Commerce One refocuses on procurement

In a move analysts are calling necessary for survival, business-to-business software vendor Commerce One on Thursday released a significant upgrade in its procurement-handling capabilities.

Called Collaborative Procurement, the new offering includes tools for handling change orders, a portal through which an enterprise can aggregate all of its supplier activities and a dynamic bidding module for online auctions.

Scott Wilkerson, manager of solution strategies at the vendor, noted that previous procurement offerings from Commerce One and other vendors proved to be too rigid to handle change orders, often forcing companies to cancel orders rather than modify them.

"Once you've done that, you lose the e-commerce benefit you gained," he said.

Commerce One must continue to innovate if it hopes to stay ahead of enterprise resource planning vendors such as Oracle, SAP AG and i2 Technologies, which continue to invade its turf, said Laurie Orlov, an analyst at Forrester Research.

"It's refocusing on procurement rather than marketplaces," she said. "Last year, it really got involved with all these marketplaces that were popping up and took its eye off the procurement ball."

"The e-marketplace stuff is at a roadblock," said Bob McCullough, an analyst at Hurwitz Group.

McCullough said he sees Commerce One's latest release as a concerted effort to get involved in direct procurement, which involves the components that go into what a company sells, as opposed to indirect procurement, which covers the products that help a business to run itself.

Many e-business portals, such as BroadVision and Blue Martini Software, focus on sell-side activity and managing multiple customers. Commerce One will now do the same for large buyers with multiple suppliers.

Wilkerson said that Commerce One remains committed to forming public marketplaces, but that the company believes enterprises will seek to create private exchanges with preferred suppliers and will want a tool to manage those private arenas. He added that Commerce One plans to offer a sell-side portal by early next year.

Orlov said the management portal marks a step outside of traditional procurement and might be a sign that Commerce One is learning more about product life cycles from its partnership with SAP AG, with which it has built a procurement module called Enterprise Buyer.

McCullough said this latest release is targeted directly at large enterprises, which must address such issues as how to handle multiple suppliers and numerous change orders.

Neither Orlov nor McCullough said they believe Commerce One has achieved a true collaboration tool, though, despite the word "collaboration" being in the name of the product.

Wilkerson acknowledged that the product is a first step toward transparent inventories, joint product development and triggered purchases for direct goods.

"It's important to remember this early stage of collaboration really reflects the state of the market right now," McCullough said. "I give them points for trying."

Wilkerson said that for a sizable enterprise looking to use all of the available tools in this release, the cost would be just under $1 million.

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More about Blue MartiniBlue Martini SoftwareBroadvisionCommerce OneEnterprise BuyerForrester ResearchHurwitz Groupi2i2 TechnologiesOracleSAP Australia

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