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Commerce One 5.0 goes for sourcing market

Commerce One is moving out from under SAP AG's shadow with a new plan to attack the strategic sourcing market.

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

The suite combines 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 new suite, the company is moving away from its previous focus on marketing private marketplaces, said Mark Hoffman, Commerce One's chairman and chief executive.

To date, the idea of private marketplaces has not resonated with Commerce One's targeted market. Hoffman said: "[Businesses are] saying, 'I have a problem sourcing. I have a problem buying. I have a problem communicating with my suppliers.'"

Commerce One now plans to lead with their applications when selling to enterprises, he said. "[Enterprises] understand that they can create a short-term return on investment simply around the applications."

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 "componentised 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."

The company's Web services strategy will be narrowly focused on supporting Web services for sourcing and procurement, he added.

Louis Columbus, an analyst at AMR Research, said Commerce One was forced to "bang the drum loudly" over its new suite to show they can make it without partner SAP.

"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process management for the e-sourcing marketplace, the joint SAP/Commerce One marketplace product positioning is now superseded with the stronger push for 5.0, Columbus said.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 optimisation-based bidding analysis.

In addition, the company, which is trying to transform itself from a company that focuses on more strategic direct procurement, faces a "tough row to hoe," said John Moore, an analyst at ARC Advisory Group.

"Their claim to fame was in indirect procurement," he said. "When you get into strategic sourcing you're dealing with fewer suppliers and much larger contracts. There isn't the need to minimise the purchase order."

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