InformationWeek

Although EDI is considered a clunky, expensive, and rigid standard, advanced-logistics EDI and bar codes have elevated traffic and procurement departments from back-office ghettoes to front-line competitive weapons. Just-in-time inventory practices are the norm for most large industries, and electronic messages move by the millions every day. The U.S. Department of Commerce says more than 250,000 companies do in excess of $3 trillion of business a year using EDI.

E-marketplaces and their associated technologies build on this decades-old foundation, yet they're not heeding its lessons. Besides the time required to link disparate partners, perhaps the most important lesson is that business-to-business activities aren't about technology or even communication-they're about trust and relationships, and that's where many marketplaces may stumble.

Just ask Marlis Elliot, purchasing manager for Cell Genesys Inc. The Foster City, Calif., company specializes in gene therapy products such as vaccines for lung, pancreatic, and prostate cancer. The company has a market capitalization of $740 million and employs around 130 people. Elliot sees her role as crucial in the research process. "I work for the scientists," Elliot says. If a researcher needs anything from a pipette to a centrifuge, her job is to get it swiftly and seamlessly, so the research process proceeds uninterrupted.

A new tool has emerged in recent months to make Elliot's job immensely easier: SciQuest.com Inc., an online marketplace for specialized scientific equipment of all kinds. Elliot is a booster of SciQuest.com, saying it has improved her job and created new efficiencies. "We can take 25 purchase orders and turn them into one, so it saves on our time and labor. We don't have to make those 25 phone calls," she says.

Manually processing a purchase order can cost $100 to $125, Elliot says, while an E-marketplace can cut that cost by almost 80%. SciQuest .com also makes it easier for Elliot to pay bills, cutting down on paperwork, she says.

And with thousands of suppliers, the site is a great help for a small company as well. "They are basically purchasing for me. SciQuest.com has set up accounts with the different vendors I'd be ordering from, and they're ordering with them," Elliot says. Other benefits include trend analysis and access to new data from prices to on-time delivery.

Yet for all her support, Elliot says she understands the problems faced by today's online markets. Traditional values and behaviors are as important as technological whizbangs when it comes to shaping Elliot's choices. Though E-marketplaces might save her a lot of time, there are times she wants personal contact as well.

"The main thing I like about SciQuest is that customer service is still there. They still have a live body if I need one," Elliot says. "If I'm stuck or my computer's down or the Internet's down, I can always get somebody and we can go back to the old way of doing it-manually or over the phone."

Elliot's concerns could trip up business-to-business marketplaces. "People aren't taking into account the dynamics within their industries. They're not looking at how people feel about technology-at what the trust is out there," says Forrester's McCullough. Loyalty and familiarity play a big part in how business is conducted-online or elsewhere. Elliot trusts her salespeople and is committed to them-which is why she chose SciQuest.com over its larger competitor, Chemdex. "A lot of Chemdex people are techies from Silicon Valley who don't really know our business, which is unique," Elliot says.

In fact, Chemdex employs more than 30 life-science Ph.D.s to work with customers, but often it's perception that matters most when decisions get made.