InformationWeek: The Business Value of Technology

The alliances let Maxager reposition its software and target suppliers doing business on the e-Steel, MaterialNet, and SupplierMarket.com exchanges. Maxager says it's seeking similar deals with other industrial marketplaces.

The company says its Maxager software, which allows detailed profitability analysis at the product level, is a natural for the dynamic pricing that takes place in Internet auctions. Such analysis can help suppliers determine when to stop bidding in an online request-for-quote event or figure out which requests for quotes are likely to result in a profitable sale.

"These online exchanges are really for the buyers," says Maxager VP of marketing Zack Lynch. "There's a tremendous amount of downward pricing pressure. Suppliers need a competitive weapon for playing in these marketplaces."

Maxager has 10 customers in the United States and Japan--all industrial suppliers that sell components to other manufacturers.

Maxager is betting that the expansion of online industrial bid-ding on sites such as the Big Three automakers' forthcoming megamarketplace will spur demand for its software. "Real-time profitability analysis used to be a hard sell; many CEOs and CFOs didn't see the need," says Lynch. "But now, the question has become an E-business profit strategy. They know they need to think about that."

The software "applies outside of E-business as well, but becomes much more applicable in marketplace bidding because of the speed of decision-making," says Mike Burkett, a senior analyst at AMR Research. "When you have to do a lot of bidding, it's a natural fit."

The Maxager software runs on Windows NT and requires the Oracle7.3.2 database or higher. Most installations cost about $1 million and can be completed in about four weeks.