BT sees future of e-commerce with Oracle

By Graham Hayday and Peter Judge, ZDNet.co.uk, 16 October, 2002 09:15

NEWS

Corporate IT departments have failed to take up electronic marketplaces because they are wedded to their in-house purchasing systems, said BT at the launch of its new B2B exchange, BT Transact. By moving its existing B2B exchange to Oracle, BT hopes to open up an untapped market of users and take its B2B e-commerce revenues from £100m per year to £1bn by 2004. "Oracle users want to run Oracle end-to-end," said Bola Oshisanwo, head of marketplace solutions at BT Ignite, so BT is moving its e-commerce exchange from the Commerce One platform to Oracle. At the same time BT is changing the brand from Ignite Marketplace to BT Transact. Other people do not share BT's optimism. Commerce One is the leading vendor in the e-commerce exchange space, with an estimated 60 percent of the market, but has laid off nearly 70 percent of its workforce in the past year. Barclays has shut its B2B exchange altogether. Ariba once touted itself as an e-marketplace specialist and made nearly all of its money from the business, but now calls itself an "enterprise spend management" company and only gets around 20 percent of its revenues from that source. B2B transactions still dwarf those made in the online business-to-consumer (B2C) space in monetary terms, thanks largely to the huge sums being put through online exchanges by companies in the automotive and oil industries, but the B2C market is growing at a much faster rate. However, BT thinks that its Oracle-based approach will win over sceptical users with in-house e-procurement systems. "Most iProcurement (Oracle's e-buying solution) users have five to ten suppliers they connect with electronically. For the most part they print out orders and fax them," said Oshisanwo. By joining BT Transact they will be able to order electronically from any supplier that is in the exchange, he said. Organisations using Oracle's buying application and others from PeopleSoft and SAP platforms have always been able to integrate with BT's e-marketplace, said Oshisanwo. Apparently they have been reluctant to do so because -- even though the differences are hidden -- they know that Commerce One software is involved. The Oracle partnership should make them happier, he said. Buyers and sellers both pay to join the exchange, said Oshisanwo, but suppliers can join free to respond to requests for quotations. Once they set up relationships with buyers, both buyers and sellers pay a fee based on the level of business they do online. The system is much like a nightclub where women enter free before 10 p.m., and smartly dressed men pay to come in, but both men and women pay for drinks at the bar, agreed Oshisanwo. "Smartly dressed women also pay," he said, extending the analogy, "since BT Transact can link to Commerce One exchanges in the US, multinational suppliers can pay extra to quote for foreign orders." When asked if the target of £1bn worth of business come 2004 was ambitious, Oshisanwo said: "In two, three, four years' time, everyone will be buying goods and services from their desktop. The target isn't really ambitious. Every organisation has a need for paper, pens, chairs and so on. For example, BT itself spends over £1bn on indirect procurement every year. All we need is to get the business of a couple of companies of that size, and the target seems very reachable." The new exchange goes live in November, and existing users will be moved across in the first few months of 2003. The exchange is being renamed BT Transact, because BT has decided to stop using the Ignite brand in external dealings with other companies.

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