AMS, Ariba team for e-procurement

In what may be the first of many deals like it, integrator American Management Systems Inc. and Internet commerce vendor Ariba Inc. have teamed up to provide a complete electronic procurement solution to federal government users.

The companies will integrate Ariba's e-commerce application with AMS' back-office financial and procurement systems to give AMS' federal users a way to take advantage of Internet-based buying.

AMS also will market and resell Ariba services and software and together with Ariba will launch Buysense.com, a World Wide Web-based marketplace designed to streamline the procurement process for state and local government agencies.

AMS recognizes that agencies are moving quickly toward using e-commerce, said Gregg Mossburg, senior principal at AMS' procurement solutions group. "We have Web-based applications, but if you're familiar with the business-to-business market and how rapidly that is evolving, the ability to partner with Ariba, who is leading the charge in that market, is an advantage to AMS from a product perspective," Mossburg said. "This allows us to offer our customers new capability to help them move to the Internet."

AMS also plans to help agencies to develop online auction sites, he added.

Mike Dow, vice president of AMS' defense practice group, said the agreement with Ariba will help DOD achieve a paperless contracting process. AMS is developing DOD's Standard Procurement System, which is designed to automate the complicated process that Defense procurement shops use to buy supplies.

AMS won the SPS contract in 1997 and based the system's development on a version of its commercial Procurement Desktop software that was modified to serve the DOD contracting community.

"The Ariba product becomes one of several products [we will] build as best of breed for the entire DOD," Dow said. "There are many pieces of the puzzle. DOD has that [paperless contracting] vision. This is a piece of that vision."

The partnership should also help government suppliers do business because the Internet infrastructure is already in place, Dow said.

"We see significant value not only to our government customers but also to suppliers whether they're Defense primes [or] small business entities," he said. "We see a big opportunity to get suppliers involved and allow them to get access to larger [sectors] of government."

This deal represents Ariba's first foray into the federal market, said Paul Melchiorre, vice president of operations for the Americas region at Ariba.

"A lot of what applies to business-to-business e-commerce is very much applicable to business-to-government [e-commerce]," Melchiorre said. "The configuration at Ariba was built from the ground up and gives us flexibility and the capability of customizing."

The joint effort is significant because it represents the first concentrated effort to develop a Web-based, government-to-business procurement network, said Joseph Marino, analyst for Internet commerce at Current Analysis Inc., Sterling, Va. Similar agreements are likely to follow, he said.

"Major commerce vendors will need to act soon to form partnerships with leading government-focused systems integrators to establish a presence for their solutions, trading standards and suppliers in the public-sector market," Marino said.

Both companies benefit from the deal, Marino said. Ariba will get access to a large new market and an established public-sector sales channel for its ORMS application.

AMS meanwhile, gets access to Ariba's electronic procurement experience and extensive supplier network that should help AMS get more government business. AMS has more than 60 federal agencies as customers in addition to the Defense Department.