Billions of pounds are offered every year in goods and services. Recruitment as a profession is becoming an increasingly important focus. Companies realize that in these times, emerging from a recession with increased global competition, an efficient acquisition strategy can mean the difference between profitability and default.
Electronic trading came onto the scene in the 1990s with the rise of dot-coms and electronic marketplaces. It took time for real value to come out after the initial rally and consolidation. One technology that emerged to realistically and effectively help businesses reduce costs was the reverse auction.
However, due to the level of understanding of this new technology by procurement professionals, the primary method of profiting from auctions was through consulting. Companies emerged that offered the possibility of outsourcing this activity and their benefits came from their qualified resource, cutting-edge methodologies, systems and comprehensive supplier databases.
With the general understanding of reverse auctions greatly improved within the procurement community and with universities teaching e-procurement as part of their curricula, more and more procurement professionals want to conduct their own bidding through reverse auctions.
Some of the companies have realized this and are starting to sell their software on a stand-alone basis or as an add-on to a larger enterprise resource planning (ERP) system. This software is still expensive, cumbersome, and requires best practice support and training.
So there is now a gap in the market for a commodity. The basic concept is simple, as there is a paradigm shift from “luxury” based software, which requires a third party, to a basic product that any professional buyer can use.
Large companies like Ariba are beginning to realize this, but smaller, more agile companies like Market Dojo are also realizing the potential.
This new generation of online hosted software is not radical in general concept but in how it is designed and positioned in the market.
The new SaaS offerings are:
• Functional and easy to use
• Integrated with professional processes
• Offer a clear pricing structure
By offering a combination of the above features, reverse auctions are being taken to the next stage of their evolution. Not only do they build on the understanding that already exists in the market, but these tools can be easily opened up to any buyer by providing a very low barrier to entry regarding cost, usability, and best practices.
As with most services that start out being used only by experts, reverse auctions are now becoming a commodity. Just look at complex software like engineering simulation, which is passing from the hands of engineers to CAD Jockeys, or web design and search engine optimization tools that started with a plethora of specialized agencies and are now in the hands of of consumers Accounting and CRM solutions have moved to the online model, such as Clearbooks and Zoho, opening up complex applications to the SME market. This is the natural progression of software in our technological age.
This new generation of companies like Market Dojo and new offerings from Ariba demonstrate the new wave that is surely just a springboard for even more innovation.
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