RIYADH, 13 May — Cyber giant Commerce One Inc. (USA), which has built 170 electronic marketplaces around the world, has announced that it has reached an agreement with a consortium of 30 leading Middle Eastern investors, including the Al-Faisaliah Group (AFG) of Saudi Arabia, for expanding its e-commerce services into the region.
“We see a lot of opportunities here and certainly think that Saudi Arabia is ready to do business in electronic commerce. So we are pushing ahead to make that happen,” said Mark Hoffman, chairman and CEO of California-based Commerce One (C1).
Hoffman, accompanied by Paul Taylor, vice president and general manager of C1 in Paris, and David Brown, chief executive officer of Commerce One Middle East (C1ME), was in the capital, where he held talks with Prince Muhammad K.A. Al-Faisal, vice president of the Al-Faisaliah Group and chairman of Commerce One Middle East Board.
The C1 chairman also met with the deputy governor of the Saudi Arabian Monetary Agency (SAMA), as well as the managing directors of the Saudi American Bank, the Saudi French Bank and the chairman of Riyad Bank.
In a statement, Prince Muhammad Al-Faisal said: “We welcome the chairman and CEO of Commerce One, Inc. to this region for two reasons. First, this visit will avail both of us an opportunity to meet and talk as partners on a variety of issues relevant to Commerce One’s strategy. Secondly, we think the visit is a conduit that gives C1 a feel of the preparedness of the region to accept e-commerce as inevitable.”
Hoffman said the new business venture, Commerce One Middle East, will provide an online commerce system to businesses in 14 countries in the region through its regional network in Dubai.
The countries to be served will include Saudi Arabia, the UAE, Oman, Qatar, Bahrain, Kuwait, Algeria, Egypt, Jordan, Lebanon, Morocco, Tunisia, Turkey and Yemen.
Hoffman also disclosed that they had built out a center of excellence in Bahrain, which he dedicated before coming to Saudi Arabia. “This center will leverage the whole region for training and providing expertise.”
C1 has invested $2 million in the 400 sq. meter Center of Excellence in Manama, Bahrain. The e-commerce network in Saudi Arabia will eventually be linked up with the Center of Excellence in Bahrain to create an e-marketplace. Hoffman said C1ME is the Middle East Council member for the Global Trading Web (GTW), a global network of business-to-business e-commerce portals. Through GTW, companies in Saudi Arabia would be able to access an international Yellow Pages directory, link up with partners’ extranets, and trade online with suppliers worldwide.
Computing solutions giant Compaq and three of the world’s Big 5 accounting and consulting firms, PriceWaterCoopers, KPMG and Anderson Consulting, will be working closely with C1ME’s Center of Excellence in Bahrain. C1ME’s clients from the Middle East could adopt C1 technology and gain leading edge B2B technology enabling them to buy from anyone, trade anytime, anywhere in the world. He said the Center of Excellence in Bahrain has about 30 people who are very knowledgeable about its technology and XML, the standard language for electronic commerce around the world.
As for Saudi Arabia, “We would probably link the Center of Excellence there and we’ll have a group of people here who will be targeting this marketplace but still leveraging all the skills out of Bahrain. The Faisaliah Center will definitely be involved in this. They are one of the original founders of C1ME. More than making money, they believe in a vision of how important electronic commerce is for the Middle East and Saudi Arabia in particular to be on the leading edge of adopting electronic commerce.”
Hoffman said C1’s involvement in Saudi Arabia will be at the level of building the e-commerce infrastructure and providing business acumen, “because we have built out more marketplaces than anybody else in the field of e-commerce. That’s 170 marketplaces, of which 70 are up and running and transacted.”
Referring to the IT infrastructure that is being put in place here, Hoffman said the Kingdom was making rapid strides in installing the Internet network. “I haven’t heard anybody question that the technology is out of the equation. What they are asking is whether the business is ready to adapt to electronic commerce. The answer is: yes, they are, although some education has still to go on.”
The chairman said, of course, there were some concerns relating to the privacy, security and confidentiality aspects of the e-commerce regulations. But they are being addressed by the government agencies in charge of these regulations. “Already, many large multinational companies are trading on the Internet, because they feel that the IT infrastructure is good enough.”
Referring to his talks with Prince Muhammad Al-Faisal, Hoffman said: “He’s highly educated and a man of vision. So he’s interested in the experiences of other countries around the world, especially how the e-marketplaces get started and how do they run.”
In reply to a question on the failure of the e-commerce experiment in some parts of the world, he said e-commerce, as defined by the dotcom companies, has not been very successful. “There are several reasons, one of which is that they went after fairly narrow segments of the marketplace by building out a proprietary non-standards-based system.”
Hoffman said these dotcomers also did not utilize partnerships with other large companies to create polar liquidity through the marketplace. “Accordingly, Commerce One’s approach has been to build out a non-proprietary standards-based system to support our infrastructure. The languages to do that are XML and xCBL. It’s a standards-based system. Because we are an infrastructure company, we are not looking at building out this marketplace ourselves. We go to a large consortium of companies, put them together and they in turn build out and run the marketplace.”
The CEO said it was a synergy combining the strength of their expertise in e-commerce infrastructure with that of their partners’ strength in the region.
In reply to a question on the pitfalls to be avoided by the newcomers to e-commerce in Saudi Arabia, he said the pitfalls are not on the technology side of the equation. “Of course, you have some implementation problems here. But the real issue here is that it’s a business problem. How do I build the business here? How do I get the right partners? How do I actually start to trade and get liquidity into the marketplace? Those are the questions you have to get solved.”
Asked about the size of the global market in terms of the cost of trading goods and services, Hoffman said it was expected to be about $5.5 trillion by 2003. “It’s huge. Essentially every type of goods and services can trade through our marketplace at some point,” he added.