E-Markets on Road to Development

Some business-to-business exchanges are turning to a tried-and-true method to pump up their bottom lines—theyre selling packaged software.

MaterialNet Inc. this week joins VerticalNet Inc. and FreeMarkets Inc. among the ranks of online marketplace providers looking to package their sourcing and e-procurement expertise as software.

Metals exchange MaterialNet this week will make available a new e-sourcing platform called Custom Procurement Management System, or CPMS. The software, which will be available as an application service provider option, enables a company to source direct and indirect goods via a Web-based management interface. It specifically enables an IT manager to build out a procurement system and create online workflows that mimic offline processes, according to officials.

MaterialNet, of Lake Success, N.Y., is not the first e-marketplace company to wade into the waters of software development. Pittsburgh-based online exchange FreeMarkets has undergone a similar transformation this year. Earlier this month the company released Version 3.0 of QuickSource software. The e-procurement platform, like MaterialNets CPMS, allows companies to manage e-sourcing through a Web-based, desktop interface. Similarly, VerticalNet, which has 59 e-marketplaces spanning a variety of vertical markets, last year entered the software fray with e-procurement offerings. Chris Larsen, VerticalNets executive vice president of global field operations, said it was always the companys intention to be a software provider—the move just happened a little quicker than the company anticipated.

"We accelerated much more rapidly [toward software development] than what we had thought a year or two ago," said Larsen, in Horsham, Pa.

VerticalNet late last year turned its content management solution into a Content Hub portal offering and late last month released its MarketPlace Manager application, which enables businesses to generate more leads through publication of discrete catalog content to multiple online marketplaces.

VerticalNet plans further software development and partnerships in supply chain management, Larsen said.

Jim Convis, who recently started using MarketPlace Manager, said he hopes the VerticalNet software will be picked up by other e-marketplaces so that when he has to connect his business software to them, he will already understand the catalog interface.

"Thats been a struggle for us, trying to figure out how each and every e-marketplace works," said Convis, president of User Solutions Inc., in South Lyon, Mich. "At a certain point, it breaks down; you cant support all these different storefronts with all these different systems. That would be a huge benefit if [VerticalNets offering] became somewhat of a standard."