Event Summary
Commerce
One (NASDAQ: CMRC) announced a broad range of initiatives in E-procurement.
Continuing in its apparent strategy to dominate E-procurement outside of the
United States (See TEC News Analysis article: "Commerce
One to Procure for the Antipodes...and Elsewhere"), the company will
partner with TD Bank Financial Group (NYSE/TSE: TD) to build an electronic marketplace
and trading portal in Canada. TD Bank Financial Group is a Canadian firm that
has already developed a number of Internet-based businesses. TD will manage
the new marketplace and will offer E-commerce services to the bank's customers
and to other Canadian firms. A similar venture with Grupo Financiero Banamex-Accival
("Banacci") will offer a marketplace in Latin America.
Commerce
One also announced vertical portal partnerships in the healthcare industry with
empactHealth.com and in the apparels industry with GUESS? Inc. (NYSE: GES).
The arrangement with GUESS? will be laid out in three stages, of which only
the last will be open to members of the textile and apparel industries that
are not in the GUESS? supply chain. The GUESS? MarketSite portal is a partnership
with ERP vendor PeopleSoft (NASDAQ: PSFT), who is also partnering with CommerceOne
to create both an E-procurement capability for Pepsi General and a module that
will enable any of the ERP vendor's customers to build E-procurement capabilities
that integrate with existing PeopleSoft data and systems.
Market
Impact
The
joint efforts with PeopleSoft follow the promises of the teaming announcement
made by the two companies earlier this year. At that time PeopleSoft made a
$8 million equity investment in Commerce One and reportedly made a "royalty
investment" in excess of $10 million. These significant announcements show that
the arrangement was a good one for Commerce One, and yet in its aftermath one
has to wonder how much other ERP manufacturers will be willing to play with
Commerce One. One of the reasons Ariba moved out of the integration business
was difficulties in getting interface information from one of the newly competitive
ERP vendors. Ariba's solution was simply to let third part integrators handle
the job. In Commerce One's case, where PeopleSoft is both a partner and a part
owner, we expect that other ERP vendors will be exceptionally unwilling to share
integration information. This may lead to increased business for systems integration
partners. Certainly, as Fig 1 shows, services are rapidly becoming a less important
part of Commerce One's business.
The
new marketplaces in Canada and Mexico are also strong moves, and are in accordance
with Commerce One's other international marketplace partnerships. Being known
as the first in a country or region is a powerful marketing tool, and one that
Commerce One seems to have down pat.
User
Recommendations
It is obvious that Commerce One won't give up opportunities to sell into organizations
that use ERP systems other than PeopleSoft. But we do think that a prospective
customer in that situation has to ask some hard questions before signing a contract.
How will Commerce One guarantee continued compatibility with your back end system?
How quickly can they guarantee that you'll be able to upgrade to the newer versions
from your ERP vendor? What would be the cost to you if such upgrades were slowed
significantly because of integration difficulties? As ERP vendors leap into
the E-procurement space these will increasingly be questions to be asked about
any best-of-breed E-procurement vendor.