I spent a couple of weeks in Florida recently - ignoring the Internet and hoping the market dip would go away. It felt good not to pull e-mail (all right, I did, but not every day) and it gave me some time to think about the whirlwind pace that's been the routine of the past year.
About a year ago I got involved in the development of what I call "Net Markets." You're probably familiar with the concept but you probably haven't logged onto one. In its simplest form a Net Market is eBay - a place to buy or sell stuff - and in a more complex form it's the stock exchange. But eBay isn't a true Net Market - they're for businesses, not consumers.
When things first started up in the Net Market space last year, there were few vendors and even fewer initial sites. At the beginning most sites had the eBay model - auctions, auctions and more auctions. But auctions were the model most Net Markets wanted least.
As I mentioned in an earlier column, the true model for most Net Markets is the negotiation. While eBay works fine for commodities (I even broke down and bought an old Sun box from eBay so I could run Solaris), most industries have more complex requirements. Some markets rely on strict anonymity between negotiators, at least until the deal is consummated. And most deals are negotiated on more than simply price or quantity, because in most industries things like delivery times, freight costs, grades of materials and even documentation are as important as price. This became obvious to most of the early vendors and some quickly adjusted their product offerings to begin to offer negotiations.
What other fundamental changes do I see occurring in the next year or so? Well, it didn't take long for software vendors to realize that the software they were providing (at a very lucrative rate, in my opinion) was making other people rich. And as they watched Net Markets spring up around their products, they realized they had a limited audience. After all, with multiple vendors and a limited number of sites per market (who competes with eBay, for example?), the software vendors were faced with the realization that they would probably host only one Net Market per industry. Couple this with a finite number of industries and things didn't look all that great. At least until someone realized that they were the best ones to create a Net Market in the first place.
So a new breed of vendor is springing up - one that wants a piece of the action in exchange for the expertise needed to create a Net Market. Alternatively, some vendors want to do it all themselves. I've seen this from infrastructure providers; now we're seeing software vendors beginning to do the same thing. Couple this with the fact that most of the original Net Market companies have now realized they can replicate their business processes in other industries to leverage their investment in intellectual capital and software expertise and we get another trend: the Net Market Hub. The Hub takes over where the Net Market ends, leveraging common infrastructure and processes to provide synergy across multiple industries.
One last trend that we'll see a great deal more of is integration. The first wave of services has been created: we can buy or partner to obtain auctions, exchanges or negotiations. The next wave will be integration of these services with several other vital areas. Logistics, CRM, ERP and accounting package integration will be the next wave for the Net Market Hub. Like every other business process, the Net Market will be grown to achieve economies of scale. We'll be able to negotiate shipping along with other aspects of the deal. We'll be able to get integrated account statements and track physical products after closure of the deal. We'll also be able to arrange credit and even book complicated transactions between more than two partners.
Where does the madness end? This year it will end with vendors becoming partners, partners becoming vendors; with logistics, credit and CRM becoming integral services rather than á la carte offerings. The winners will be the ones that can put it all together the quickest and leverage their current investments. No matter what, it promises to be an interesting year. I'm already booking my trip to Florida next year to recover.
Sean Rhody is editor-in-chief of Java Developer's Journal. He is also a respected industry expert and a consultant with a leading Internet services company.