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Case study: EMK3 L.C., Dallas

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Challenge: EMK3 L.C. wanted to build the energy industry’s first online marketplace (www.emk3.com) that would allow buyers and sellers of domestic oil and natural gas to trade bids on production at the well, the first point in the supply chain. The company faced the pervasive problem of convincing the industry to move beyond faxes and phone calls to begin transacting on a Web-based platform.

EMK3 needed to create an exchange that would satisfy the needs of both giant oil producers, who had major reservations about being able to safeguard their proprietary information, and thousands of smaller companies, which had varying security and technological requirements and needed more flexibility.

Solution: EMK3’s in-house staff of three programmers teamed up with developers at Dallas-based Web consultancy eLevel Inc. to create what they call "distributed marketplace technology" to power the exchange, which took four months to build and launched last month. In essence, the software allows customers to determine the level of security they desire. The technology even allows companies to host a piece of the exchange internally, thereby protecting their data behind their own corporate firewalls. Unlike most exchanges, EMK3’s distributed marketplace doesn’t demand that customers put complete control of their information in the hands of the intermediary.

"The first generation of marketplaces were generally self-contained and centrally controlled," said Bill Wittsche, EMK3's VP-technology. "Most of them felt integration wasn't important. We're one of the first to develop a marketplace that allows participants to transact from anywhere. We can take any piece of the marketplace and put it anywhere."

Using extensible markup language, the developers also made sure that users could trade information on bids even if their legacy systems were different. "EMK3 needed a way to exchange documents from one system to another reliably and securely," said Steven McFarland, eLevel's director-technical services. "We had to go in there with that in mind from day one."

Result: By creating a marketplace that could be distributed anywhere, EMK3 provided a way for its large corporate customers to host the exchange internally, keep their data from being exposed to the open

Internet, and integrate information on the exchange with their older systems. For the smaller companies, EMK3 created an exchange that was short on splashy Web design and long on ease of use.

EMK3 President-CEO Gary Wittsche, who is Bill's father, said that at least seven of the top domestic oil producers have signed up to test out the marketplace. Only about a half dozen leases, or bids for oil production, are being exchanged right now, but Gary Wittsche expects that to increase as users grow accustomed to the technology. "They just need a little bit of hand-holding," he said.

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