Managing Information Technology

262 Part II • Applying Information Technology

• If Sellers are Concentrated,
  Sellers are likely to dominate.


• If Buyers are Concentrated,
  Buyers are likely to dominate.


• If Buyers and Sellers are
  Fragmented, Independent
  Intermediaries are
  likely to be successful.

Sellers

Seller-dominant B2B marketplace

Buyers

Sellers

Buyer-dominant B2B marketplace

Buyers

Sellers

Independent B2B Intermediary

Buyers

FIGURE 7.7 Dominant Players in B2B Marketplaces

supply-chain information would typically be used with
only a few selected business partners with which a strong
relationship has major benefits. Many of these types of
supply chain applications are designed to leverage prior
enterprise system investments, especially ERP systems
with SCM modules. For example, the e-sourcing initiative
(described earlier) at Nestlé USA leveraged a major supply
chain initiative that was part of a global ERP system roll-
out under the parent firm headquartered in Switzerland, for
whom the cost savings from coordinated information was a
key e-business driver (Ariba, 2005). Other companies have
leveraged centralized databases with product and inventory
information to develop B2B applications for a vendor-
managed inventory (VMI) partnership in which the client
entrusts the management of their inventory levels to a
strategic supplier. VMI partnerships are therefore depend-
ent on timely electronic information sharing of the client’s
sales information with the supplier. The low cost of B2B
communications via the Internet has made this type of

B2B application feasible for even midsized and smaller

companies (for a detailed example, see Case Study II-1,

“Vendor-Managed Inventory at NIBCO”).

B2B applications are expected to continue to grow as

more companies across the globe implement standardized

ERP platforms to more locations and develop extranet

portals for information sharing with key business partners.

The growth of these e-business applications has also meant

that entirely new skills are needed for business auditors.

That is, traditional internal 1999 end-of-year holiday

season within the United States is usually cited as a major

milestone for B2C applications, as online sales approached

1 percent of holiday retail sales for the first time. Besides

online purchasing, consumers were also using the Web to

search for gift ideas and for price comparisons (Schwartz,

2001). Accounting controls have been “rendered useless”

in today’s B2B environments, and auditors need to be

skilled in e-business technologies as well as systems audit-

ing (Pathak and Lind, 2010).