Rentable Procurement

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Event Summary

On November 29th, RightWorks announced plans to make its procurement solution available via the web. They chose Exodus Communications, Inc. (NSDAQ: EXDS) as an exclusive host. The new service will allow small to midsized businesses to benefit from RightWorks' procurement applications without the additional investment of installing and maintaining an additional computer system.

RightWorks 4 provides the tools to consolidate supply base, control spending, leverage buying power and streamline procurement operations. It is available in both standalone and Procurement Service Provider (PSP) models through a subscription service.

Market Impact

This announcement represents an emerging market of web hosted business applications. By leveraging the internet, Application Service Providers (ASP) may deliver business tools while simultaneously creating user communities with tremendous purchasing capabilities.

The ASP market is in its infancy. The market, participants and focus remains undefined. The move by Rightworks and Exodus is a natural progression as procurement software providers look to partner with web centric organizations (See TEC News Analysis article: "American Express Selects Tradex To Build New Business to Business Commerce Network" December 15th, 1999).

User Recommendations

This announcement is appealing to small or mid-sized organizations considering a procurement application. The value proposition is attractive, as companies will save capital otherwise spent developing, implementing and supporting a custom network. Companies also gain the power of a consolidated marketplace which could help reduce costs through quantity discounts or pre-negotiated pricing.

However, don't jump yet. RightWorks has only announced a hosting agreement. There are licensing, bandwidth, information usage and security issues that need to be considered. Performance and reliability statistics are not available at this time. Additionally, Rightworks is not alone in the procurement space and face stiff competition from Ariba, Commerce One and Concur.

The unique factor RightWorks offers is a rentable procurement solution coupled with the power of a digital market place. First, we recommend that organizations determine if their procurement solution has the features you need and if their market place has the type of buyers/sellers that are right for you. Only then should the organization consider the buy versus rent issue.

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