IBM’s Marketplace Solutions: Is Ariba Not Enough?

What a rout! Didn't I tell you that they'd make it a passing game?

Not that we recall. Given that your time is limited, let's get down to business. What is the biggest effect that you see from IBM's announcement?

When IBM gets into a market it gives it a new kind of legitimacy. When analysts predict thousands of vertical marketplaces and millions of participants they aren't talking about early adopters going with products just out of the IPO chute.

But companies like Ariba, Commerce One, Peregrine, VerticalNet and others are constantly in the news and seem to be signing customers right and left. Surely there's no doubt that electronic marketplaces are part of the business framework by now.

Maybe so. But maybe you guys in the Research Department spend too much time reading press releases. I don't doubt that companies will be building marketplaces right and left in the next few years, but so far the only real success stories have been functional: "So-and-so managed to actually install their software at their first customer site," or something similar. The revenues haven't yet started to flow, and most of the companies that will end up being the bedrock of the vertical market business are average companies - the kind that prefer to be in the second or third wave, not those who are willing to take the chance of getting washed up on the beach.

And this has something to do with IBM?

When IBM says that something is cooked enough for a product offering that tells the business world that it's time to think about pulling up to the table. Of course, IBM's existing e-commerce customers will probably sign with IBM, but the halo effect will reflect on other software makers as well.

And that leads into our next question. What about Ariba?

Ah, Ariba. There was something about them and IBM in the news recently, wasn't there?

Surely you remember. On March 9 IBM, Ariba and i2 made a huge partnership announcement. (See B2Big Deal for IBM, Ariba, and i2). The companies were going to integrate technologies, build a "competency center" and cooperate massively. IBM will create a team of "several thousand" salespeople who will be dedicated to selling the alliance's solution. IBM promised to develop a team of specialists in this solution from among the 138,000 employees of its Global Services division, and said that Ariba and i2 will acquire IBM's current e-procurement software capabilities. IBM's recent announcement doesn't seem to completely square with that announcement.

Things change, you know. Although, to be fair, they also stay the same. It does seem to me that the IBM.Ariba.i2 alliance is still going strong. For example, IBM and Ariba just announced that Ariba would be the backbone of IBM's internal eProcurement solution, running on the new copper RS/6000 models.

That's true. That's a marketplace that will eventually support 300,000 IBM employees buying from 14,000 suppliers. But

Wait. You were going to protest that this is just an internal marketplace, weren't you?

No, actually we were going to ask you to find out what happened to the coffee. But, yes, you're right about this being internal to IBM. It isn't the same kind of thing that the WebSphere Marketplace Edition does. Is that the important distinction?

But was it? IBM's own press release listed three "critical aspects of accelerating the B2B economy" that the alliance would address. These were:

• Full-service marketplaces
  
  
• Integrated supply chain
  
  
• Open services

And the announcement went on to state "The companies will integrate their technologies to provide a comprehensive open market platform, which will be resold to both vertical and horizontal market makers through IBM, i2 and Ariba channels." So it certainly looked to us like IBM would be making Ariba's software the basis of its own marketplace solutions. In fact, that's what you told us to expect.