Private hubs move ahead economically

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Private exchanges, used by individual companies to make supply purchases, will grow in importance in response to a reduced workforce and an increased reliance on paperless business processes, according to at least one exchange executive.

A drive for b-to-b efficiency, caused by anticipated layoffs in travel and other industries, plays to the advantage of private exchanges, said Rusty Braziel, CEO of the software and consulting service company Netrana L.L.C., Houston. "Most sectors of the economy will have fewer people working," Braziel said. "Whenever cutbacks happen, it is important for companies to automate transaction processes."

Marc Hebert, president of Sierra Atlantic Inc., San Jose, was in the uncomfortable position of launching a private exchange last month. FoodBex, based in Singapore, was obscured by the terrorist attacks. Nonetheless, Hebert was bullish on the prospects of private hubs in coming years.

"There will be a permanent change in the way people do business," said Hebert, whose company is eight years old, has 400 employees internationally and supports numerous private exchanges. "The technology is improving, and large companies are getting good ideas on how to govern their ever-more-private exchanges."

Some private trading hub service and software companies are likely to add video conferencing, Hebert said, and Web seminars will come of age as a part of private trading exchanges. He predicted other forms of audio-video sales and marketing presentations would be added to private trading exchanges in the coming months.

"We think theres going to be a lot of playing up the idea that it is more attractive now to do regular client and prospect meetings over the Internet than flying someone and doing a software demo on the site [of their business]," Hebert said.

Linda Rossetti, CEO of digital strategy consulting firm eMaven Inc., Boston, said big business brands are best positioned to build strong private exchanges.

"With their recognized branding power, old-line corporations are best positioned to reap the benefits exchanges offer to strengthen relationships with suppliers and customers," Rossetti said.

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