US-based e-procurement company, MRO.com, is homing in on the South African business-to-business (B2B) market by partnering with MST, a local enterprise asset management solutions provider.
The international e-procurement firm is finalising a business plan with MST, which will mean an inroad into the local maintenance, repair and operation market. The companies will share technology and information in their working relationship.
MST was formed out of the IT division of engineering consulting firm, Megkon. MST is the African agent for the Maximo Work and Asset Management System, a product developed and marketed by US vendor Project Software and Development Corporation (PSDI). MRO.com is a wholly owned subsidiary of PSDI.
"MST has identified e-procurement in the maintenance, repairs and operations (MRO) environment to be unchartered territory in the SA industry and has taken the initiative to engage with MRO.com," says Kobus Blomerus, business leader at MST. "The solution provided by MRO.com has a 100% fit to the requirements for indirect material procurement and was the natural choice for the MST e-procurement offering."
Having identified the need for MRO solutions in the local industry, MST also felt that MRO.com was the best solution for its target market of maintenance and repair-intensive organisations.
A primary asset in Maximo
MRO.com has come a long way from its initial three-member team and now has international offices with a complement of almost 300 people.
According to Paul Rose, alliance and business development manager for MRO.com in Europe, Middle East and Africa, main components to the business include mroBuyer, mroMarketplace and mroSupplier. A portal offering is to be launched by mid-March.
The company has a number of acquisitions under its belt, which have helped to strengthen its position in the market. Among these is Modern Distribution Management, a news content service for the maintenance and repair market. MRO.com essentially acquired its editorial skills.
Another important buy was Intermat, a company that delivers content management, and data cleansing tools and capability. The acquisition was, as Rose puts it, "simply a case of liking the product so much, we bought the company".
A $1.3 trillion market
"The Maximo software existing client base was one of the primary assets to launch MRO.com as an e-commerce business, which was done about 10 months ago," says Rose. The US e-commerce market, which is showing signs of verticalisation and specialisation, will be worth about $1.3 trillion, notes Rose, and can definitely support a number of players.
However, he suggests that Internet e-procurement is still in the early stages of development and many businesses have not figured out strategies and do not fully comprehend what Internet e-procurement is.
E-procurement necessitates a change in the modus operandi of a company as activities relating to the process of buying and selling within a business are conducted online.
Rose admits there is a lot of hype within the e-procurement market and the company is keen on getting beyond this. MRO.com will, as MST has already done, become engaged with local tertiary institutions to help people understand not only the maintenance aspect of the market, but also the e-commerce side of things.
Meeting challenges
This is the first attempt at the local market for MRO.com. Although Rose says it is difficult for the company to calculate the market share it hopes to obtain, he feels there is definite interest and likely challenges.
"E-procurement generally is a business process re-engineering project where you start to streamline the procurement function within a business. Our particular flavour of this is really extending the enterprise asset management capabilities that many organisations have adopted, and e-commerce enabling that," he explains.
MRO.com, adds Rose, is particularly strong in maintenance and repair. It has about 6 500 customers worldwide using Maximo software to purchase inventory and maintain machinery.
"To actually get the complexities and understanding of supporting procurement within a capital asset-intensive business is a very complex thing to do," notes Rose.
MRO.com`s plan is to target and focus on the existing Maximo software client-base and go on from there. He says although the company has a number of opportunities with organisations that are not Maximo customers, he feels it doesn`t make sense to adopt a wide approach at this stage.
Rose explains that one of the company`s key strengths is being able to connect into the enterprise and take the cost out of the procurement process.
"We`re not talking at a conceptual level, we`re delivering. I think it`s important that people understand we`ve got the scar tissue. These are challenging times - you are challenging the way businesses operate today. It does get very emotional when changing work practices, so there is a cultural side to this as well."
Managing the process
He believes the company has much to offer in the way of services and products. One of its key strategies is its focus on capital asset-intensive business as opposed to people-intensive businesses. Rose says that MRO.com understands that it`s not all just about a spot buy, but also about managing the planned purchase.
The product line also has "rapid time to benefit" - something Rose says is attractive to prospective clients. "We are an existing and established software company... we have proven methodology and we can connect into legacy systems."
The company`s goals are to be open and inter-connectable, and it will continue using Extensible Markup Language. MRO.com also plans to reduce existing barriers hampering involvement of smaller suppliers and the delivery of a basic level of connectivity.
Another key offering is its soon-to-be launched portal service, which will provide a gateway into the virtual marketplace. The service is a means of hosting suppliers, displaying catalogues and connecting to their business systems. Negotiations with MST are underway as to what form of working partnership this would take.
"The portal is being driven for a number of reasons. The main one being that something like 70% of MRO purchases are made by organisations that you would put into the small and medium enterprise marketplace. Those organisations would find it difficult to justify taking a full-blown e-procurement application to support their purchases," explains Rose.
"What we`re saying to suppliers is you can connect into the marketplace, you can leverage the investment you make in this data cleansing, catalogue infrastructure and have a link to the catalogue from your own Web site," says Rose.
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