Bad financial news from leading B2B vendors has served as an industry wake-up call, signalling a sharp shift toward private business-to-business market places and tentative corporate spending on IT.
Taking the spotlight earlier this month, Ariba announced lay-offs and disappointing financial results, putting a stop to the $US2.55 billion acquisition of Agile Software announced in late January. Other B2B market place and e-commerce providers, including Commerce One, i2 Technologies, WebMethods, Art Technology Group (ATG), BroadVision and SynQuest, also had downcast financial news.
Predictably, analysts had varied takes on what happened to the once high-flying Ariba and what lessons other B2B players could glean from the situation. But observers agreed that fizzling interest in public exchanges, coupled with the general slowdown, is forcing e-business vendors to refocus their development energies.
The collapse of the Agile acquisition will remind B2B vendors to "focus on the core aspects of their business," said Austin Whitehead, an analyst at Gartner Group. The multiple acquisitions of the B2B players "have started to make them less best-of-breed and more jack-of-all-trades," Whitehead said. "They're losing their ability to do niche capabilities."
Even Ariba's CEO concedes public market places do not work in all cases. "Companies are looking for competitive advantage. If they are part of a [public] market place, they give that up," chairman and CEO Keith Krach said.
One analyst said Ariba's problems were due to internal difficulties rather than a shift in the B2B industry.
"The nonsense Ariba put out there about nobody being interested in B2B is completely silly," said John Bermudez, an analyst at AMR Research. "The B2B market is still the fastest growing market there is. Ariba is just trying to justify some management miscues and explain why they need to retrench in e-procurement, which they probably should have stayed focused on."
Much of the current woes can be attributed to a natural lag in the market between when early adopters purchase products and when less cutting-edge, more pragmatic enterprises began their buys, Bermudez said. Many of them were "selling on a vision," he said. "These guys don't have applications that do what their vision PowerPoints say they do," Bermudez said.Photograph: Keith Krach, Ariba chairman and CEO