InformationWeek
Defining The Business Value Of Technology
September 13, 1999
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Here's a closer look at the market leaders.
Ariba
Ariba went public in June, disclosing losses of $10.9 million on sales of $8.3 million in fiscal year 1998. It has about 250 employees. Revenue is expected to increase to more than $50 million in 1999 and to more than $75 million in 2000, according to Brent Thill, an analyst at Credit Suisse First Boston Corp--but he isn't worried. "Obviously, this a very young market," says Thill. "These vendors are growing at pretty mind-boggling growth ratings, albeit off a small base."
Ariba came out with an "outstanding tool" that others are trying to replicate, says Miles. "Ariba is clearly on the leading edge. They have a very sound strategy." While evaluating the products, Miles wanted to go to his suppliers' Web sites, but wasn't able to. Ariba executives "listened and responded with enhancements," he says. Version 6.0 of ORMS lets users go to suppliers' sites, identify what they want to buy, and get it all on one system.
Ariba plans to derive more revenue from sales of its current software and network services offerings and also from its maintenance and support fees, says C.J. Glynn, director of corporate marketing. In the future, it also plans to add value-added services such as supplier ratings and auctions.
While praising Ariba's product and innovation, Torrey Byles, president of Granada Research, an E-commerce research firm, says the downside of Ariba's products is the hefty price, which can range from $1 million to several million dollars.
Glynn says Ariba's huge benefits and savings to buyers and suppliers make the value of its products worth the price. Also, it has targeted high-end multinational companies that can afford the systems and want an end-to-end solution. "As we expand our focus, we may deliver a different price model," Glynn says. Midsize companies are also served by partners, including J.D. Edwards.
Commerce One
In its public offering statement in July, Commerce One disclosed losses of $24.6 million on sales of $2.6 million in 1998. Analyst Thill estimates Commerce One will post revenue of $17.5 million for 1999 and $42 million in 2000. In June, Commerce One signed a deal that makes PeopleSoft the exclusive seller to its own customers of eProcurement, a PeopleSoft application based on BuySite technology.
Photo by James Elliot
Extensible Markup Language also holds out promise for more standard data interchange online. "By 2001, global XML repositories will be sufficiently developed to ease XML interchanges between applications without the need for traditional EDI switching," says Barbara Reilly, a research director at Gartner Group.
Related links:
Ariba has 41 major accounts, including General Motors, Merck, Nestle USA, and Seagate. It has also entered into strategic alliances with Yahoo.
Users are enthusiastic, too. Ariba customer Canadian Imperial Bank of Commerce, the seventh-largest bank in North America, spends about $938 million on supplies and services. Since October, the bank has brought six major suppliers and 300 "power users" online to do most of the purchasing. Canadian Imperial has plans to grow to 2,000 users scattered throughout 1,400 branches, and it expects to automate 25% of the purchases it makes each year, using the Ariba system, says Jack Miles, the bank's senior VP and chief purchasing officer. As the software evolves, he will add even more customers to that mix.
Nipping at Ariba's heels, Commerce One has its own list of 28 top-notch customers, including Schlumberger Oilfield Services, Warner-Lambert, and Wells Fargo. Its Commerce Chain Solution features two products: Commerce One BuySite automates the internal procurement process from requisition to order, and Commerce One MarketSite is the marketplace. Unique to Commerce One is the ability for customers to choose not to purchase its procurement product, but only its MarketSite.
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