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Where
Vision Becomes Reality
By Michael Alan Hamlin
June 18, 2001
About a year ago, Trade & Industry secretary Manuel
A Roxas II asked the Philippine business community to work together
to set up an e-commerce portal, and six large firms responded by
setting up BayanTrade (a client of my firm). The founding consortium
includes Aboitiz, Ayala Corporation, Benpres, J.G. Summit, PLDT,
and UniLab. Six months after signing a memorandum of understanding,
BayanTrade began operations. Tomorrow, it celebrates its first anniversary,
counting from the signing.
How has the year gone? Last June when the founding
members formalized their partnership, the dot-com and technology
downturn was just beginning to get truly messy, and as we now know
conditions would deteriorate further. Much further. Analysts long
critical of the super-high valuations companies in these sectors
were getting from frenzied investors finally had their day in the
sun, reminding newly receptive listeners that profitability does
have a pretty central role in making businesses successful.
But while investors have fled the technology and Internet
sectors in droves, traditional businesses have embraced e-commerce.
According to international research firm IDC, e-marketplace services
will grow 27 percent annually from US$5.2 billion in 2000 to US$17
billion in 2005. It values the impact of e-commerce on the worldwide
economy at US$5.3 trillion that year.
In no way is Asia Pacific being left behind. IDC says
corporations will purchase US$516 billion in supplies through the
Internet by 2005, representing a phenomenal 3,900 percent increase
over last year. Growth in Asia Pacific e-commerce will exceed 100
percent annually compared to 68 percent growth in the U.S. As a
result, the region's share of global e-commerce will increase from
five percent in 2000 to 12 percent in 2005.
Corporations serious about increasing efficiency, productivity,
and profitability through e-procurement and e-auctions are driving
this growth. The Asian Wall Street Journal found in a recent survey
that 83 percent of respondents said that online activities raised
awareness of their company's products and services. As a result,
71 percent of respondents found that their companies were able to
improve service, and 42 percent were able to increase orders from
existing customers. Sixty-six percent of respondents found that
they were able to reach new customers.
Results like these help account for BayanTrade's impressive
growth over the first six months of operations. During that time
the e-marketplace conducted around 100 online auctions, and processed
over 4,000 purchase orders, and that rate is accelerating. What's
interesting about these results is that they match or exceed development
rates for most any e-marketplace anywhere in the world.
Eugenio Lopez III says BayanTrade's first year went,
"surprisingly, very smoothly." He attributes the smooth
going first to a commitment by board members to work in their collective
best interest, despite often-competing business interests. As a
result, business "was handled in a transparent manner that
created a feeling of mutual trust at the Board level," he says.
Second, Mr. Lopez believes that putting an independent,
results-oriented professional team into place was critical to BayanTrade's
success, and it's a team he says he is "very pleased"
with. Carol E. Carreon, who also led the development of another
complex joint initiative, MegaLink, heads the team. Although her
technology credentials are impressive, her skills managing organizations
owned by competing companies and institutions must have been equally
attractive to the board. Ms. Carreon most recently was managing
director of global enterprise systems provider SAP (a client).
Assisting Ms. Carreon is a team of proven professionals,
headed on the operations side by Dante Briones, director of operations.
Marketing the e-marketplace is the job of Virgil Pedro. Mr. Briones
is leading the development of BayanTrade's value-added services,
which help companies do more than just transact over the Internet.
It is value-added services that tie procurement to buyers and sellers'
backend systems, which increases efficiency, productivity, and responsiveness
to market conditions and customer demands. They also make transactions
"complete," providing e-logistics and e-payment. Value-added
services include something called strategic sourcing, which is a
fine sounding term for identifying and qualifying buyers, relieving
buyers of this time-consuming job.
Mr. Pedro is demonstrating the benefits of e-procurement
and e-auctions to Philippine companies with impressive results.
Non-consortium buyers recently adopted into BayanTrade include the
Philam Group, Equitable PCI Bank, NexTel, Johnson & Johnson,
Janssen, and Sara Lee. He's also recruiting new industry clusters
to form vertical portals aligned to the purchasing needs and practices
of particular sectors. Mr. Pedro says he has some exciting announcements
to make tomorrow about new portals.
For Ms. Carreon, success is a factor of two variables:
1) the vision of the founders; and, 2) the capacity to execute.
She credits the founders with having the foresight to consolidate
their strengths to build a New Economy enterprise for which there
is still no complete model, and no roadmap to development. Second,
the founders understood that without strong management development
might stall, as issues and challenges were debated.
Maria Huang, managing director of Commerce One's MarketPlace
Management Group for Asia and the Pacific agrees. "It's true
that without a clear vision and a marketable value proposition a
portal can't develop a viable marketing strategy or a sales plan.
But the most insightful vision and an elegant value proposition
by themselves won't make a portal successful. It takes execution,"
she says, "and poor execution is the primary reason portals
fail."
Commerce One provides the software that runs e-marketplaces,
and Ms. Huang has seen both goods starts and not-so-good starts.
Of BayanTrade, she says, it "has developed very fast in a very
short period of time." Ms. Huang believes that BayanTrade provides
a good model for other startup e-marketplaces, and has made it a
reference site. As a result, a steady stream of visitors comes by
to see how a world-class e-marketplace should be run.
Despite the doom and gloom of the past year, BayanTrade
has distinguished itself not just in the local market, but internationally.
Its success is turning vision into reality. And that's something
to be proud of.
(Mr. Hamlin is managing director of the consultancy
TeamAsia and the author of two books on Asian economies and managing
in Asia. His latest book is The New Asian Corporation: Managing
for the Future in Post-Crisis Asia. His e-mail address is mahamlin@teamasia.com.ph.)
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