Andersen Consulting makes bid for eProcurement

by Deborah Gage

Andersen Consulting this fall plans to open a yet-to-be-named "eProcurement venture" for customers to procure office supplies, computer equipment, airline tickets and other indirect goods.

AC Ventures, Andersen's venture-capital arm, has made a majority equity investment in new venture. Sun Microsystems has made a minority equity investment and will supply Andersen with up to $300 million worth of hardware, services and iPlanet software over a three-year period. The new venture also will become a majority shareholder in hpi GmbH, formerly Hoechst Procurement International, a Celanese company with 50 clients that manages $2 billion in indirect spending.

Andersen CEO Joe Forehand says Andersen has signed letters of intent with customers across geographies in the financial services, automotive, telecommunications, chemicals and food products industries that will represent more than $20 billion in aggregated spending when the agreements are finalized.

The new venture will earn transaction fees and category-management fees, but will outsource the major IT components to ISPs and other providers. "We'll focus on procurement and the supply-chain-management function," Forehand says.

IPlanet, meanwhile, has committed to putting developers behind the venture.

Andersen has taken extraordinary steps lately to attract and retain talent, to compete with Web integrators and dot-coms. Observers also note that iPlanet is not a leader in the procurement software space.

Dow Bauknight, former managing partner of Andersen's Supply Chain line of business, was named president and CEO of the new venture.