PwC survey finds realism, not pessimism, in global e-markets

The best mover in e-markets beats the first mover, finds PricewaterhouseCoopers in a survey of senior executives in 31 of the largest exchanges in the US and Europe.

While the need for speed in e-markets is crucial, exchanges also need to draw on more established business practices. So, instead of rushing to be first, participants should take time to get the business basics right. It is not a gold rush. Companies are not panicking. They want to get the fundamentals right.

PricewaterhouseCoopers also found that it is vital in e-markets to get the balance between buyers and suppliers right. It reports a perception that buyers benefit more in e-exchanges because they drive down suppliers` prices. Suppliers fear a squeeze on prices and dilution of their brand value. PricewaterhouseCoopers, however, found that buyers do not participate deliberately to drive down prices, but are more concerned with transparency. Pro-active marketing is essential.

PricewaterhouseCoopers advises players to address technology early. At present technology is immature and the main e-market issues are data quality, systems and process integration, and security. PricewaterhouseCoopers also laments a lack of standards and end-to-end security.

Security is the number one issue in e-markets. The main barriers to trust are a perceived lack of secure and reliable systems, logistical shortfalls and legal and compliance issues. Players want common standards and a level playing field.

PricewaterhouseCoopers urges participants to make people part of the e-market strategy. It discerned a lack of qualified champions, few incentives to innovate and cultural differences in e-markets.

Further findings include:

Exchanges cannot sit back and wait for buyers and suppliers to enter e-markets. They have to adopt proactive marketing strategies to address concerns about the loss of cost and price advantages feared by both suppliers and buyers.

Exchanges need to work towards the development of technological standards to streamline e-markets and speed up integration. The right legal, security and fulfilment mechanisms are essential for a climate of trust.

E-markets have profound implications for the management of people, which must be addressed from the outset.

PricewaterhouseCoopers defines e-markets as "on-line trading taking place under the auspices of fixed exchanges in a co-operative environment of information sharing". It says at least 1 000 e-markets exist and "possibly 30 000 developing private exchanges".

Large companies in sectors such as pharmaceuticals, motors, air travel and retail have established their own exchanges to better manage their supply chains.

PricewaterhouseCoopers reports that e-markets have experienced turbulence in the past year. Past volume estimates turn out to have been optimistic - but many organisations participate and believe in e-markets.

"We believe in the potential for e-markets to facilitate business transformation. E-markets represent the latest stage of the application of digital technologies to streamline procurement and other back-office processes. Exchanges and participants face considerable challenges in the short to medium term. It may seem an uphill struggle at times but it is imperative to overcome these obstacles if exchanges and participants are to maximise value-creating opportunities," says Ernst Maritz, National e-business director of PricewaterhouseCoopers` Assurance Practice.