Titans Boost E-Commerce Purchasing

<B> Titans Boost E-Commerce Purchasing</B>
<I>Microsoft, MasterCard Ally To Promote Online Business Buying</I>

By Cheryl Rosen

<I>New York</I> - Microsoft and MasterCard International, along with Atlanta-based Clarus Corp., last week outlined their plans for the "biggest initiative ever to jump-start business-to-business online purchasing," the Microsoft E-Commerce Alliance.

It's a broad vision in an e-purchasing arena already rife with broad visions. But it has the mammoth clout of Microsoft, and the payment expertise and reach of MasterCard, behind it.

Microsoft will "be putting dollars against a broad array of programs" to help companies sell their products over the Web, helping businesses of every size "define and develop e-commerce systems, and deploy and support them," said E-Commerce industry marketing manager Michael Pinckney. "We are changing our focus from selling particular applications to developing complete solutions, with a set of programs for different industries. We are going to create teams of partners to deploy solutions, with a set of programs for different industries in a fixed time at a fixed cost."

The XML-based corporate purchasing systems the Alliance builds would sit atop any combination of accounting, human resources and ERP systems, and download line-item data in rich detail. Data on transactions that involve travel, specifically mentioned as part of the Alliance vision, would include actual airline segments as well as full hotel folio data.

The Alliance noted specifically its interest in "employee self-service" applications that allow people to order things they need at work directly from online catalogs of preferred corporate vendors, charge everything from travel to pens to a MasterCard corporate purchasing card, route orders to their managers for approval, and allow the interchange of complete business documents.

For vendors, the Alliance promises to deliver a Web site on a fixed delivery schedule, for a fixed price, with a full return on their investment often in less than a year. Small and mid-size vendors low on cash to ante up can choose hosting and leasing options for a monthly fee.

Focusing on travel purchasing, Clarus intends to unveil a dedicated end-to-end booking and expense reporting suite of its own "in about a quarter or so," said strategy and business development vice president Steve Hornyak.

In addition, Clarus will be working on "how to develop direct relationships" between travel industry suppliers and buyers.

"We know what we have to develop; the key is whom to partner with for all the back-end stuff," Hornyak said. In a travel industry of "archaic technology," he noted, building a travel application means "you now have to get all the data backed down into the CRS, plus all the last-minute telephone stuff" as travelers change their plans on the road.

MasterCard International sees the E-Commerce Alliance, which it first talked about late last month (<I>BTN,</I> Apr. 26), as a way to address the "huge opportunity" of its corporate purchasing card. Analysts expect the business-to-business marketplace, which already accounts for 25 percent of MasterCard's U.S. growth, to reach $2 billion by 2002, said U.S. corporate products senior vice president Steve Abrams.

For corporate buyers, the benefits of moving all corporate purchasing to a single Web site, as outlined at the press conference by Clarus's Hornyak, are as familiar as an e-ticket. Centralization "gives the corporation control over its employees' purchases, dramatically lowers cost, allows you to consolidate suppliers to increase your leverage, gives you efficient management and control, and lowers administrative and operational costs," he said. It combines employee self-service with a corporate payment system, integrates with corporate policies and legacy systems, and supports preferred suppliers on both the local and national levels.

"E-commerce is about multiple systems coming together in a complete solution, about working with partners to bring the pieces together for maximum flexibility," said Satya Nadella, general manager of Microsoft's consumer and commerce group. The goal for Microsoft is to offer merchants "qualified audiences of customers" on an NT platform with SQL servers for data warehousing and mining, to "improve the process and programs to drive e-commerce to the next level."

"It's a natural for the travel industry," Abrams told BTN, noting that MasterCard already is focusing on two aspects in its efforts to deliver better travel data to its corporate customers: segment data from the airlines and folio data from the hotel companies.

"The primary demand is for airline detail showing actual segments by carrier, and we already are dealing with the CRSs to acquire that" as a result of its huge federal government card program win, Abrams said. "We've historically called that optional data, but GSA is pushing us to the next level of data delivery. On the hotel side, we've been in serious conversations with Pegasus to get folio data for over a year, and it looks good for the first quarter of 2000."

American Express, which declined to bid on the GSA account, saying it was not a profitable piece of business, has aligned with GE Capital and Commerce One on an e-business platform of its own (see story, page 5, and <I>BTN,</I> April 12). "It's fair to say we are in a research phase," said spokesperson Melissa Abernathy. "We will make more announcements in the next couple of months."

IBM, with its customer base of major travel industry suppliers, also has laid claim to a piece of the e-commerce space.

The Microsoft E-Commerce Alliance is designed to get commercial Web sites up and running quickly and at low cost. Will Microsoft's interest help speed the development of a robust business-to-business marketplace, where corporations buy many products, including travel, online, and settle directly with suppliers?

It couldn't hurt.

"Microsoft is a fierce competitor in any space, and e-commerce is the focus and mission for many of the business units within the company," said former Microsoft and Worldspan executive Timothy O'Neil-Dunne, who is now principal consultant in the e-commerce practice of T2N International Ltd. in England.

Microsoft's decision "to venture with different partners in travel may seem conflicted, but it is no different than other business areas," he said. "What is interesting to note is that Expedia and the AXI venture (with American Express) are not mentioned, nor is the Transpoint bill presentment joint venture with Citicorp and First Data. It must be accepted that Microsoft will be a major force in travel procurement as well as travel distribution. It clearly sees these as different and has separate teams focused on each."

Meanwhile, Hornyak said that the Microsoft E-Commerce Alliance also will make it possible for the intermediary companies that host Web sites for others--be they system integrators, accounting firms or travel agencies--to act as buying consortia, leveraging their purchasing power to buy inventory at a discount and offer it to small and midsize companies at lower cost than they could negotiate themselves.