Three months after it entered the midmarket supply chain business, Microsoft has expanded into procurement.
This week, Microsoft Great Plains Business Solutions announced it would integrate its back-office business applications with the procurement software of Clarus. Microsoft finalised its purchase of Great Plains, in April and this is its first major announcement in the supply chain, back-office accounting software field.
"This is really the first serious effort to reach the midmarket with an internal procurement application instead of a hosted one," said Shawn Willett, an analyst at Current Analysis.
He added that the problem with hosted purchasing applications is that IT departments still need to build links into back-office applications, which adds complexity and cost to the equation.
Clarus has been in competition with companies like Ariba and Commerce One to sell half-million-dollar procurement applications to larger enterprises. Many of those companies sought to forge supply chain partnerships similar to the one between Great Plains and Clarus, but most have fallen through during the past year.
"Commerce One and SAP are about the only partnership left standing and that goes beyond procurement into marketplaces," said Karen Peterson, an analyst at Gartner.
Oracle, SAP and i2 Technologies have also built procurement tools on top of their enterprise resource planning software, though analysts criticised those companies for a lack of functionality in their initial online procurement offerings.
Carman Fors, e-commerce product manager at Great Plains, said her company would have faced a similar learning curve if it had attempted to develop a procurement product without Clarus.
With Clarus on board, the new product will be ready to ship in the last quarter of 2001. Fors said the first version would provide a simple data normalization link between Clarus' procurement engine and Great Plains' back-office accounting functions.
A full integration is expected by the middle of next year, possibly leveraging some of Microsoft's new .Net technology to connect the systems.
"We envision triggered purchases through supply chain applications," Fors said. "Your supply chain software would notice your inventory is low and then tell your back-office software to contact your procurement software to make the purchase."
Peterson wasn't sure how long the partnership would last, but she said it presents a great opportunity for Microsoft to field test many of its new .Net business process applications.