E-procurement is becoming viable as a long-term solution for the business-to-business realm, but significant hurdles remain before confidence will return to the embattled sector, according to industry observers.

Mountain View, Calif.-based b-to-b platform vendor Ariba Inc. used its Ariba Live 2001 user conference in Las Vegas last week to demonstrate the strength of its industry alliances and to establish credibility for its newly anointed president and senior management team.

However, the hype surrounding b-to-b vendors such as Ariba and Commerce One Inc., which are vying for supremacy as e-procurement platform developers, has given rise to a plethora of competing third-party tool providers that claim to rectify Ariba and Commerce One's shortcomings.

Vendors such as BillingZone LLC, Cardonet Inc., CascadeWorks Inc., CoreHarbor Inc., Enterworks Inc., Rapt Inc., and Tivoli Systems Inc. used Ariba Live to demonstrate software designed to complement Ariba's suite of e-procurement and b-to-b offerings. The e-business-focused solutions included contract management services, catalog and content management packages, and enterprise integration services.

At the conference, Ariba announced that its products will be incorporated into IBM's WebSphere application server integration software and that IBM will ship its Leveraged Procurement Services (LPS) suite on Ariba's b-to-b platform in June.

Ariba also announced an agreement to strengthen ties to BEA Systems' WebLogic application server. Ariba also secured the support of PricewaterhouseCoopers for a jointly developed and delivered collaborative sourcing system to come for quote-enabled procurement.

Although Ariba appeared determined to demonstrate industrywide partner support, the range of competing solutions had some conference attendees worried.

Predicting a third-party vendor shakeout, Mark Himmel, principal of Deerfield, Ill.-based e-business integrator and consultancy The Revere Group, said that, although there are many players, there are "not a lot of 800-pound gorillas. ... Customers are looking for one-stop shopping whenever possible."

Although e-procurement still offers efficiency to business, Himmel warned that work processes, personnel, and technology involved must work together before true benefits of e-procurement will be realized. "I think the technology is way ahead of its time," he said.

Itay Meiri, CEO of Santa Clara, Calif.-based e-catalog provider Cardonet, said the gaps in Ariba's suite create "big pain points" for customers.

Diana Jovin, president and CEO of CascadeWorks, a San Francisco-based vendor focused on the human resources side of procurement, said enterprise users now need e-procurement technology to acquire services for staffing, consulting, and service-agreement needs. "Customers want to execute on projects where they can get immediate benefits," she said.

The emergence of third-party vendors goes part way to resolving some of the issues, such as ease of integration and the difficulties with Ariba's collaboration technology, that users face.

Hans Hansen, a Burlingame, Calif.-based professional services consultant and former ERP (enterprise resource planning)/CRM (customer relationship management) applications consultant at Oracle, said third parties are needed to improve Ariba's collaboration functionality. "I have never seen this [work well] in reality," he said.

In response, Ariba executives said users have reported significant time-savings from the collaboration process. Larry Mueller, Ariba's new president and CEO, was quick to defend the company, saying, "When you look across the key functional areas, we provide outstanding solutions."