Oracle is attempting to become the eBay of the business to business procurement market by launching the Oracle Exchange Web site as a spin off from its Business Online (BOL) applications hosting service.
Although the Web site will be run from Oracle’s BOL data centre in Redwood Shores and out of other BOL Centres in the UK and Australia, the database supplier claims that, unlike rival procurement Web sites, users will not need to implement its proprietary software to use the system.
Larry Ellison, Oracle’s chairman and chief executive, said: “Unlike MySAP, this won’t just work with Oracle applications. In fact, you don’t need any Oracle software at all. We provide the Web site and we have our enterprise resource planning (ERP) applications at the back end, but MySAP, for example, requires that SAP software is installed at the supplier and the demand end.”
He continued: “This might very well morph into another eBay. The best metaphor is Nasdaq - there aren’t three Nasdaq’s, there’s only one, and we want this to become the place to do comparison shopping and the place to go and buy stuff.”
Oracle Exchange will enable customers to purchase goods and services using the traditional catalogue buying model, the spot buying method and a buyer auction service, whereby purchasers solicit and manage bids from multiple suppliers online.
The site will be based on Oracle’s new Internet Sourcing bid management software, which is due to ship by the end of the year, and will be rolled out in phases until then. It will also include socalled vertical Exchanges or virtual subsets aimed at specific industries such as the auto business or PC electronics.
Oracle has already signed up 260 vendors to provide content under its new Supplier Network scheme, including Boise Cascade Office Products, Compaq and Adecco Staffing Services, and also wants to sign up financial institutions such as banks to underwrite transactions in local territories.
It expects to make money from the site by charging transaction fees and selling advertising and is in the process of rolling the system out internally, although Ellison admitted that “the impact has yet to be felt”.
But he believes that winning critical mass and being the first to market when offering a chargeable Internet service is crucial.
“I don’t think suppliers like Ariba are equipped to do this - they’re largely local and this has to be done on a global basis, but they don’t have the resource to throw at the problem. If you have buyers, sellers will come. Buyers bring sellers, so we’re starting by targeting this at large businesses, although we want as many people on Exchange as possible into the long term,” he said.
He added: “If our Exchange can provide procurement services to more users at a lower fee, then why shouldn’t we win? It’s all about scaleability and you have to have a degree of scaleability to be successful.”
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