Ford, GM, Daimler put business at the helm of technology

2000-02-28

A week is a long time in this topsy-turvy technology world. Just last Monday (in “Oh, no, not another marketplace”) we were bemoaning the fact that Ford and General Motors were going it alone by setting up independent eProcurement marketplaces, a model that we do not see as sustainable. By the end of the week the two companies announced their intentions to collaborate with a third, Daimler-Chrysler, to develop a common exchange for automotive transactions. The collaboration will take the form of a new company with its own identity, which will offer services to all automotive manufacturers and their associated companies.

Now it would be wonderful to believe that the world’s largest automakers had changed their minds based on the advice of IT-Director.com, but sadly we cannot make any such claim. Last week’s announcement will have been based on a great deal of discussion and negotiation between the companies and their representatives. It will have been going on in parallel with the deals struck up, for example between Ford and Oracle, or GM and Commerce.One. It is currently unclear about which technology companies will be the winners (or losers) in the still-infant venture, however winners there will be, big time. A single market will require single sources for primary technologies, such as hardware, transaction management and application software.

What is perhaps most fascinating here is that the businesses involved are seizing the nettle of defining an electronic environment in which they are all prepared to work. Traditionally this role has fallen to technology companies or standards bodies, with businesses being involved to agree the form of any dialogues but not the environment itself. This move by automotive companies is unprecedented, not only because of the level of collaboration it requires but also because it puts them in front of the technology companies. “We’ll sort out the bigger picture,” the car makers are saying, “and we’ll be in touch.”

This change should not be underestimated: it is a major sea change in how technology is defined and used. It suggests a growing understanding, on the part of businesses, of the capabilities of technology. It also suggests a maturing of the technologies themselves. “What” – i.e. the exchange – is less the issue than “how” and “when” it should be implemented. Finally it indicates a transferral of power, from the companies providing the enabling facilities, to the companies wanting to use them.

The decision by Ford, GM and Daimler-Chrysler may mark a watershed but it is not over yet. As we indicated in the last article, there will be a consolidation and standardisation of marketplaces not just within industries but across them: specific exchanges, such as aircraft spares, car parts or electronics raw materials may be kept separate for practical purposes but will be based on the same underlying standards and technologies. The power of business to drive technology should not be underestimated, nor should the power of the consumer: the Internet has already given ample demonstration of how customers vote with their feet.. These changes in the power base between technology and business, business and consumer are happening now. Traditionally, the IT sector has kept its position through hype and gadgetry, exploiting the FUD factor to the full, but the monopoly that such companies have held on technological understanding is coming to an end. It may be difficult at this stage to predict what the impacts will be: all we can say is that they will be deeply felt.

(First published 28 February 2000)