Andersen, Sun Form B2B Venture

Andersen Consulting, Sun Microsystems and iPlanet announced Tuesday that they will form a joint venture and invest $300 million (US$) to set up a system to provide electronic buying services for businesses.

The venture is aimed at cutting businesses’ costs on items such as office supplies, computer equipment and airline tickets by as much as half. All three companies have agreed to commit personnel and resources to the venture and have set a goal of attracting more than $200 billion of procurement spending by 2004.

The firms said they already have $20 billion in spending commitments from firms in the financial services, chemical, automotive and telecommunications sectors.

Cost Savings Predicted

The companies say they will be able to cut the cost of buying supplies by leveraging their client base and by creating a system that can handle millions of transactions each day. The venture will be led by Dow Bauknight, former managing partner of Andersen Consulting’s supply chain line of businesses.

Andersen said it will take a major stake in the new firm through its AC Ventures wing and that up front investments will be made in hardware from Sun and in software and services from iPlanet — which is itself a partnership between Microsoft and America Online.

Andersen is one of the first consulting firms to become directly involved in e-commerce. In January, the firm announced it had raised $1 billion in capital for its AC Ventures and would put the money into Internet and e-commerce firms worldwide.

The yet-to-be named venture should be up and running by the fall, the companies said in a statement.

Rise of E-Marketplaces

According to Forrester Research, business-to-business (B2B) e-commerce will reach $2.7 trillion in 2004. Internet trade between individual partners will continue to flourish, the data shows, but eMarketplaces will fuel most of the growth — reaching 53 percent of all online business trade in five years.

Meanwhile, IDC predicts that B2B transactions will account for 77 percent of worldwide e-commerce in 2000, with thousands of sites competing to become the key marketplaces for business buyers.

In its “IDC Predictions 2000,” the research firm said that “B2B sites need to learn more from business-to-consumer (B2C) sites,” predicting that “in 2000, the walls between the B2B and B2C worlds will crumble quite a bit more as top consumer online players, including Yahoo!, MSN, and Lycos, go after the B2B market, leveraging their strong brands, online experience, and market clout. While each already has low-profile efforts in place, mainly targeted at small businesses, we expect them to dramatically turn up the heat.”

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