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HICSS'01: Business Models for Internet-Based E-Procurement Systems ...

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HICSS'01: Business Models for Internet-Based E-Procurement Systems ...

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Business Models for InternetBased EProcurement Systems and B2B Electronic Markets: An Exploratory Assessment Qizhi Dai and Robert J. Kauffman Information and Decision Sciences, Carlson School of Management University of Minnesota, Minneapolis, MN 55455 USA {qdai;rkauffman}@csom.umn.edu systems were the major means by Abstract which firms exchanged business documents Information technology (IT) has long been applied electronically. AlthoughEDI systems continue to enable to support the exchange of goods, services and firms to achieve more efficient data and information information between organizations. It is with the advent management and to imp rove supply chain management, of Internetbased eprocurement systems and business there are still a lot of companies that do not yet use EDI tobusiness (B2B) electronic markets that the real due to the relatively high costs of implementing and opportunities for online transactions have opened up running such systems [26]. New alternatives exist, across space and over time. In this paper, we draw on IS however.Internetbased eprocurement systems and and economics theory to investigate the motivation for businesstobusiness (B2B)electronic marketplacesare the various online business models, and the adoption different from proprietary IOS that involve EDI. They requirements of purchasing firms, through the are open systems that enable firms to reach and transact examination of a set of minicases. Our exploratory with suppliers and customers in virtual markets without study finds that private aggregating and negotiating investments in dedicated systems. Figure 1 displays the mechanisms are being adopted for large quantity different ITenabled procurement mechanisms. business supply purchases, while public market mechanisms are more often adopted when firms faceSuppliers Valueadded uncertain and high variance demand. Moreover, marketValueadded network network facilitation, expertise sharing and collaboration are gradually attracting more attention, and call for future investigation.Proprietary IOS Keywords:B2B, buyersupplier relationships, e business, electronic markets, eprocure B2B ment, interorganizational informationBuyer EMarket systems. Acknowledgements:The authors would like to InternetBased acknowledge the useful input of two anonymous EProcurement System reviewers.Other Buyers Figure 1. ITEnabled procurement mechanisms1. Introduction According to a recent report, the value of goods and Interorganizational information systems(IOSservices sold via B2B electronic markets will reach $2.7) can be used to form electronic marketplaces in which buyers trillion by the year 2004, representing some 27% of the and sellers exchange information and make transactions overall B2B market and almost 3% of global sales [3]. Before the commercial application of the Internet transactions [14]. This growth is slated to occur in the and the World Wide Web, proprietary information context of a global market for B2B transactions worth systems such as electronic data interchange (EDI) $953 billion, growing to about $7.29 trillion by 2004