Card Cos. Push B2B Webward

<B>Card Cos. Push B2B Webward</B>
<I>Second Of A Three-Part Series On E-Commerce Purchasing</I>

By Cheryl Rosen

If the crystal ball gazers are right, suppliers of corporate charge cards are facing the move of somewhere around $7 trillion worth of business-to-business purchasing to the Internet in the next five years.

Not surprisingly, traditional corporate payment system suppliers, such as American Express and GE Capital, are carving out plans to grab a piece of that purchasing pie. As corporate employees head online to buy everything from travel to computer disks, the two are opening B2B marketplaces and betting their familiar names will attract their regular clientele. That will bring together corporate buyers and suppliers, and simplify data collection and payment for all corporate purchases.

GE Capital next month will launch the GE Business Marketplace, a procurement system for a wide range of goods and services, hosted and serviced by General Electric. The site will offer online tracking and reconciliation of orders, as well as exception reporting, from the very beginning. It soon will add a procurement module that brings in customizable catalogs and workflow approval processes.

Meanwhile, American Express has five customers pilot testing its B2B Commerce Network, through which it hopes to bring together its huge base of corporate customers and merchants in its own hosted marketplace.

"Our customers told us they wanted an online purchasing capability that combines the functionality of corporate cards with online purchasing tools, on one platform," said GE Capital Financial Inc. president Jeff Dye. "Many clients are combining purchasing under one roof within the sourcing department. Travel is part of it, but what we are really doing is providing a total solution for MRO (maintenance, repair and operations), purchasing and fleet management."

GE has the advantage of bringing on board its own mammoth purchasing heft, including a worldwide T&E tab that in 1998 totaled $850 million--the third-largest in the nation (<I>BTN</I>, Aug. 16, 1999). And its total purchasing volume is "really big," said Dye. "Our employees use our card for everything: travel, fleet and purchasing goods and services to run their businesses. Our solution is really a combination of that."

To that end, GE hopes to add the business of the 200 corporate customers it has on its three card products for travel, fleet and purchasing. Ten of these customers are serving as beta testers for the first release of the GE Business Marketplace in March. That version will allow customers "to access all their charge data through the Web, and deploy it to multiple levels of the organization, and to access all our reporting tools through one combined database of all procurement activity," Dye said. It will combine the ability to order over the Internet with a physical card employees can use on the road or at the store.

"Our vision is to provide clients with a tool for purchasing, but to leave the purchasing up to the client," said Dye. "In some cases, they'll ask us to integrate with another portal, an expense reporting system or a travel booking solution, and we'll be happy to do that. Everything that's purchased on the card will feed a database that then can be linked to their financial reporting system."

The next phase, scheduled for Q2, will add MRO procurement, with online catalogs and requisitions. "Our clients will choose the catalogs and we'll make it happen for them, either through aggregators, the client's solution or the merchant's solution," Dye said. In the travel arena, GE will hook clients up with the booking system of their choice, but most customers do not yet envision that as their foremost need. "Our beta clients are thinking travel, but initially they are focused on MRO and asking us to ensure that the solution works well with their existing travel process," Dye noted.

GE has not yet set a pricing model, though Dye said it will be "very affordable" and "definitely" include a subscription fee. Customers will be able to brand the site with their corporate names if they choose, so cardholders need not be aware that GE is behind the service. "We are building your company's solution, not GE's, so you can brand and build your business rules into it," he said.

The target market will be midsize to large corporations, especially global ones, though the initial release will be in the United States. Dye noted that the marketplace is "100 percent backed and hosted by GE, and an end-to-end solution. It will be one platform--one database, one financial reporting system--and we will provide reporting tools with a common look and feel throughout."

At American Express, meanwhile, the B2B Commerce Network announced in November is now in pilot testing with five customers, with room for two more still available. The Amex vision is to provide "a trading exchange that allows for dynamic exchange between buyers and sellers," hosted by American Express outside the corporate firewalls of participating corporations, said Corporate Services Interactive vice president and general manager Nancy Grim. Using Internet technology in a hosted environment "is an emerging model, an application made feasible by the power of the browsers to give customers access to lots of catalogs and information easily over the Web."

As the leading corporate card company, Amex has existing relationships with thousands of corporate buyers and merchants that it will invite to participate. The application will "allow corporations to be very specific, to include the existing contract pricing and content that most large-market clients already have in place," Grim said.

Customers will be able to set up their individual business rules for purchasing, telling their internal users "how they want them to purchase and from whom, and who can buy what." It also will include company-specific workflows, allowing users to purchase pens, for example, with no internal approval, while passing along larger orders to senior managers.

Like GE Capital, Amex also plans to focus initially on office products, MRO purchasing and business services--"the stuff everybody uses but isn't managed incredibly well," Grim said. But, she added, "I reserve the right to change that as we learn more."

Even as American Express still is busy educating its customers about the product and evaluating the market demand, the site offers an "incredibly robust content library" from e-Content Inc. Enthusiasm for the service is "huge" in the middle market, Grim said, and in some segments of the large market, "especially service companies that don't already have ERP and MRO systems of their own. These companies don't have huge tech budgets and like the pay-as-you-go approach."

Pricing still is not set, though it will involve "a subscription model plus transaction fees plus an implementation fee." Customizing catalogs with corporate-specific negotiated rates will entail an additional fee.

"We're embarking on a whole new distribution stream that requires all our traditional corporate card and purchasing card services, plus new ones that work really well online," Grim said. "We understand who the buyer is and who the seller is, and can introduce one group to the other, helping them manage risk and ultimately helping with the billing, and the exchange of funds and information."

For now, customers of the B2B Commerce Network will use the American Express card for payment, "but ultimately we'll offer different payment products, as we do on the travel sites," Grim said.

Even though it is not selling travel, at least for now, the B2B Marketplace ultimately will help push usage of all online purchasing systems, Grim predicted, and "travel managers will benefit from the fact that more and more purchasing is moving online. As more people do online expense management and purchasing, employees will get more savvy and more comfortable, and it will be easier to get compliance.