Cyberlynx prepares for launch

Barry Scott, chief executive officer of Cyberlynx, has predicted the horizontal B2B exchange will be cashflow positive by the end of 2001.

Cyberlynx, established by the Commonwealth Bank, Lion Nathan, Woolworths, EDS and Telecom New Zealand, is a horizontal electronic commerce system connecting large Australian corporates, such as the aforementioned equity partners, to various suppliers in an attempt to gain bulk savings on procurement.

When the exchange was announced, it was expected the buying groups would save as much as 7-15 per cent on the procuring of goods and services, a figure Scott is sticking to as the exchange swings into operation.

"Most of the business plans of our equity partners expect savings of at least 7 per cent, and the top end of those savings depends on each partner," he said.

The exchange is based on the Ariba buying platform, with newly announced middleware partner webMethods providing the integration between the buyer's legacy systems and the Ariba platform, all hosted by EDS.

The CBA and Telecom New Zealand have already commenced trading on the platform, sourcing a variety of goods and services during the pilot phase, including monitor and printer products from Lexmark and Samsung. Trevor Taylor, manager of special projects at Samsung Electronics Australia, said negotiating with Cyberlynx was challenging but produced positive results.

"They were extremely hard negotiators," he said. "They were fair, but tough. From our point of view it has produced a satisfactory outcome."

Samsung had supplied monitors to EDS for about 18 months, so winning the tender for the Cyberlynx business was not necessarily an effort to win new customers. Similarly, Lexmark had existing relationships with three of the five equity partners.

"We have achieved an increased customer base but, more importantly, we've gained more of a market share among our own existing customers," said Taylor. "They have found it cheaper to buy monitors direct from us than buy their monitors bundled with PCs from elsewhere."

Taylor believes the high-end corporate market is driving for direct relationships with vendors, believing they will be more in touch with advancements in technology and will receive better support. "Financial gains are not the main reason they want these relationships," he said.

Barry Scott expects the Cyberlynx to be fully operational within four to six weeks. In doing so, it is likely to be the first mass-scale, horizontal procurement exchange transacting in Australia. The only other contender, corProcure, is unable to determine when it will commence full trading beyond its aim to be operational by sometime early this year.

"We really don't compare ourselves to anyone else, we just focus on our business plan," he said. "We are quite comfortable, however, because we are already transacting and there are not a lot of people doing that."

Photograph: New Cyberlynx CEO Barry Scott.