MCI Systemshouse will brand Commerce One's electronic purchasing service, which works on an extranet, as Internet Procurement Automation, and will provide services to help both buyers and sellers get up on the service.
Today's announcement follows word two days ago that MCI has invested in Commerce One, part of a $31 million round backed by several financial investors. MCI Systemshouse president Scott Ross will join Commerce One's board. Enterprise resource planning software firm SAP, already a Commerce One investor, also invested in the latest round.
Commerce One runs a service that lets corporate buyers automate purchases online using online catalogs from multiple vendors. Commerce One collects a fee on completed transactions, starting at $2.50 and decreasing to as low as 25 cents depending on volume.
Online procurement is designed to squeeze costs out of procurement by eliminating paperwork, channeling buyers to approved suppliers offering the best prices, and streamlining the purchasing process.
"If we were to do this in-house, we would have to add on substantially more cost," said Chris Barnes, whose department buys $650 million per year for Los Angeles County. Her department is beginning to implement the system.
"We believe it's feasible to save 5 percent or more on the cost of goods, based solely on the comparison-shopping capabilities of the software," she added, noting that the county has already closed one 250,000-square-foot warehouse where purchases have been stored.
Called Buy Site, Commerce One's system is designed for so-called indirect goods, the routine supplies necessary to run a business, rather than for supplies used to build products.
"This is a horizontal application across many businesses, but certain verticals will be attractive where they have a high degree of spending in indirect," said Commerce One chief executive Mark Hoffman, also a cofounder and former CEO of Sybase. He mentioned utilities, government agencies, colleges, cable companies, and phone companies as likely users.
With the merger of MCI and WorldCom that closed two weeks ago, the Commerce One service will now have broader reach with the combined networks. MCI WorldCom also will use the Commerce One system for its own online procurement.
On Monday, MCI WorldCom also announced On-Net, a business offering for customers that want to put all their local, long distance, voice, and data services on the combined network.
Systems integrator PriceWaterhouseCoopers is also a preferred integrator for Commerce One.