exchange space, he said that companies have long used Big Blue's technology and services for e-commerce.

Erica Rugullies, an analyst at Giga Information Group, said exchanges are proliferating quickly and IBM's success will depend on how many users it lures to the marketplaces it launches.

"We expect to see 10,000 new hub sites by the end of this year," Rugullies said. "IBM needs to keep in mind that in 2001 (and) 2002, we expect a hub-site shakedown, leaving just two hub sites per industry."

A number of service providers help set up business-to-business Net marketplaces, or trading exchanges that link partners and suppliers that want to purchase goods and services over the Internet.

Component Knowledge is what IBM terms a "pre-procurement" service, meaning it's designed to support all of the steps prior to the actual purchase of any goods.

For example, as sales people at an original equipment manufacturer (OEM) identify a new prospect, the information is registered with a particular electronic component manufacturer through Component Knowledge. The manufacturer can accept or reject the prospect.

If the prospect is accepted, a team of account managers, inside sales representatives, customer service representatives, product managers and field engineers can then begin to collaborate on the new prospect, preparing for a transaction.

"We have worked with more than 100 component manufacturers and independent sales rep firms in this industry over the last 20 months to make this service fit their needs," John Rector, global offering manager for Component Knowledge at IBM Global Services, said in a statement. "We're looking forward to delivering on the promises of this service, as well as making e-business very real for this trading community."

The monthly, per-subscriber cost for the new service is $9.95, the company said.