Australia Inc To Create Net Exchange
Sydney Morning Herald
Thursday July 6, 2000
Fourteen of Australia's largest companies are creating a billion dollar e-marketplace, an exchange for business supplies on the Internet.
The exchange, to be called corProcure, will be the first ``multi-industry" online marketplace, and will include corporate leaders Amcor, AMP, ANZ, BHP, Coca-Cola Amatil, Coles Myer, Foster's, Goldman Fielder, Qantas and Telstra.
After months of separately negotiating their own individual eprocurement strategies, the companies jointly formed corProcure and have committed to spend $8 billion buying supplies through the Internet portal over the next two years.
The participants, who also include Australia Post, Orica, Pacific Dunlop and Wesfarmers, expect to achieve significant costs savings from sourcing supplies in the ``paper-less" environment.
The companies, many of which share non-executive directors, began discussing the idea of corProcure just four weeks ago, deciding a joint venture would be the quickest and least costly way to establish a business-to-business Internet channel.
It is believed that Telstra and Coles Myer have been the major proponents of the exchange, which has been modelled on the $US250 billion ($420 billion) auto supplies exchange established by Ford, Daimler Chrysler, and General Motors in the US earlier this year.
While still in the early stages of planning, it is envisaged that corProcure will operate like a giant shopping mall, featuring and promoting goods and services used by corporates.
Office and cleaning supplies, fuel, energy, telecommunications, facilities management, human resources, legal services, promotions and advertising, computer services and insurance are just some of the products likely to be traded through the site.
BHP, another leading proponent following its involvement in a similar metals procurement site, said corProcure would complement its global e-commerce strategy.
``CorProcure will provide BHP with increased transactional efficiencies and subsequent cost savings by streamlining the procurement of goods and services which are not unique to our mining operations," BHP chief executive Mr Paul Anderson said.
Telstra's general manager of strategic outsourcing, Mr Tom Pearson, said the company had been looking at expanding its strategy into ``collaborative outsourcing" and hoped to be selected to provide telecommunications infrastructure to the new venture.
``Clearly it is something we want to do it's happening all around the globe," he said.
A new report by technology analyst Forrester Research suggests almost all businesses will be exchanging products over the Internet within the next year, with two-thirds of companies already doing business over the Net through trading exchanges.
``Almost 70 per cent of companies will participate in more than one e-marketplace and more than half are expected to join between two and four, because no single marketplace serves all needs," Forrester analyst Mr Simon Yates said.
However, though companies were anxious to participate in e-marketplaces, Mr Yates added that application integration remained a big hurdle.
There was also no sure way of quantifying cost savings, with investors still to be convinced that companies would achieve the perceived cost benefits of trading over the Internet.
CIRCLES OF POWER
Directors of companies involved in the portal
* Stan Wallis - Amcor, Coles Myer, AMP
* Margaret Jackson - ANZ, Qantas, BHP
* John Ralph - Telstra, BHP, PacDun
* Chris Roberts - Telstra, Amcor
* Michael Chaney - Wesfarmers, BHP
* Brian Heeley - Orica, Fosters's
© 2000 Sydney Morning Herald