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PeopleSoft jumps into business-to-business niche

The firm is the latest enterprise resource player aiming to supplement lagging software sales by tapping the business-to-business rush.

PeopleSoft is the latest enterprise resource player aiming to supplement lagging software sales by tapping the business-to-business rush.

The Pleasanton, Calif.-based company today said it is teaming with business-to-business software maker Commerce One to build trading exchanges for other companies, using PeopleSoft software.

Enterprise resource planning companies have made their fortunes selling human resource, supply-chain management and financial applications to big businesses. The shift to online exchanges, analysts have said, is a natural extension of these companies' existing business. Analysts have estimated that the business-to-business market will grow to between $2.7 trillion and $7.3 trillion by 2004, from about $131 billion in 1999.

The venture follows earlier moves by PeopleSoft competitors SAP, Oracle, Baan and J.D. Edwards in the business-to-business market. Earlier this month, SAP announced plans to form a subsidiary focused solely on business-to-business.

Like its competitors, PeopleSoft has been trying new ways to expand its product line to include e-commerce and other Web-based capabilities. Earlier this month, the company detailed its new application service provider division, called PeopleSoft eCenter. As previously reported, the new division will manage, host and support PeopleSoft's business applications for start-ups and larger companies.

"This is very critical for PeopleSoft because their bread and butter was the human resources product, which hasn't done so well. They needed to make a strategic move into e-commerce to offset that," said Harry Tse, an analyst with the Yankee Group.

Business-to-business ventures typically set up an online marketplace connecting buyers and sellers of products in a specific industry. Firms with specialized software and online exchanges promise to drastically decrease the cost of doing business, thereby increasing profits.

PeopleSoft and Commerce One have teamed in the past to develop an electronic sales channel for PeopleSoft customers by integrating the PeopleSoft Order Management module with Commerce One's MarketSite.