Andersen Consulting Forms B-To-B Joint Venture With Sun

The race among big consulting firms to dominate business-to-business E-commerce continued Tuesday, with Andersen Consulting revealing it would create a new company with Sun Microsystems and iPlanet to outsource E-procurement software, services, and online marketplaces.

Andersen Consulting will be the majority owner of the as-yet-unnamed venture and will provide its E-business expertise. Minority investor Sun will be the venture's first customer. Andersen execs say their firm will be a customer, but did not specify when.

The new venture will buy up to $300 million worth of Sun hardware and services, as well as iPlanet E-commerce infrastructure and applications, during the next three years, says Dow Bauknight, president and CEO of the venture.

"We're unveiling a new venture to reduce the costs on indirect purchases [such as maintenance, repair, and operations, or MRO, items] within horizontal markets by as much as 50%," says Bauknight, a former managing partner of Andersen Consulting's supply-chain practice. Such indirect purchases include the online procurement of goods and services such as office supplies, computer equipment, travel services, and legal services.

"[The new venture] is about allowing people to focus on what they do for their business, rather than procurement," says Scott McNealy, chairman and CEO of Sun. "A horizontal MRO market is one that every company in the world should outsource."

The new company consists of about 100 former Andersen Consulting procurement professionals who will help their customers develop supplier strategies. It is expected to ramp up to 600 employees by December and attract more than $200 billion of spending on indirect goods and services by 2004, Bauknight says.

He says the new venture has letters of intent from several companies worldwide and expects to announce several new customers during the next four to six weeks.