Cap Gemini links up with TradeCard

Cap Gemini Ernst & Young (CGEY) didn''t bet on the numerous start-ups in the B2B craze. It stuck to industry consortiums and so far, it has paid off. The management and IT consulting firm hedges its next bet on TradeCard.

Surviving business-to-business (B2B) companies have to change business models to incorporate more value-added services in order to survive, according to Richard Demoll, vice-president of Cap Gemini Ernst & Young.

"I think there has been a resistance in the market place to paying a very high transaction price. Some marketplaces were looking at taking a percentage of dollars that would go through the marketplace. Other sites looked at the transactional unit pricing model.

Under both forms, there has been pressure to lower the cost of bringing the transaction to the marketplace for customers," explains Demoll. "Therefore, you have to find other services you can take to the marketplace to generate revenue, and frankly, more reason for a customer to come to a market place."

As a result, B2B sites are now looking at financial settlement and payment as a value-added service. This is where the alliance between CGEY and financial supply chain service provider TradeCard comes in.

The companies have agreed to deliver and integrate TradeCard's patented financial supply chain services to help companies improve working capital and business process efficiencies. When implemented, CGEY believes that companies can save up to 100 basis points of top-line revenue via automation of the financial supply chain with TradeCard technology. CGEY concluded this after a benchmarking study of 150 large companies.

According to CGEY, the savings can result from improvements to working capital, risk management and business process costs, including the costs related to purchasing, invoicing, accounts receivable, accounts payable, treasury and cash management. "TradeCard's open platform and interoperability are some of the keys to success I think," says Demoll. Importantly, TradeCard's order-to-settlement financial supply chain means that parties do not have to drop offline and revert to traditional methods in order to settle the transaction.

Currently, Demoll says that CGEY is working on some 70 B2B sites globally, focusing on consortium initiatives. High profile clients include automotive industry exchange Covisint and Cordiem, the B2B exchange set up by some of the world's largest airlines including British airways and American Airlines. "We focused on the industry consortium as opposed to dotcom start-ups. Dotcoms have had a bit of an issue in the markets but we weren't involved with that. The consortium play has worked very well for us," says Demoll.

The alliance, however, is not an exclusive one for either party. "It based upon what we see as TradeCard's abilities today versus the state of the open marketplace. Both TradeCard and ourselves expect that competitors will come along," concludes Demoll.