Commerce One, Oracle Introduce Sourcing AppsCommerce One, Oracle Introduce Sourcing Apps

With corporate-purchasing departments growing increasingly cost-conscious, CommerceOne Inc. and Oracle Wednesday unveiled new applications that are expected to add sophistication to the process of selecting and negotiating with vendors of specialized parts and materials, called direct materials. Both companies have integrated the so-called sourcing process with enterprise resource planning and supply-chain apps in an attempt to make sourcing more than an automated procurement process.

Commerce One execs say Commerce One Source reusable business library will speed up sourcing cycles by making it possible to reuse sourcing data assembled during a vendor selection. "We think this is sort of the secret sauce of what we're doing," says Scott Wilkerson, director of product marketing. Wilkerson says a standalone sourcing product has been ready for some time, but Commerce One wanted to combine it with portions of the company's transaction engine. He also says customers increasingly have been asking for an application that kicks in earlier in the sourcing process, providing more control from the initial request for information through the contract-management stage. The average price for an implementation is about $500,000.

Wilkerson says Commerce One Source will not affect the company's relationship with SAP, which owns about 20% of Commerce One and also is working on a direct-materials procurement application. He admits the two companies--which also have a technology partnership--may compete from time to time for sourcing customers, but SAP generally will sell to its own install base, while Commerce One is targeting non-SAP customers. Commerce One has five beta customers using the sourcing app, though it's not divulging who they are. The application will be generally available by the end of the month. Oracle Sourcing, meanwhile, is designed to save time by letting companies manage the entire sourcing process online, including conducting real-time, automated negotiations. Pricing was not available.

Joseph Marino, an analyst with Current Analysis, says both applications are strong products with distinct advantages. Oracle Sourcing, says Marino, is buoyed by Oracle's staying power and customer confidence in the company. He says Oracle Sourcing represents a more substantial offering than Oracle's previous procurement apps. "They're not just Web-enabling their commerce stuff," he adds. "This is a real Internet commerce application."

Commerce One Source's ability to reuse sourcing data could prove to be a strong differentiating feature, says Marino, but customers--not just a strong product--are needed to help lift Commerce One from its doldrums of the past several months. "There are no magic bullets here," he says. "Execution is what it's all about."