Commerce One signs up Sun, courts PeopleSoft

Battered by the downturn in the economy, Commerce One is moving aggressively to boost its sales with a new relationship with Sun Microsystems and a possible expanded partnership with PeopleSoft.

Commerce One is scheduled to announce this week that it's extending its SAP AG partnership to include Sun Microsystems, based in Palo, Alto, Calif., which will offer its MarketSet business-to-business marketplace environment for Sun's Solaris operating system.

In addition, SAP officials said earlier this month that Commerce One was free to negotiate a deal with PeopleSoft similar to its SAP agreement.

No plans are in place, but PeopleSoft is in talks with Commerce One and others for arrangements in which PeopleSoft would provide application services for marketplaces, said Kerry Lamson, PeopleSoft's vice president of e-business strategy and marketingFor the next phase of their partnership, Commerce One and SAP will port their joint MarketSet marketplace platform and Commerce One's Buyer product to Sun systems. The MarketSet platform is designed to handle direct procurement, supply-chain management, and real-time collaboration.

The relationship with Sun will be a boon to Commerce One because it will open up the vendor to Unix customers, said Lance Travis, an analyst at AMR Research, in Boston. "Commerce One needs to do something if they want to remain an independent company," Travis said.

Travis added that an alliance between Commerce One and PeopleSoft, both based in Pleasanton, Calif., would allow Commerce One to focus on PeopleSoft's customer base for human resources modules without threatening SAP.

Commerce One customer Bob Renner, CTO at Atlanta-based timber products exchange, ForestExpress, said his company chose the solution for the Solaris platform because participants need assurances that their internal enterprise environments will handle the data and transactions of the exchange.

The news comes at a crucial time for Commerce One, as its shareholders will meet this week to consider a reorganization to keep half of its stake in automotive b-to-b exchange Covisint LLC.

Covisint serves as a reminder of the importance of suppliers, analysts said. The demand for Covisint offerings has been sluggish, and it uses only 50 of Commerce One's 1,500 service employees despite earlier predictions that it would need thousands more, said Patrick Walravens, equity analyst at New York-based Lehman Brothers. As a result, demand for consultants has exceeded supply, resulting in too many service personnel. "If [suppliers] were all hooking up to the Covisint marketplace, you would need a lot more than 50 working on it," he said.

Exchanges such as Covisint "are only a small part of Commerce One's customer base, so the math used by Lehman doesn't accurately reflect our utilization," said a Commerce One spokesman.

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