Ten ways trading exchanges can fail

By Staff -- Modern Materials Handling, 11/1/2000

Big names in the aerospace (Honeywell), retail (Sears), and automotive (GM, Ford, and DaimlerChrysler) industries are creating public trading exchanges. But these exchanges, dubed consortium trading exchanges (CTEs), are heading towards disaster if they don't kill the hype and face reality, says AMR Research, Boston, Mass.

Here are ten areas that AMR believes threaten these new marketplaces within the next year:

• Functionality promised prematurely.

• Collaborative commerce applications promised prematurely.

• The lack of consensus on where functionality should reside.

• Cost of hooking up to the exchange.

• The total cost of the exchange not budgeted for yet.

• Suppliers are skeptical. Recruitment, participation, and integration will be difficult.

• Competition among best-of-breed vendors.

• Standards are too immature.

• Marketplace-to-marketplace integration is a ways off.

• Political fighting.