Post by
kirk15 on Dec 21, 2001 8:59am
here is the NEWS!!!
IBM partners with Ariba for renewed B2B push
December 21, 2001 00:01:00 AM ET
By Siobhan Kennedy
NEW YORK, Dec 21 (Reuters) - Business-to-business software may be one of the dirty words of 2001, but the much-hyped technology isn't dead yet.
So says International Business Machines Corp. (IBM), which on Friday said it was making a renewed push into the market through an alliance with one time B2B high flyer Ariba Inc. (ARBA).
IBM will offer Ariba's purchasing software as a paid-for service over the Internet. The software lets companies connect to suppliers to buy basic goods, such as office supplies and furniture, at much lower costs than traditional methods that rely on phone or fax.
The new service, called Quick Start, can get companies up and running and purchasing goods within 21 days, IBM said.
Towers Perrin, a large U.S-based management consulting firm, is one customer using the IBM's new service to wring costs out of its internal purchasing processes.
The company typically spends hundreds of millions of dollars every year buying office supplies -- desks, chairs and computers -- from up to 60 different suppliers.
But the process is so complex, and its business so large, that its very difficult to control who's buying what, where, and for how much money, said John Hays, director of global sourcing and procurement for Towers Perrin.
"It's a major problem," Hays said. "We had no real ability to manage spend and vendor relationships throughout the country on a day to day basis," he said.
SHAVING COSTS
Using Ariba's software, Hays said Towers Perrin has now managed to whittle its list of suppliers down to just one, a shift in its business strategy that the company believes will help it shave between 20 percent and 35 percent off its annual purchasing costs.
"We expect to save in excess of $80 million in five years," Hays added.
IBM's deal with Ariba comes at a time when most business-to-business software companies are struggling to keep their heads above water amid a sharp economic downturn and a drastic reduction in business software spending.
Companies like Ariba and its rival Commerce One Inc. (CMRC) burst onto the scene in 1999 with the promise of saving companies billions of dollars by connecting them with suppliers to buy discounted goods over the Web, in the process threatening to displace established giants in industries ranging from manufacturing to retail.
But as the Internet bubble burst and B2B firms started running out of cash, online marketplaces didn't take off as quickly as once promised and most went bust.
B2B NOT DEAD AND BURIED
But that doesn't mean the whole concept of B2B is dead and buried, Paul Boula, director of procurement for IBM's Global Services division told Reuters.
"We continue to pursue this (B2B market) very aggressively first and foremost because our customers continue to demand it," Boula said.
Companies no longer want to be part of large online marketplaces, but they still want to do the majority of their purchasing online, Boula said.
Industry research firm International Data Corp. predicts that companies will have spent about $4.5 billion on Web-based procurement software by the end of 2001.
"And that's just software sales alone," Boula said, noting that companies that manage the service, like IBM, can also make money by taking a cut of each transaction or charging a monthly fee to use the software.
"This procurement stuff really works," agreed Bruce Richardson, an analyst with AMR Research in Boston said. REUTERS
Comment by
PatrickH on Dec 21, 2001 9:10am
Thanks kirk15,
Exciting news. With IBM partnering Ariba the stock price could sky rocket!
I visited the Yahoo board & they are going nuts over there with optimism! I am long with Jan 2003 Leap Options & intend to stay that way.
Lets hope this board will start livening up.
Pat