Venture Agrees to Purchase Up to $300 Million of Hardware, Software,and Services from Sun and iPlanetâ„¢
NEW YORK and PALO ALTO, Calif., April 25, 2000 -- Accenture today announced that it has established a new eProcurement venture in a strategic relationship with Sun Microsystems that will be powered by products from Sun and iPlanetâ„¢ E-Commerce Solutions, a Sun/Netscape Alliance. Each firm has agreed to commit the people, products and resources required for the success of the venture and other iPlanet eProcurement initiatives.
The new eProcurement venture expects to take advantage of the burgeoning marketplace for indirect, web-enabled procurement and predicts that it can help customers to cut their costs by as much as 50 percent on specific categories of these purchases. Cost reductions will be driven by sourcing specialists who foster effective relationships with suppliers with the goal of yielding the best possible prices from the market.
Accenture Technology Ventures, the venture capital unit of Accenture, has made a majority equity investment in the venture. Sun, as the first of several strategic charter customers, has made a minority equity investment. Subject to the satisfactory completion of due diligence, the venture will provide sourcing and transactional operation services to a significant portion of Sun and Accenture’s indirect purchasing spend.
The new venture has agreed to purchase Sunâ„¢ hardware and services as well as iPlanetâ„¢ eCommerce infrastructure and applications software, with a list price value of up to $300 million. The venture will draw upon iPlanet’s broad portfolio to build a scalable, more secure, end-to-end industry standards-based solution comprised of industry leading products.
"Accenture’s strengths in eProcurement and strategic sourcing combined with Sun and iPlanet technologies will provide the venture’s customers with one of the most reliable, scalable eCommerce solutions available on the market today," said Scott McNealy, Chairman and CEO of Sun Microsystems, Inc. "Sun’s platform and the eCommerce expertise of iPlanet enable marketplace service providers to process millions of transactions per day and in the process save millions of dollars for customers and shareholders."
"By combining the strengths of Accenture, Sun Microsystems and iPlanet, we are enabling businesses around the globe to extract new benefits from Internet-based procurement," said Joe W. Forehand, managing partner and CEO of Accenture. "Our combined hardware, software,consulting and outsourcing services will unite leading edge technology and world class procurement experts to deliver a uniquely efficient and effective business-to-business solution to our clients."
The eProcurement Venture
The venture, which will be named shortly, is expected to be fully operational by Fall, 2000. The venture’s goal is to attract more than $200 billion of indirect procurement spend by 2004. Currently, the venture has secured commitments from customers that, once finalized, will represent more than $20 billion in aggregated spend. These customers include major companies crossing both geographies and industries, including financial services, automotive,telecommunications, chemicals and food products.
This global venture expects to provide a unique model for web-enabled procurement of indirect goods and services like office supplies, computer equipment and airline tickets. According to IDC, the market for expenditures processed by Internet commerce procurement solutions will reach upwards of $1.4 trillion by 2003.
The eProcurement Solution
The success of this venture has been predicated on the integration of three areas of expertise - Accenture’s and the venture’s negotiating and sourcing capabilities, iPlanet software solutions, and Sun servers and storage.
Accenture expects to contribute to the venture critical sourcing capabilities, business integration skills, eProcurement experienceand outsourcing expertise. The venture expects to leverage Accenture’s expertise to address strategic and tactical issues related to eProcurement implementation. In addition, the venture will benefit from Accenture’s experience in developing sourcing strategies and managing supplier transactions.
To further strengthen the venture’s negotiating and sourcing capabilities, it is expected to become the majority shareholder in hpi GmbH, formerly known as Hoechst Procurement International, a Celanese company that serves 50 clients for whom it manages approximately $2 billion of indirect spend.
"The combination of negotiation skills we expect to bring to the venture and the transactional efficiency available through the new platform provide a strong value proposition for our clients," said Mike Freienstein, Managing Director of hpi GmbH. "We anticipate that the accrued savings we project will be virtually unmatched by any other venture available in the market."
The venture predicts that it will achieve increasingly favorable pricing, both from the purchasing power it will gain as its client-base grows, and from the efficiency derived from enhanced relationships between vendors and customers. In addition, leading-edge eCommerce solutions from iPlanet are expected to help the venture’s specialists to drive greater value into the procurement process by providing for, among other things: simplified requisitioning; contract placements using reverse auctioning tools; a portal providing greater ease of use to customers and suppliers; and improved spend reports using data warehousing/mining. In effect, the venture expects to create a new electronic marketplace that will rapidly accelerate the achievement of cost savings to its customers.
The venture’s software platform will be based on the iPlanet Strategic Internet Procurement solution which uses iPlanet BuyerXpert and iPlanet ECXpert as core applications. This solution was chosen by the venture because of its customization capabilities, flexibility and advanced distributed architecture. Built on iPlanet’s robust and scalable industry leading Directory, Application and Web Servers, this solution provides a comprehensive procurement environment that will allow the venture to efficiently meet the needs of its customers.
Sun’s family of servers and storage products, providing customers with the necessary reliability, availability and scalability needed today, is expected to allow the venture to build out the infrastructure needed to transact the tremendous volume of business anticipated in the Internet commerce procurement marketplace. The Sun Enterpriseâ„¢ server family provides customers with flexibility, investment protection and an unparalleled growth path. Designed for workgroup, departmental and data center computing environments, the Sun Enterprise server family provides the ideal platform for electronic commerce, data warehousing, Internet/Intranet and customer management systems.
The eProcurement Venture Leadership
Dow Bauknight, former managing partner of Accenture’s Supply Chain line of business, will act as President and CEO of the venture. Mr.Bauknight will be supported by a team of sourcing and eProcurement solutions specialists around the globe.
About Sun Microsystems, Inc.
Since its inception in 1982, a singular vision - "The Network is The Computer"â„¢ -- has propelled Sun Microsystems (Nasdaq:SUNW) to its position as a leading provider of industrial-strength hardware, software and services that power the Internet and allow companies worldwide to ".com" their businesses. With $14 billion in annual revenues, Sun can be found in more than 170 countries and on the World Wide Web at http://www.sun.com.
About iPlanet E-Commerce Solutions iPlanet E-Commerce Solutions, a Sun-Netscape Alliance, was established in March 1999 by America Online, Inc. and Sun Microsystems, Inc. to provide easy-to-deploy, comprehensive eCommerce solutions for the Net Economy. iPlanet E-Commerce Solutions provides the industry’s broadest portfolio of Internet infrastructure and eCommerce applications software and services. Its iPlanet Messaging, Directory, Web and Application Server software all enjoy #1 marketshare positions. For more information, consult the iPlanet E-CommerceSolutions Web site at http://www.iplanet.com
Sun, the Sun logo, Sun Microsystems, iPlanet, Sun Enterprise and The Network Is The Computer are trademarks or registered trademarks of Sun Microsystems, Inc. in the United States and other countries.