By Siobhan Kennedy
NEW YORK, Feb 20 (Reuters) - Commerce One Inc. <CMRC.O> and
SAP AG <SAPGp.DE> <SAP.N>, taking aim at a market dominated by
i2 Technologies Inc. <ITWO.O>, are planning a venture to launch
software that allows manufacturers to streamline the purchase
of raw materials by collaborating with suppliers over the
Internet.
The jointly developed software, which enables companies to
set up online marketplaces that link buyers and suppliers and
enable them to share product plans and designs online, will be
available at the end of March, Commerce One and SAP said this
week at Commerce One's eLink user conference in Berlin.
"I think it's a very good product. We've talked to a number
of early users of the software and they've all been very
bullish on it," said Goldman Sachs' Tom Berquist.
Although Commerce One and SAP formed an alliance for online
exchanges in June last year, Kevin Schick, Commerce One vice
president of product marketing, told Reuters the existing
version of their joint platform, called MarketSet, featured
only "loosely coupled" software from the two vendors.
But the new version will include tight integration between
Commerce One's electronic commerce software and SAP's supply
chain applications, which enable companies to share their
product planning and purchasing details with partners and
suppliers, Schick said in an interview on Tuesday.
"It's a very competitive move against i2. I would say the
two leading contenders in the direct procurement, collaborative
commerce market are now Commerce One and SAP against i2,"
Berquist said.
While the first generation of online exchanges focused on
indirect procurement, or the buying and selling of finished
goods such as office products and services, over the Web, the
second generation is focused on software that automates direct
procurement, or the buying and selling of raw materials.
Inefficiencies in procuring raw materials cost
manufacturers billions of dollars a year, analysts said.
But they say bringing the systems on line, and enabling
buyers and suppliers to share inventory, demand and planning
data, will help cut those costs dramatically.
Automating that process was also the reason Commerce One's
rival Ariba Inc. <ARBA.O> got together with No.1 supply chain
management software vendor, i2 Technologies, and International
Business Machines Corp.<IBM.N>, to form their joint B2B
Alliance last year.
But with Ariba and i2 continuing to launch products that
encroach on each other's territory, many analysts say the
alliance is all but over, leaving the door wide open for
Commerce One and SAP.
To that end, the two vendors used Commerce One's conference
this week to gather momentum for their alliance by announcing a
host of new joint customer wins.
The companies, which already have 15 joint marketplaces
under their belt, said their software would be used as the
platform to power four more exchanges.
Importantly, said Schick, the marketplaces help Commerce
One expand its presence in Europe, where the vendor has had
very little traction to date.
Brokerage firm Credit Suisse First Boston said in a
research note Tuesday that SAP was key to Commerce One's
international success.
"SAP's global installed base of 13,000 and 50 percent
applications market penetration level in Europe provides a rich
revenue stream," CSFB said. "Release of MarketSet 2.0 at the
end of this month will further accelerate new opportunities."
The firm said that Commerce One's management had indicated
during the conference that there were several industries --
chemical, agriculture, electronic components and general
contracting -- that have yet to be tapped.
Commerce One stock fell $2-5/8, about 11 percent, to
$21-3/8 on Nasdaq on Tuesday, while i2 lost $5, or 13 percent,
to 33-3/16. SAP's shares traded on the New York Stock Exchange
fell $1.54, or 3.5 percent, to $42.80.
REUTERS
Rtr18:39 02-20-01
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