On the technology front, Ariba will look to provide more functionality around compliance with the next iteration of its platform. Due in February, the Mars platform will add enhanced functionality that enables users to cross-check vendor invoices against negotiated contractsa key capability according to research firm Aberdeen Group, which also points to outsourcing and category management as areas to watch in 2004. Separately, FreeMarkets acquisition of Covisint likewise beefs up its services arm, though the acquisition doesnt provide much in the way of technology. The move also positions FreeMarkets as a serious contender in the automotive industry.With the Covisint purchase, FreeMarkets will add General Motors Corp., DaimlerChrysler AG and Ford Motor Co. to its customer roster. The deal is expected to close this month. Even with a full plate of offerings, Ariba and FreeMarkets face stiff competition from the likes of IBM and EDS that provide sourcing technology and strong service arms. At the same time, enterprise resource planning software developers are close at their heels as they look to provide similar functionality. "There is going to be a good deal of consolidation [in this area]," said Tim Minahan, vice president of supply chain research at Aberdeen, in Boston. "Some of the pure plays are going to either merge or be acquired, particularly as ERPs want to grow out their supplier relationship management and augment that with domain expertise."
Under the terms of the agreement, Covisint will transfer its customer contracts for auction services to FreeMarketsa move that will guarantee FreeMarkets revenue from Covisint for the next three years and move it more solidly into the coveted automotive vertical.