Joint Venture Brings Chase into On-Line Corporate Purchasing

Some of Chase Manhattan Corp.'s interests in corporate payment services and on-line commerce converge in a joint venture called Intelisys Electronic Commerce.

Chase has a 50% stake in the company, a vendor of business procurement software also backed by BVP, a private investor group in Woodbridge, Va. It makes Chase one of the few banks involved in the technology of corporate purchasing.

"Companies have told us they want to streamline their purchasing operations, dramatically reduce their number of preferred suppliers, and better manage their information for nonproduction goods such as office supplies and desktop computers," said Scott LaForce, Chase vice president and senior product manager for Intelisys.

"Intelisys is the latest of Chase's efforts to bring client-focused, technology-driven solutions for corporate requirements," he said.

Erica Rugullies, an analyst with Giga Information Group of Cambridge, Mass., said about 12 procurement software vendors are competing in a $25 million market that is expected to grow to $375 million in 2000.

"Intelisys is faced with stiff competition," she said. "It is a fairly small market to be shared with a dozen companies."

The leaders include Commerce One Inc. of Walnut Creek, Calif., Elekom Corp. of Bellevue, Wash., and Ariba Technologies Inc. of Sunnyvale, Calif.

Businesses can use the Intelisys system for ordering and paying for supplies using intranets and the Internet.

Intelisys' IEC-Enterprise intranet software resides on the buyer's server. It creates purchase orders and routes them through an approval process. IEC-CatalogLink lets buyers order from a supplier's catalogue. IEC-OrderLink sends the purchase order to the supplier for fulfillment and returns the invoice to the buyer.

Intelisys products comply with OBI, the Open Buying on the Internet standard supported by American Express Co. and, probably for that reason, lack MasterCard and Visa endorsement. The protocol and related procedures are designed to help lower costs by using the Internet rather than costly private lines.

The focus on OBI differentiates Intelisys from its competitors, Ms. Rugullies said. But she added that OBI has not taken off as strongly as expected.

Six buyers, including Chase and Motorola Inc., have signed up to use Intelisys. A dozen suppliers, including Office Depot Inc., also are working with Intelisys.

Most large buyers give the vast majority of their business to only a few suppliers. The Internet can open them up to more suppliers at lower cost.

Intelisys is developing an application with the commerce software company Open Market Inc. called IEC-SupplyNet. It will let small and midsize suppliers create and host catalogues on their servers.

"You need to be able to get down to that supplier base to make electronic commerce really pay," said Robert Barnes, Intelisys founder and vice president for product development.

Businesses using Intelisys products can pay for items with purchasing cards, send files directly to a buyer's accounts-payable system for payment from any bank account, or initiate automated clearing house payments through Chase.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER