Helping Major Companies Link to Suppliers

 
 
By John S. McCright  |  Posted 2001-02-12 Email Print this article Print
 
 
 
 
 
 
 

Vendors introducing applications for implementing private exchanges

Net marketplace providers Ariba Inc. and Commerce One Inc. are preparing for what most observers agree will be a year in which the luster of the large public exchanges will be tarnished as large companies look, instead, to implement private exchanges.

These private exchanges are essentially automated supply chains that use the marketplace platform to provide a common data store and language for integrating applications of both the buyer, or owner of the private exchange, and the sellers, or suppliers.

Commerce One, of Pleasanton, Calif., has already been working to take advantage of this shift through the relationship it formed last fall with SAP Markets, a division of enterprise applications developer SAP AG. Those partners next month will release Version 2.0 of two jointly developed products—the MarketSet collaborative supply chain software and Enterprise Buyer software—which are used for e-procurement of direct and indirect goods.

The MarketSet upgrade will include new product life cycle management capabilities, particularly around sharing design process documents among manufacturers and their suppliers, Commerce One officials said.

The Enterprise Buyer Professional edition upgrade will include enhanced direct materials procurement support with better integration into back-end financials software. The Enterprise Buyer Desktop edition will share a common look and feel with Professional.

Also in its efforts to offer suppliers of all sorts easier access to the e-marketplaces created with its software, Commerce One late last month announced that eTrango Inc., of Fremont, Calif., will sell its sell-side transaction software through the Commerce One.net Affiliate Program. eTrangos software enables suppliers to engage in e-procurement processes such as requests for quotations and auctions.

Ariba is also looking to expand the ability of large companies that use its exchange platform to manage their supply chains. The company late last month bought Agile Software Corp. for $2.5 billion. This move was widely hailed since Ariba, of Mountain View, Calif., was short on supply chain technology, and that is exactly what Agile offers, though not in a terribly broad suite.

Agiles Buyer software gives Ariba a tool for direct goods e-procurement. Aribas strength has been in procurement of indirect goods.

"Id summarize [the reasoning behind the Agile purchase] with one word—expansion," said Ariba CEO Keith Krach.

Ariba had been adding other partnerships to boost its ability to get more suppliers involved with its Ariba Commerce Network and more easily integrated with Aribas trading platform software.

Also last month, Ariba unveiled its Supplier Hub Program, in which it teamed with seven supplier-enablement vendors to provide Web-based, hosted software that will involve suppliers with users of Aribas buy-side software. The initial seven partners in the program include aggregators and enablers. The aggregators are hubs that bring together suppliers in particular vertical markets. They include AeroV Inc. in aerospace, Impresse for media and marketing, ProMost Inc. for promotional goods, and Viacore Inc. for electronic components. The enablers provide integration to a broader range of suppliers and include Microsoft Corp.s bCentral, MartQuest and Trigo.

Ariba, of course, had some access to supply chain software through its three-way partnership with i2 Technologies Inc. and IBM, which is known as The Alliance. While acknowledging that the market and The Alliance have changed, Ariba officials said there was no overlap between Agiles software and Dallas-based i2s. Officials at i2 disagreed.

"There is no question that there is going to be more competition" with Ariba, said Janet Eden-Harris, vice president of marketing and strategic initiatives at i2.

Ariba may not be done with its efforts to make integration of enterprise processes onto the Ariba platform easier. CEO Craig Conway of ERP (enterprise resource planning) and supply chain software developer PeopleSoft Inc. said that he is looking for a deal to resell Ariba software to his customers.

PeopleSoft, also of Pleasanton, already resells Commerce One software. A deal with Ariba will give PeopleSoft users another option for building private marketplaces, Conway said.

"We [license Commerce Ones] MarketSet software. ... Im trying to do a similar thing with Ariba," Conway said. "Hopefully, that will be in the not-too- distant future."

Many observers see such product enhancements and partnerships as part of a trend toward providing software to manage the business processes of a buyer and its suppliers in a private marketplace similar to the way ERP software manages business processes within a single large enterprise.

Ray Lane said he thinks that every large company will one day have a private exchange. Lane, the former No. 2 executive at Oracle Corp. and now a Silicon Valley venture capitalist who sits on the boards of several companies involved in B2B e-commerce, said this will give everyone in the supply chain a good view of where their business stands.

"Everybody is trying to figure out whats going on in the supply chain, to optimize their position to see if they can out-plan the other guy," Lane said. "They are saying, I want to know where inventory is at all times."

 
 
 
 
 
 
 
 
 
 
 

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