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RUSSIAN BUSINESS AT E-MARKETPLACE


Oil of Russia magazine talks to Dr. Dmitry Gulko, President of the Intertech Scientific IT Center


      In 1999, Intertech was one of the first Russian and international companies to develop and implement an e-commerce system, to set up e-procurement services for oil and gas companies and marketing services for engineering manufacturers. Today, Intertech's main product, the Inmarsys e-marketplace system, is used by all the major oil and gas companies and manufactures of oil industry process equipment and materials in Russia and the CIS.

      Q: Mr. President, please describe how the Inmarsys project was conceived and why you decided to set up a B2B system for trading in oil and gas equipment?
      A: Intertech was founded by several companies, and its largest founder was Soyuznefteoborudovaniye (SNO) - an organization that deals in oilfield equipment to this day. Hence our system's industry focus. In 1996, the IT Department of the SNO decided to create a corporate web site. So actually that was how Intertech was started. The website Oil-Equip.Ru was created, but our colleagues were skeptical about the project, because the industry was known to be largely conservative, so the web site was not expected to be an effective sales-boosting tool. But in fact, it did help the SNO to execute several major contracts, with contracts averaging from $100,000 to $200,000 each. This generated some optimism about using
      Internet for real-sector transactions to increase oilfield equipment sales. In 1998, the year of the economic crisis in Russia, the SNO streamlined its operations, spinning off the IT Department and reorganizing it as Intertech. The new company's function was to provide IT support to the oil and gas industry. By that time, the company had developed the concept of what we called an information and marketing system. Hence the name of the system, Inmarsys. Actually the e-marketplace was launched in 1999.
      Q: In your view, what are the results of the system's four years of operation?
      A: The main result is that Inmarsys is now used by about 10,000 participating entities and publishes information about some 1.2 million products. The Inmarsys customers include JSC Lukoil, YUKOS, Bashneft, Tatneft, TNK (Tyumen Oil Company), Slavneft, SOCAR, Kazakhoil, Itera, and several Ukrainian companies. Another achievement is undoubtedly the development of a package of solutions that meet the needs of our customers; the package includes the Inmarsys and integrated corporate systems. Inmarsys has developed all the functionalities required to conduct transactions from finding products to executing purchase contracts. The system enables buyers to find products and to obtain full information about the product, the sellers, manufacturers, and intermediaries.
      It is true, however, that the system is mainly used for searching for products, and much less for making transactions, executing contracts, and bidding - due to certain features of corporate regulations and Russian legislation, which does not authorize e-signatures under contracts executed in public e- commerce systems like Inmarsys (since the participating entities have no contractual relationships with each other). The web site also features a much-visited electronic bulletin board system, on which users may put advertisements in any form they like. There are search engines for finding companies not only by product, but also by area of business operations, by region, and other criteria. So the system can be also used as a business database. It also can be used to hold public and private tenders and auctions.
      Q: What are the sources of information offered by Inmarsys and who keeps it up-to-date?
      A: The system's information comes from two sources. One is the suppliers of products advertised, which can input data about all the products they have to offer. That includes not only the name and make of the product, but also completeness of equipment, method of delivery, prices, availability, and additional functions and performance characteristics. That information can be published by our Inmarsys support specialists, acting under a power of attorney from the relevant company. Those are specially trained experts who update the information and also study the market, finding new firms and products, and introducing them to the system. So in fact, their functions include marketing and finding new users.
      Q: Does the Inmarsys quote actual prices?
      A: Many companies face situations where the prices quoted by public B2B systems do not match the actual prices. We suggest that the prices quoted by Inmarsys be interpreted as the starting and negotiable price. With this in mind, Inmarsys has implemented the request for quotation function. By checking a specific item on the product list and pressing a button, a user can request a quotation from the seller, stating the amount of product required, the delivery date, technical features and specifications, etc. The quotation received by the user from the supplier will be treated as the official offer under the RF Civil Code, entailing all the relevant obligations.
      Q: What are the regulations governing e-commerce systems in Russia, including Inmarsys?
      A: We have a team of experts including representatives of the State Procurements Institute of the State University - Higher School of Economics working to make Inmarsys's functionality consistent with the RF Civil Code. One problem hampering this work is the fact that the existing law On Digital e-Signatures fails to adequately regulate the use of e-signatures in public e-commerce systems. No validating centers exist. It was planned some time ago that e-signatures would be validated by the Federal Agency for Government Communications and Information under RF President. Now that the Agency has been reorganized, it is not clear how the validating centers would be certified. Which obviously is a big question that concerns the use of e-signatures in full-scale transactions conducted through public e-commerce systems.
      Q: Your company certainly aims to keep going forward. What other projects are being implemented by Intertech?
      A: At present, we are offering another solution that is also popular with oil and gas companies; unlike Inmarsys, it is intended for use in corporate networks. This is an e-procurement system, and it operates the entire cycle of procurements of an oil company or any other major industrial company, from requests for proposals to consolidation thereof and allocation of approved logistics demands to specific procurement organizations. Then the system develops a procurements scenario for the company: single- sourcing, selecting between two authorized suppliers, with either public or private bidding purchases. So the system has the standard procurement options that are actually used by companies. The system can be adjusted to accommodate any changes in regulations and procedures.
      Q: What plans and prospects are in place for Inmarsys?
      A: The plans are to expand the system from a petroleum industry tool to an all-industry tool, to cover all the sectors of the national economy. Even today, we have several major power-industry, chemical, and construction companies using the system.
      Q: Do you have non-Russian companies using your system?
      A: We have some 500 non-resident companies, about half of which are from the CIS countries. The most active CIS users are those in Kazakhstan and Ukraine. We also have equipment suppliers of Britain, Romania, Germany, Austria, France, South Korea, and Italy, plus CIS-based offices of international oil companies that are buying equipment and materials.
      Q: How do you position Inmarsys among similar B2B systems in the international oil market?
      A: There are quite a few systems working in the oil and gas sector. As far as I know, the most successful of those is the Trade Ranger in Houston, Texas, based on the well-known Commerce One products. However, there are not many large-scale systems similar to ours. Some important rating lists put Inmarsys at the top of e-commerce charts. In terms of functionality, our solutions are largely comparable to Commerce One products, which are used by many international e-commerce systems. Some Commerce One functions are better than ours, but some of our solutions are superior to theirs. Speaking of the number of users, I think 10,000 users is a good figure for any international e-commerce system.
      Q: Do you think it is necessary to have more foreign users of Inmarsys?
      A: Well, this is a Russian-language system, which certainly narrows its customer base. We need to develop an English-language version for non-Russian users. The real issue is not just to translate the interface. The entire content has to be translated into English and regularly updated. But we are working on it. And we hope to launch a project this year to help Russian manufacturers to access international selling markets.


Oil of Russia №3 2003.
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