PeopleSoft sees procurement opportunity

PeopleSoft sees an opportunity to make sales where the pioneers in e-procurement have stumbled. It questions whether e-procurement vendors have given customers the return on investment as fast and as thoroughly as they claim.

PeopleSoft sees an opportunity to make sales where the pioneers in e-procurement have stumbled. It questions whether e-procurement vendors have given customers the return on investment as fast and as thoroughly as they claim.

But pioneers like Commerce One say they're already well ahead of the enterprise resource planning (ERP) vendor, and said PeopleSoft will have its own slow integrations to work through.

It's the latest sign of pressure for native e-procurement vendors, which are looking to expand their services even as the market pulls back its support. The ERP vendors believe they can provide a broad offering and install it faster.

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"Customers paid too much money, for one, and vendors couldn't really get suppliers up and running as fast as customers wanted," said Terry Sutte, director of e-procurement sales at PeopleSoft.

That shouldn't make it any easier for PeopleSoft, countered Scott Wilkerson, manager of solutions strategy at Commerce One.

"We're agnostic to any back-end system," he said. "We can function as a hub." In contrast, far-reaching ERP systems have complicated connections to make, he said.

Arriving behind the market's longtime leaders, PeopleSoft has needed to fill out its software offerings. The company plans to roll out new parts to its e-procurement software over the next several months for a complete off-the-shelf product, he said.

Some companies use e-procurement but prefer to buy directly from some of their suppliers' Web sites. Early next year, PeopleSoft plans on introducing "direct merchant integration" tool kits that will let companies tie into their favorite suppliers directly.

For those that prefer to control the content of what they buy, rather than let employees scout suppliers' Web sites, PeopleSoft will offer licensed software that will manage catalogs, "normalize" content so that it uses the same format and makes comparisons possible. PeopleSoft expects to announce this next month. The company also has a portal product that it markets as a way for companies to bring in supplier information.

Combined with its marketplace product that lets companies hook into public and private marketplaces, PeopleSoft will cover all the bases with packaged software, he said.

Finally, it plans to offer prepackaged software in a quick-start program to give customers faster returns on investment, he said. ERP vendors like PeopleSoft and Oracle remain far behind Commerce One and Ariba, who claim hundreds of customers. PeopleSoft has about 60 e-procurement customers, Sutte said. Oracle, which did not return phone calls for this story, has not been a force in the market, and needs to break beyond its customer base for this market, analysts said.

Still, Sutte believes the pedigree will help PeopleSoft compete against best-of-breed solutions like Commerce One and Ariba, he said. Companies want broader solutions that integrate with a wider range of applications.

"SAP, Oracle and PeopleSoft are going to benefit by the meltdown of Commerce One, Ariba, PurchasePro, Elcom and Rightworks being acquired by i2," Sutte said. Smaller vendors are also having trouble. Metiom recently filed for bankruptcy and Clarus is also struggling.

Analysts said Sutte might have a point.

"ERP vendors didn't have anything worthwhile in e-procurement last summer," said Jon Ekoniak, an analyst at U.S. Bancorp Piper Jaffray. "With the slowdown on the macro level, it gives them a chance to catch up and sell it as part of a broader solution."

That only underscores how far PeopleSoft and other vendors have to go, said Scott Wilkerson, manager of solutions strategy at Commerce One.

If ERP vendors have any edge, Commerce One isn't worried - it has SAP covering its back, Wilkerson said, referring to the company's tight alliance with the big German ERP company.

"There's a lot of strength and leverage in partnering with an ERP vendor," he said.

The company may need it, said another analyst.

"E-procurement is becoming increasingly suite-based," said Kevin Restivo, an IDC analyst. "The alliance (with SAP) is critical," he said.

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