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Andersen Consulting Ventures into E-Procurement Biz

Andersen Consulting Wednesday announced that it initiated a new e-procurement venture as part of its expanded strategic relationship with Sun Microsystems, Inc.

Products from Sun (SUNW) and Sun-Netscape offspring iPlanet E-Commerce Solutions will power the new venture. Each firm has agreed to commit the people, products and resources required for the success of the venture and other application service initiatives.

Andersen's e-procurement gambit is designed to leverage the burgeoning marketplace for indirect, Web-enabled procurement of business services and supplies. Consultants predict that Anderson can help its customers cut their costs by as much as 50 percent by utilizing outsourcing specialists to foster business relationships with their suppliers.

AC Ventures, Inc., the venture capital unit of Andersen Consulting, made an undisclosed majority equity investment in the venture. Sun made an equally undisclosed minority equity investment.

Anderson agreed to purchase Sun hardware and services as well as iPlanet eCommerce infrastructure and applications software as a part of the deal, which is valued at $300 million. The venture will draw upon iPlanet's portfolio of standards-based solution to build a scalable, end-to-end e-procurement service.

Scott McNealy, Sun chairman and chief executive officer, said the combination of the three companies means that success is imminent.

"Andersen Consulting'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," McNealy said.

Joe W. Forehand, Andersen Consulting managing partner and chief executive officer, said its e-procurement venture would enhance the bottom line for the customers it serves.

"By combining the strengths of Andersen Consulting, Sun Microsystems and iPlanet, we are enabling businesses around the globe to extract new benefits from Internet-based procurement," Forehand said. "Our combined hardware, software, consulting and outsourcing services will unite to deliver a uniquely efficient and effective B2B solution to our clients."

The venture remains unnamed, but is scheduled to be fully operational late this year. Anderson's goal is to attract more than $200 billion in procurement spending by 2004.

Anderson will face stiff competition in the rush to get a piece of the e-procurement marketplace, which according to International Data Corporation research, may reach upwards of $1.4 trillion by 2003.