InformationWeek
Defining The Business Value Of Technology
December 20/27, 1999
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Network-Based Procurement Services
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his was the year in which services-based models replaced software applications in categories across the board--and that trend extended to one of the newest classes of software: Web-based procurement.All the major online procurement application vendors unveiled and aggressively pushed their network-centric services offerings in the past 12 months. These let procurement vendors, rather than business customers, host the online catalogs of business suppliers and give customers a wider variety of suppliers from which to choose. Such offerings include Ariba's Ariba Network, Commerce One's MarketSite.net, Concur Technologies' Concur Commerce Network, and Intelisys Electronic Commerce's Intelisys.com.
This trend in online procurement mirrored the momentum behind application service providers in many other software sectors. The primary driver behind this trend is price. Software licensing fees passed the $1 million mark for some early adopters of online procurement applications from the likes of Ariba and Commerce One in 1997 and 1998.
In the new services model, pricing is based on subscription and transaction fees.
As the Web has matured, buyers have become more comfortable with the network-centric model. "Our vendors' catalogs are on Commerce One's MarketSite.net, where they're available to other buyer companies, too," says William Lynch, director of global procurement and logistics for Schlumberger Oilfield Services in Houston. "But the price, terms, and conditions are still Schlumberger-specific on our BuySite interface."
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