Ariba, PeopleSoft target strategic sourcing

Vendors are maneuvering to offer strategic sourcing solutions to meet the growing demand for technology that cuts straight to the bottom line of enterprise operations.

Pleasanton, California-based PeopleSoft Inc. and Ariba Inc., in Sunnyvale, California, both announced applications last week designed to allow companies to choose the best suppliers based on price or other factors, and negotiate better deals to cut costs and improve efficiency.

Market research firm Gartner Inc., based in Stamford, Connecticut, has estimated that by 2003, 70 percent of all enterprises will adopt strategic-sourcing technology.

Louis Columbus, an analyst at AMR Research in Boston, said companies could save between 25 percent and 40 percent on general office supplies, and between 14 percent and 40 percent on other indirect materials with a cross-enterprise strategic-sourcing initiative.

PeopleSoft 8.4 Strategic Sourcing is a collaborative solution built to help organizations manage the complex bidding and negotiation process associated with the procurement of direct goods, services, and large capital expenditures, according to company officials.

Traditionally, workflow processes associated with procurement have been manually intensive and paper-based, said Tom Anthony, PeopleSoft's director of supplier relationship management product strategy. "These solutions are designed to allow our customers to analyze their spending," Anthony said. The analysis may shorten the purchasing cycle.

Business analytics embedded in the solution are designed to help organizations quickly evaluate the performance of their suppliers, based on user-defined criteria such as cost, warranty, quality, and delivery, Anthony said.

In addition, Ariba, which recently revamped its entire corporate focus around managing corporate spending, teamed up with CascadeWorks this week to offer a spending-management solution designed to reduce the cost of procuring temporary workers and consultants.

The new Ariba Workforce enterprise software enables buyers to strategically divert more spending to their preferred vendors, according to company officials.

Whereas the average Fortune 1000 company spends between 11 percent to 19 percent of its annual purchasing dollars on work force procurement, the process is often performed manually, said Martin Boyd, Ariba's director of product marketing. "Without visibility, they don't even know how much is being spent with preferred providers," Boyd said.

Ariba Workforce enables time sheets and expenses to be submitted and approved online, and to build checks and balances into the system to avoid overbilling, Boyd said.

Autodesk, a San Rafael, California-based design software and services provider, is using CascadeWorks to save the 1 percent markup that used to go to a third-party e-billing manager overseeing temporary workers, said Lindsay Myers, Autodesk senior buyer. With the new system, contractors "can't submit an invoice unless there is a purchase order," she said. "It eliminates [the possibility of] us overspending on a purchase order."

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