Back in March an article in Information Week talked about IBM’s cloud-based exchange reducing transaction costs by 80% for the Indian automotive industry. After pondering for a very brief moment “where I have I heard this before,” the first thought that came to mind is those who fail to learn from history are doomed to repeat it. Specifically, how is IBM’s AutoDX truly different from Covisint, which was once hailed as the poster child for the “web-based B2B world?”
While “cloud-based,” the reference to an overarching platform as well as other terminology regarding the AutoDX, is surprisingly similar in tone to that used to describe Covisint – at least from the standpoint of a unifying or centralized intent. The only difference being that instead of Ford, Daimler Chrysler and Nissan pursuing a consolidated industry-wide platform, it is the Society of Indian Automobile Manufacturers and the Automotive Components Manufacturers Association.
In response, some might suggest that the main difference beyond the cloud, is the fact that the Indian initiative is a collaborative effort between the auto manufacturers and their top suppliers. While there is an optimistic view that the majority of its members will adopt the platform by the end of the year, I am not sure sure that this level of buy-in is sufficient for success.
Specifically, and outside of the referenced top 750 manufacturers and parts suppliers, what is the actual number of other stakeholders who are also part of the auto industry, who are not part of this core group? This is a key point, especially in the context of “standardizing the data definitions, data interchange formats” in an effort to “expand the possibilities of automation.” The reference – at least has described – to standardization, and the prospects of having to adopt to a single or monolithic standard, is bound to be disconcerting to the majority of industry SMEs which likely number in the thousands. In short, it appears to be potentially exclusionary as opposed to inclusive.
Add into the mix the reference to the top 750 having access to “over 160,000 organizations around the world that already use IBM Sterling B2B Collaboration Network,” and it is not a stretch to consider the possibility that this will provide Indian auto manufacturers and their main suppliers with the “leverage” to drive down SME supplier margins at the expense of the indigenous supply base. After all, the bottom line is still the bottom line. Think low cost country sourcing.
In the end, overarching, industry-wide initiatives requiring an adherence to a single standard have consistently failed. This is especially true when the expressed standard has been established by what may be perceived as being an elite, centrally driven “buyers” group.
Looking at any exchange be it cloud-based or otherwise (see Covisint) from what has traditionally been a predominantly buyer’s perspective, increases the risk for what Bill Michel’s once referred to as being a “competitive leverage approach,” in which suppliers are “only as good as their last price,” and operate under “the business is always at risk” cloud.
Conversely, in viewing an initiative from the perspective of the supplier, buyers will actually have the opportunity to create a progressively dynamic and universally accessible supply base that delivers the best possible outcomes for all stakeholders.
In terms of IBM’s AutoDX which is it?
This of course brings us back to my original question; is IBM’s AutoDX truly different from Covisint?
The answer is not going to be found in the top 750 auto manufacturers and parts suppliers. The answer is ultimately going to come from the thousands of suppliers who operate outside of this core consortium.