Model N Inc. is challenging the idea that business-to-business electronic trading can be done only through a centralized e-market arbiter.
The South San Francisco, Calif., company last week officially launched itself and its namesake B2B trading software, which enables companies or consortia to create interenterprise networks for trading and collaboration among companies.
The heart of the Model N technology is Private Business Network Platform, which provides a central server and modules that enable companies to manage interactions with trading partners. The concept is that a group of trading partners will tap into the Model N platform via the Internet or an EDI (electronic data interchange) network and share information through the central server.
Unlike a traditional online marketplace, where a central authority dictates the rules for business engagements, Private Business Network has a Community Manager function that lets participants set up auctions, manage orders, define business processes and perform similar tasks on a one-to-one basis, said Model CEO, founder and application server pioneer Zach Rinat.
If, for instance, one company on the network wants to provide different price discount structures for each of its top customers, the employee assigned to handling discounts simply defines the rules for dealing with each customer on the network.
"We are about relationships," Rinat said. "We have an architecture where the network is dominant, where logic and data and intelligence is distributed. In an exchange, it is all in a certain location."
Model N also introduced a suite of applications to enable rapid deployment of such basic business processes as order-to-cash and negotiate-to-contract.
Commerce Ventures LLC launched a Model N-based trading network called Provision X for the meat and poultry industry in March. The Chicago-based consortium, which transacted more than $1 million on its site in the first three weeks after it launched, had considered e-procurement platforms from top e-marketplace vendors such as Ariba Inc., Commerce One Inc. and i2 Technologies Inc. But Provision X CEO Kevin Nemetz said his company chose Model N for its online trading infrastructure because tools that the marquee B2B providers were offering were so generic they didnt fit the job.
"You cant jam down our throats an Ariba or a Commerce One or an i2 [solution] if [they] dont understand our business processes," Nemetz said.
One reason Model N could address more of Provision Xs business problems than those others was that Model N studied the meat and poultry business to understand what roles and relationships existed, Nemetz said. "They wanted to know about my business before they could answer my questions," he said.
That Model N technology runs across EDI was attractive to Provision X because so many suppliers in its industry use the networking protocol. Nemetz said he expects that, eventually, many Provision X users will access the network through a standard Net browser.
As evidence of the cost-effectiveness of Model N, Nemetz pointed to the Transora food exchange, which, he said, spent $100 million on traditional e-marketplace software, while Provision X spent less than $20 million to get up and running. Nemetz said he wants to see logistics planning applications from Model N so that Provision X can enable its suppliers to better manage truck loading and route planning.