Intel Corp. Invests in Extranet Channel
In recent months, the focus on intranets has increasingly been moving to the extranet. While the industry has known for sometime that the extranet existed, no one seemed to know the best use for it. Now vendors are investing a lot of research and development resources on efforts to replace the use for electronic data interchange (EDI) with extranet technology, setting up direct sales channels for business-to-business e-commerce.
Many of these efforts come from large ERP vendors such as SAP AG (www.sap.com), Baan Co. (www.baan.com) and PeopleSoft Inc. (www.peoplesoft.com). Oracle Corp. works on its own customer relationship management (CRM) purchasing solution that utilizes the extranet.
A small extranet solutions provider, Webridge Inc. (www.webridge.com), has already developed and packaged an application called Mainspan, an enterprise extranet solution that uses the Internet to develop direct channels to partners for business-to-business e-commerce.
The company was started in 1996 by a group of industry professionals, many from Sequent Computer Systems Inc. (www.sequent.com), including former Sequent president Scott Gibson. Sequent has its own CRM and ERP solutions. While many larger companies are either working on or just now releasing extranet solutions, Webridge has had Mainspan out the door since July 1998.
Intel Corp., which is optimizing its chips for several Internet technologies, recognized Webridge's presence in the market. The company announced an undisclosed investment into the company last month. It will work with Webridge to tune Mainspan to Intel's IA-32 and, soon, the IA-64 processors. The companies will also work on optimizing the performance and scalability of the Mainspan application server running on Intel Pentium III Xeon chips.
Webridge says it will use the cash to expand its sales and marketing activities. "To compete in the Internet economy, businesses need to embrace a new information architecture that makes partners full participants in a company's work and information flow," says Gary Fielland, Webridge CEO. "Integrating partner management processes with internal business processes and systems can help speed the information flow between companies, eliminating the barriers to productivity and contributing to lasting competitive advantage."
Adam Grossberg, a spokesman for Intel, says extranet applications, particularly those provided by Webridge, can spur the purchase of Intel servers. The investment was a natural fit for Intel. Grossberg also says the company hasn't ruled out any investments with other extranet vendors.
Baan just announced its new E-Enterprise product line last month. Sterling Commerce Inc. (www.sterlingcommerce.com) announced a similar initiative in April with its Commerce:Webforms extranet solution.
Being a relatively small, privately held, Internet-based technology company, combined with presently having a solution in place that larger companies want usually means one thing: acquisition. "That's always one of the biggest questions in the market," says Gary Whitney, vice president for Webridge. "You shouldn't plan for that [though]."
Greg Blatnick, vice president at Zona Research Inc. (www.zonaresearch.com), says he certainly wouldn't rule it out. "I think there is a tremendous amount of evaluation going on of almost any small company in the Internet space," Blatnick says. "They are really under several microscopes from companies that have gone public and have a rich war chest to make purchases with and expand their business and it is probably more reasonable to buy than to develop at this point."
Blatnick explains that the issue is not the cost of the purchase but the time that it takes to get to market. Companies can get their quicker if they buy an existing solution that's been tested and shown to work. In the extranet business-to-business space, one such solution is Webridge's Mainspan.
IDC Reports on EDI
A recent bulletin by International Data Corp. (IDC, www.idc.com) reports that electronic data interchange (EDI) has a powerful competitor in Web-enabled procurement systems. In this bulletin, titled Tracking the Dollars: Direct Business-to-Business Buying Over the Internet,IDC praises the advantages of Web-enabled procurement systems.
According to IDC, the name EDI has made for itself among large companies for direct goods procurement has been threatened recently by business-to-business electronic commerce. Further, IDC says use of the electronic commerce software for procurement offers many advantages, such as creating efficiencies, allowing aspects of the purchasing process to be tracked, and breaking down the barriers of access for global suppliers.
IDC does note that the migration away from EDI will not be a quick one, as many companies have large investments in EDI, and believes small and midsize companies that do not typically have large investments in EDI will be the fastest in adopting Web-enabled procurement systems.