Oracle on Monday is launching Oracle Sourcing On Demand, a subscription-based software service for procuring goods and services. More important, it shows that Oracle has identified another area where it can provide software as a service to its traditional customer base of large businesses.

Sourcing On Demand is a hosted offering that Oracle says will integrate with its own ERP systems as well as competitors' systems, and is priced at $850 a month per user.

That price may seem high, but as Oracle points out, large businesses may have only a few dozen procurement specialists on staff, while a business might deploy the $100-per-month Oracle CRM On Demand SaaS to thousands of salespeople.

Sourcing On Demand is designed for the procurement of such things as equipment and contracting services in the areas of financial services, manufacturing, high tech, consumer goods, and other industries, says Nagaraj Srinivasan, VP of supply chain management at Oracle.

What's more, the SaaS-to-ERP module may be just the beginning. "From an ERP standpoint, this is the first such offering to make its way to the marketplace," Srinivasan said in an interview Friday. "In terms of future plans, we're working with customers on which areas make sense" for future SaaS modules, he said.

The idea isn't new, however. SAP has offered a SaaS module for supplier-relationship management for at least a year, and recently hired a former Oracle executive, John Wookey, to develop an entire line of SaaS modules that have some connection to the core ERP system.

Oracle and SAP, in fact, appear to have a similar strategy around the concept of software plus services: stick with an on-premises, licensed software model for their customers' core ERP systems, but build SaaS extensions that work with those on-premises systems.

Oracle and SAP have said large companies prefer to keep their ERP systems on-site rather than venture into a SaaS model. But there's a financial incentive for these vendors, too: It protects their tried-and-true method for making money selling business software licenses and the accompanying maintenance contracts, while also providing customers with SaaS in areas they're most likely to appreciate.

A large company, for example, may be more willing to pay an $850-per-month, per-user fee for procurement than come up with the investment and time commitment to deploy such software on-site.

Sourcing On Demand is designed to complete sourcing events, ensure agreements are implemented as soon as they're signed, and generate "more effective" contracts, according to Oracle. It allows collaboration among experts from finance, purchasing, and business units to achieve the best cost and quality on purchased goods and services.

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