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E-Procurement Software Specialists

At the heart of the e-procurement revolution are several companies that over the past few years have been building increasingly powerful and flexible software platforms specifically dedicated to online procurement. These include increasingly familiar names, such as Ariba, Commerce One, ProcureNet, Intelisys Electronic Commerce (now Metiom), Sun Microsystem/Netscape, and Broadvision, all of which originally developed online procurement software suites that were intended to help usually large and financially powerful companies to develop dedicated, one-to-many enterprise systems. Companies such as Concur Technologies, Clarus, Trilogy, and Remedy all provide "light" systems for the mid-size and smaller company market.

These software suites have all the basic procurement functionality that you might expect. They allow for online catalogs, which today can be managed either by the vendors, by the buying enterprise, or more often these days by ASPs or other third-party groups. They allow employees, either from central purchasing or from the desktop, to electronically search for items; compare prices, functions, and availability; choose different payment methods; requisition the materials; and track materials delivery.

As we have seen, these suites originally focused on the much more straightforward purchase of indirect goods, but lately have moved into providing more advanced functionality for the complex purchasing of direct materials. As this drive toward direct materials continues, these companies are beginning to form alliances with providers of supply chain support applications, including those that can round out their e-procurement solutions with CRM, strategic sourcing, or advanced planning and scheduling (APS) functionality. Ariba, for example, purchased Supplier Market.com, an online workplace for manufacturing materials, which it intended to use as part of its direct sourcing infrastructure. Similarly, Commerce One has teamed up with Aspect Development, Extricity, Andersen Consulting, and other partners to create a direct-materials portal.

The major e-procurement players have also all begun to develop a two-pronged approach to implementation that reflects the shift from the one-to-many to the many-to-many model. Not only do they provide a software platform that can be maintained by the buying enterprise (one-to-many), but they now also provide a separate platform that exists as an independent "network" (many-to-many model). For example, Ariba provides an enterprise suite—ORMS (Operating Resource Management Systems)—and also a subscription-based, e-community portal network through its Ariba Network Platform. Commerce One's enterprise solution is BuySite, and its networked e-community platform is MarketSite. Metiom (formerly Intelisys) has the ConnectTrade product suite for both its enterprise and network offerings.

As we have already seen, these networked platforms provide an independent, portal-based trading community that often supports thousands of suppliers with most of the same level of functionality as the enterprise procurement platforms, including requisitioning, tracking, and payment services. These networked solutions, both sponsored by the software creators and sold to independent groups (third-party ASPs and market creators) interested in using these network portals to develop their own industry exchanges, have been instrumental in the explosive growth of vertical trading communities. As these network solutions have become more popular, their functionality has been expanded to include important business services, such as content management tools, integrated payment systems, easy vendor registration, advanced search and comparison tools, strategic sourcing and decision support systems, and other key business support services. Commerce One's MarketSite, for example, also includes payment services from American Express, tax assistance and tools, and logistics and freight delivery services prearranged with UPS and TanData Corp.

The great advantage of these networked offerings is that they provide even small and medium-sized third-party sponsors with essentially a "ready-made" trading community platform. This type of opportunity has been enhanced even more lately, as specialist vendors use their memberships in horizontal network exchanges—such as Ariba's Internet Business Exchange, designed to provide a horizontal platform with full exchange and e-procurement functionality—in order to develop their own industry-specific vertical exchanges within those horizontal networks. Known as on-ramps, these exchanges allow members of any size to build up their market-specific content and supplier catalogs—essentially developing their own trading community while never having to build or take responsibility for ownership of the software themselves.

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