Oracle, Commerce One join B2B sourcing battle

Even though there aren’t as many passengers climbing on board these days, the business-to-business software bus keeps rolling forward as rival vendors try to match one another with online sourcing applications aimed at automating the process of finding suppliers.

Developing sourcing applications has become the rage for business-to-business vendors this year, and that trend continued last week when Oracle Corp. and Commerce One Inc. both announced new sourcing tools. Ariba Inc. rolled out sourcing software three months ago.

The new applications were designed so that users looking to buy products such as office supplies can post requests for proposals online and then score the responses they get from would-be suppliers.

Pierre Mitchell, an analyst at AMR Research Inc. in Boston, said automated sourcing is the logical next step for companies that have installed software supporting online purchasing and business-to-business auctions. But Mitchell added that he doesn’t expect users to rely on the current sourcing tools for much beyond auctions and pilot projects involving the negotiation and management of long-term contracts.

For example, Commerce One built its new sourcing application based partly on recommendations submitted by General Motors Corp., which owns part of the Pleasanton, Calif.-based vendor. The Commerce One Source software is available for beta testing now and is due to ship later this month.

But a GM spokesman said the automaker isn’t using the beta-test version of the sourcing tool at this point. GM did provide input to Commerce One on needed functionality, “but that’s the extent of it,” the spokesman said.

While Commerce One is among the entrenched business-to-business vendors, Oracle has been a relative latecomer to the market. But its Oracle Sourcing application puts the capstone on an e-business product offering that also includes procurement and spending analysis software.

Joseph Marino, an analyst at Current Analysis Inc. in Sterling, Va., said Oracle has chosen a good time to jump into the business-to-business market in a bigger way. Companies such as Commerce One and Sunnyvale, Calif.-based Ariba are in a state of flux because of a demand slowdown, he noted.

“This isn’t a short race,” Marino said. “It’s a marathon, and Oracle’s got an installed base [from its database and business applications] that will allow it to stick around.”

The big challenge for Oracle will be proving that its applications work well in multivendor environments, Mitchell said.