EDS goes with Ariba in US and NZ

In a venture that may be a pointer to its local e-commerce partnership with Telecom, EDS is to team up with Ariba to develop Web-based procurement sites in the US.

In a venture that may be a pointer to its local e-commerce partnership with Telecom, EDS is to team up with Ariba to develop Web-based procurement sites in the US.

EDS is, along with Microsoft, Telecom's alliance partner in eSolutions, the business-focused online division that Telecom is due to unveil next month.

Telecom's e-commerce plans took a trans-Tasman turn late last month when it announced that both itself and AAPT, the Australian carrier in which it took an 80% stake last year, had licensed software from Ariba, which specialises in business-to-business e-commerce applications.

Xtra and AAPT's ISP, Connect.com, are to provide the access infrastructure for procurement portals and the two carriers will use the Ariba Network service and Ariba ORMX application to manage their own purchasing and trading through the newly-established marketplace.

Now, EDS's US subsidiary CoNext has announced it is joining with Ariba to co-develop Web-based business-to-business procurement sites for big corporate customers.

CoNext and Ariba want to create what they call Leveraged Sourcing Networks for more than 400 companies. The networks will offer a wide range of goods and services — from office supplies and computer systems to travel and energy services — for purchase and auction.

Ariba and EDS will charge registration and per-transaction fees to firms that buy goods through the network. Company officials declined to provide specifics.

Ariba operates an extensive online catalog of office supplies that will be tailored to meet the specific purchasing needs of each buying consortium. Participating buyers will install Ariba’s software and electronic purchasing forms on their intranets and purchase supplies via a Web browser. The deal calls for EDS in Plano, Texas, and Ariba, to swap stock warrants. EDS could gain a stake in Ariba of up to 7.3% depending on the revenue stream generated from the procurement sites, while Ariba could gain a 5% stake in CoNext.

Greg Spray, the director of operations procurement at Hewlett-Packard, has been using Ariba’s procurement network since last February. Spray said the system made transaction processing more efficient by using electronic forms and offering one spot for users to order goods.

“The other efficiencies are important, but the real upside is the environment of competition we’re building with our supplies, and we expect that to translate into lower prices,” Spray said.

EDS has demonstrated that it can lower costs by driving efficiencies into many business processes and managing systems effectively, said Stan Lepeak, a vice president at Meta Group. “Their consultants are better negotiators, and they know how to strike a good deal [with suppliers].”

EDS, Bethlehem Steel, Clorox, Kellogg and eight other firms have signed on to participate in the first of 12 planned sourcing networks, with the first site launch slated for June. The next four networks — one each for companies in Asia, Europe and South America and a fourth for industry-specific procurements — are expected to open for orders later this year.

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