PeopleSoft becomes third ERP player to launch a B2B hub

PeopleSoft's announcement of its own business-to-business online trading exchange earlier this month will come as no surprise to...

PeopleSoft's announcement of its own business-to-business online trading exchange earlier this month will come as no surprise to market-watchers. After all, it is the third major enterprise resource planning (ERP) firm to set up its own trading hub online, writes Danny Bradbury

The company, which rolled out PeopleSoft Marketplace on 9 May as a service offering electronic procurement of office supplies, joins SAP and Oracle in the bid to profit from online business between customers and suppliers. Last summer, SAP launched and Oracle rolled out its Oracle Exchange online marketplace.

You do not have to look far to see why some of these companies are making such an effort to set up shop online. Some traditional ERP suppliers have been experiencing problems, thanks to a combination of resistance from the small to medium-sized market and a saturation of the blue-chip customer base.

SAP has been doing relatively well recently, but Baan lost $26m (£17.4m) in the first quarter. PeopleSoft has also been financially wobbly. While showing a 42% increase in European revenues in 1999, PeopleSoft saw worldwide net profits down to $21m from $164.1m the previous year, excluding non-recurring items.

Bruce Bond, group vice-president of Gartner's enterprise and supply chain management group, says that Oracle is ahead of the game in the online marketplace arena, even though SAP has been active in this area for longer. Whoever shouts loudest has the advantage in this immature market, and Oracle has marketed its site more effectively, he claims.

Focusing on horizontal goods such as office supplies is an easier task for the ERP suppliers, because vertical markets can lead to complex sales.

As the vertical markets evolve, it will become increasingly necessary for online marketplaces to provide collaborative facilities so that suppliers and customers can work together on customising product design and fulfilment more effectively, admits Phil Wood, e-business marketing manager at Oracle.

Such collaborative facilities are a stated goal for PeopleSoft, which will develop its marketplace into a more mature service in the future. In the meantime, the company has hooked up with Commerce One, the online trading hub software supplier and service provider, to take supplies from its own Global Trading Web, as well as its own trading partners.

The other members of the big five ERP suppliers, often called the JBOPS group - JD Edwards, Baan, Oracle, PeopleSoft and SAP - have yet to announce marketplaces, although both have rushed to offer software solutions that allow customers to build e-procurement networks.

Baan has turned to Microsoft's Commerce Server to provide a suite of e-procurement and e-sales solutions which it rolled out in April. JD Edwards launched its Activeera solutions suite, which includes an e-marketplace product, in February.

The market for latecomers will be limited, says Bond. "There's no motivation for some enterprises that are building their marketplaces to go with lesser-known suppliers." ERP suppliers need to pin down technical challenges behind online marketplaces before the market gets cold.

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