Alan Turfe well remembers the e-biz promises of 1999. There were assurances of how the latest software and computer technology would revolutionize the way automakers and suppliers did business.
Turfe was in charge of building General Motors' TradeXchange, GM's first foray into online marketplaces. Through it, GM would buy parts and materials and collaborate with suppliers with unprecedented speed and intimacy.
The analysts' predictions were off the charts, with savings estimates of up to $3,000 a car. Automakers, suppliers, dealers and consumers would all benefit.
Such promises could not be ignored. Across town, GM (gm.com) learned, Ford Motor Co. was developing its own business-to-business exchange.
Like the B2C dot-com craze that preceded it, B2B technology - in particular, the online exchange - became a buzz phrase across multiple industries. At their zenith in 2000, analysts estimate, there were as many as 2,000 public and private exchanges. About 150 were used by the automakers and suppliers.
Today, the B2B exchange space is undergoing a massive shakeout. Experts say this is the critical year, with about 15 to 20 auto-related exchanges still in business.
Kevin Prouty, automotive research director at AMR Research in Boston (amrresearch.com) predicts that number will be cut in half.
"I don't think there are any investors that want to continue investing past this year," he said. "The ones I've talked to all basically said by the end of this year we'll know one way or the other where we're going with this."
That's not to say exchanges don't have value. Covisint LLC, the automotive industry exchange, estimates it has saved the industry roughly $5 billion with its reverse auction tool. But like other exchanges, Covisint (covisint.com) has not turned a profit.