Commerce One passing SAP?

Commerce One Inc. is manoeuvring out of SAP AG’s shadow by laying out a new plan to attack the strategic sourcing market while unveiling its future foray into Web services.

The company last week rolled out a suite of collaborative solutions called Commerce One 5.0, designed to fully automate the entire strategic sourcing and procurement process while enabling deep integration between an enterprise and its trading partners.

The suite combines e-commerce buying applications – Commerce One Buy and Commerce One Source – with the Commerce One Collaborative Platform, a workflow and business process management platform designed to link applications to support business processes within and across enterprises.

With the suite, the company will move away from its previous focus on marketing private marketplaces, said Mark Hoffman, chairman and CEO of Pleasanton, Calif.-based Commerce One .

To date, the idea of private marketplaces has not resonated with Commerce One’s targeted market, usually purchasing managers and materials managers, Hoffman said, noting that “[Enterprise are] saying, ‘I have a problem sourcing. I have a problem buying. I have a problem communicating with my suppliers.’ ”

As a result, Commerce One now plans to lead with its applications when selling to enterprises, thus pulling its platform on its coattails, Hoffman said.

Hoffman also unveiled the company’s Web services architecture, which the company plans to roll out in the middle of this year. Commerce One will be building a “componentized platform” that will support Web services for sourcing and buying.

“We will change all of our applications into Web service applications that can plug into this environment,” he said. “I want to turn it into a platform that enhances our applications.”

Louis Columbus, an analyst at AMR Research in Boston, said Commerce One was forced to “bang the drum loudly” over its new suite to show it can make it without partner SAP, a previous source of substantial revenue. They parted ways last month in the e-procurement arena.

“Paradoxically, the relationship with SAP, so supportive financially over time, may limit the adoption of 5.0 for Commerce One,” Columbus said.

Although the suite provides much-needed business process management for the e-sourcing marketplace, the joint SAP-Commerce One marketplace product positioning is now superceded by the stronger push for 5.0, Columbus said. This may cause confusion in the market, he said, adding that the new suite is missing direct materials sourcing and optimization-based bidding analysis.

In addition, the company, which is trying to transform itself from a company that tackles indirect procurement to one that focuses on more strategic direct procurement, faces a “tough row to hoe,” said John Moore, an analyst at ARC Advisory Group in Dedham, Mass.

“When you get into strategic sourcing…you’re dealing with fewer suppliers and much larger contracts. There isn’t the need to minimize the purchase order,” Moore said.

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