Event Summary
TD
Bank (Toronto-Dominion Bank) of Canada (NYSE: TD) is creating a Canadian marketplace
to bring E-purchasing and other services to Canadian companies. The bank is
partnering with Commerce One (NASDAQ: CMRC) to create the marketplace and will
make Commerce One's other networks available to its customers. (See TEC News
Analysis articles: "Commerce
One to Procure for the Antipodes...and Elsewhere" and "Commerce
One Goes High, Wide and PeopleSoft"). The new marketplace will serve
customers of all sizes, and after its initial offering of straight purchasing,
will extend to these customers additional services such as dynamic trading,
purchase cards and third-party services in information technology and logistics.
Market
Impact
As
the first to announce such a marketplace in Canada, TD Bank has a perfect right
to say that it is defining the market. However, its announcement raises a larger
question. Who should create an electronic marketplace? TD Bank makes a good
case for banks getting involved. Existing financial relationships with many
companies are a good base for recruiting market members, and the bank's ability
to assist in funds transfer, cash management and trade financing will be attractive
to many companies. What the bank does not bring to the table is recognized expertise
in procurement or technology. Of course, any commercial bank will have specialists
in each of these areas as part of the teams it creates to evaluate loans and
investments, but by engaging in this venture the bank is effectively commoditizing
the E-procurement marketplace business. By using Commerce One for procurement
expertise, and a variety of ERP vendors and technology integrators to supply
technical expertise for back-end systems integration, the bank is showing that
anyone can create an E-procurement marketplace. It may take a big anyone, but
this announcement tells us to expect dozens, if not hundreds of similar announcements
in the next few months.
User
Recommendations
A Canadian firm wishing to engage in E-procurement will certainly want to consider
the new offering of TD Bank. Given its Canadian membership and links to Commerce
One's international networks, TD Bank has a lot to offer to its customers, and
might well be able to create a vibrant and efficient marketplace. In the process,
it could easily become a de facto technology advisor to small and mid-sized
Canadian firms.