New Alliance Aimed at Small Firms

FRAMINGHAM (06/30/2000) - Ariba Inc. and The EC Co. are trying to level the e-business playing field for small and midsize suppliers, often referred to as "the forgotten 5 million."

Under a deal announced this week, EC, a Palo Alto, California-based e-commerce services firm, will provide suppliers with free software to electronically receive and process orders placed by large corporate buyers using procurement software from Ariba, in Mountain View, California.

Once connected to EC's network, the smaller suppliers - many of which now do business by telephone and fax - can conduct all business electronically.

Suppliers can download the EC software from the company's Web site.

The EC software functions much like a value-added network, handling all the transaction processing behind the scenes. Suppliers pay a monthly service fee based on transaction volume.

Procurement experts say many large companies typically bypass small and midsize suppliers that can't process their orders electronically. Paper-based transactions are too expensive and prone to inaccuracies.

Electronically exchanging documents also significantly cuts costs. A paper-based transaction typically costs between $20 and $150, compared with an Internet transaction that costs between 10 cents and $2, according to Carl Lehmann, an analyst at Meta Group Inc. in Stamford, Connecticut.

Yet Chris Silva, an analyst at International Data Corp. in Framingham, Massachusetts, said cost savings isn't usually a supplier's primary motive for moving its business to the Internet. Instead, Silva said, the main motivation is to gain greater access to larger buyers.

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