Taking An Ax to Spending

Ariba Inc. and Verticalnet Inc. are answering customer demands for help in reducing overall spending with software and services to do the job.

Ariba is readying software called Network Sourcing that is designed to help companies run reverse auctions for quick savings opportunities. The product offers companies a chance to try sourcing products in a hosted environment, company officials said.

The software and service, which Ariba hopes to roll out at the end of the month, will give customers the ability to create sourcing projects and events on the companys Supplier Network—a community of about 60,000 suppliers and 250 Ariba customers—by connecting current and new suppliers on the network.

In addition to reverse-auction capabilities, Network Sourcing provides negotiation and open request-for-quotation capabilities. Buyers can negotiate with multiple suppliers simultaneously on a number of attributes other than price. By operating as an on-demand service, the offering enables users to get started in days or weeks rather than months, said officials, in Sunnyvale, Calif.

Beyond this launch, Ariba will release with its next major product upgrade, at the end of next March, additional category-specific spend management service and software offerings that target hard-to- manage spend areas.

Separately, Verticalnet this week will release Supply Management 5.0, which includes a hosted version of 11 supply management modules that the company guarantees can be implemented within 45 days for less than $100,000. The Spend Analysis application has been significantly upgraded in Version 5.0 to include Web-based analytics, enhanced data cleansing and auto-classification capabilities. In addition, users will be able to initiate a reverse auction or negotiate directly from the analytic tool.

Functional enhancements to the Supply Selection module include enhanced supplier discovery, an improved ability to select suppliers based on total landed cost, support for diversity procurement, the ability to include supplier performance metrics as decision criteria and improved auction capabilities.

Aaron Songer, corporate sourcing analyst at MasterBrand Cabinets Inc., has all of his companys raw-material spending information aggregated into Verticalnets spend management tool, which pulls and aggregates data from five legacy systems. Songer said he sees the most benefit around reduced cycle times.

"Prior to using the application, if someone were to ask us what were spending on a particular material, we would have to go out to all the groups and ask them for information," said Songer, in Jasper, Ind. "Wed pull everything together in one massive spreadsheet and crunch the numbers. That would be weeks to get the information. Now in some cases, its minutes or hours to generate the information we need."