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IBM-led group wins software deal for B2B exchange

An e-commerce alliance led by the computer maker beats out an Andersen Consulting consortium for a contract to provide technology to one of the largest Internet marketplaces.

An e-commerce alliance led by IBM beat out an Andersen Consulting consortium for a contract to provide technology to one of the largest Internet marketplaces.

The picked IBM, i2 Technologies and Ariba over Andersen Consulting, Microsoft and Commerce One. General Electric and Oracle also vied for the contract but did not make the final round.

The multiyear, multimillion-dollar deal will help the fledgling exchange grab a foothold in the burgeoning e-commerce marketplace. Market researcher International Data Corp. estimates $1.6 trillion will be spent on Internet commerce by 2003. By the end of this year, 29 percent of Internet users will purchase some goods or services online, increasing to 38 percent by 2003.

"The Ariba-i2-IBM alliance won this multiyear, multimillion-dollar contract on the basis of the breadth, scope and depth of the capabilities it has shown it can bring to bear on our requirements, its proven ability to implement solutions quickly, and by acting as a unified entity in responding to our issues and needs during the selection process," Patrick Steele, head of the technology and operations for the exchange, said in a statement.

Announced on March 31, the exchange is a Web-based business-to-business operation seeking to simplify trading between retailers and more than 100,000 suppliers and distributors. The 22 members--including Best Buy, Gap, Kmart and Safeway--operate 50,000 stores worldwide with combined sales of $450 billion.

The exchange, which is member owned, has put aside about $100 million for start-up costs, much of it to be spent on technology.

But the exchange Will B2B's magic last?is viewed as a latecomer to retail business-to-business e-commerce and must rely on the IBM-led technology alliance to quickly build its infrastructure. The retail group plans to commence operations later this summer, starting with online auctions.

Armonk, N.Y.-based IBM will provide system integration services and host the exchange, using Ariba's business-to-business commerce software and i2's TradMatrix product line. Ariba's contribution will facilitate cost calculations, electronic payments and similar services, while i2 will handle supply chain logistics and catalog management services.

"The technology platform that the alliance will build and manage for us will enable current member retailers, others who choose to join us, and our vendors and suppliers to increase efficiencies and reduce costs through improved communication and streamlined processes," Gerald Storch, head of marketing for the exchange, said in a statement.

Storch said the organization hopes to cut costs "throughout the supply chain that will ultimately translate into lower prices for consumers."