Outsourcing Supply Chains

Hosted apps from Webplan, Ozro, IBM offer a low-budget way to pull together ERP, procurement

Webplan Corp., Ozro Inc. and IBM are targeting new hosted SCM products at companies that have had neither the time nor the resources to develop their own business-to-business e-commerce applications.

Webplan will launch in two weeks its eSupply-Chain.Net platform, which bundles its existing supply chain management application Ceo into a hosted package. eSC.Net will provide, for a monthly subscription fee, a view into a companys supply chain by pulling information out of a customers back-end enterprise resource planning system and pushing it out to trading partners.

The platform will also offer analysis capabilities, according to company officials in Newport Beach, Calif.

Similarly, Boston-based Ozro, which last week changed its name from TradeAccess Inc., will officially launch a hosted version of its Ozro Agreement for e-Procurement offering later this year. The SCM platform, which comprises the companys negotiation engine and other e-procurement functionality, is in early release as a hosted application through Unibex Inc., a Washington-based ASP (application service provider).

Separately, IBM, of Armonk, N.Y., last month unveiled its e-marketplace hosting service for Ariba Inc.s Ariba Buyer e-procurement software. The service automates the purchase of indirect goods, those not used in making a product, for small and midsize companies.

Hosting supply chain software can save big upfront costs. The license alone for Ariba Buyer, for instance, can run from $500,000 to several million dollars. But pricing for the IBM hosted service starts at about $20,000 a month, an IBM official said.

FitnessMX.com Inc., which is an e-procurement service for the health club industry, chose Unibex to host its site. As a budget-minded startup with 1,000 customers and 200 suppliers, it was a no-brainer for the company to have its supply chain software hosted, said co-founder Rich Warren.

In connecting with suppliers, FitnessMX found that about 95 percent of them were not enabled for e-commerce. Because the company opted for a hosted supply chain service, it was able to create an online exchange for its supplier base.

"Theyre looking to us for a procurement system," said Warren, in Bethesda, Md.

While acknowledging that hosted SCM applications fit the bill when IT resources are at a premium, Bill Conait is suspicious of running mission-critical software outside his four walls.

"The idea is to have a fail-safe system, but if your T-1 connection goes down, sometimes it doesnt get fixed for days," said Conait, IS manager at Maax Spas Arizona Inc., in Chandler, Ariz.

Since supply chain applications are critical for Maax Spas, Conait said he would also be concerned about confidentiality and security.

"Lets be honest. Were in the infancy stages for this whole ASP model," he said.

The 14,000-member National Asso-ciation of Manufacturers, in Washington, endorses the ASP model for supply chain management.

"Youre not stuck with any one sys-tem but getting a system that will be flexible and updated over time in a relatively inexpensive manner," said Dan Akman, assistant vice president of e-commerce marketing.