Oracle Corp. today jumped into the growing on-demand sourcing services market by launching a software-as-a-service offering comprising its Oracle Sourcing and Oracle Sourcing Optimization products.
Based on the sourcing functionality available in the company’s E-Business Suite Release 12 ERP software, Oracle Sourcing On Demand is available for $850 per user per month, plus a one-time setup fee of $5,000.
Oracle Sourcing On Demand focuses primarily on automating the transactional aspects of material procurement. The tool can be used to aggregate demand; determine whether an RFP, RFQ, or other sourcing process is needed; compile contract terms; notify and qualify suppliers; establish prices and discounts and conduct multi-round negotiations; and aggregate and award bids, said Nagaraj Srinivasan, Oracle’s vice president for EBS supply chain management, in an interview with Managing Automation.
The new SaaS offering also includes extensive technical services and packaged integration with Oracle ERP applications, such as EBS, PeopleSoft, and JD Edwards. Oracle Sourcing On Demand can also be integrated with other ERP platforms on a custom basis, Srinivasan said.
The technical services include a help desk that can be used to introduce suppliers to the service and handle administrative tasks, such as distribution and management of passwords.
While each customer of Oracle Sourcing On Demand receives the same application, the software is implemented in a single-tenant architecture, which dedicates server space and storage to specific customers. This is important to manufacturers, particularly those in need of high levels of data security because they sell to the federal government, Srinivasan said.
The on-demand sourcing app expands the company’s SaaS offerings and makes Oracle a competitor in the on-demand sourcing space, which includes established providers such as Ariba and Emptoris as well as emerging providers such as Aravo and Zycus. The market for supply management software and services grew by 9% in 2008 to $3 billion, according to AMR Research estimates. SaaS and other alternate pricing and delivery models in 2008 represented 38% of the supply management market’s licensing and subscription revenue. And while growth of revenue from traditionally licensed supply management software is expected to slow to between 4% and 5% this year, revenue from on-demand supply management products is expected to grow 22%, AMR has predicted.
“Oracle Sourcing On Demand is something that can be absorbed quickly and can help manufacturers realize savings in the short term,” Srinivasan said.
Oracle expects Sourcing On Demand customers to include companies that are new to Oracle applications as well as existing Oracle application customers that so far have not implemented sourcing modules, Srinivasan said.