E-procurement, just a few years ago the great business-to-business Internet prospect, is now at a crossroads. What we understand by the term today may have changed radically - and some of its brightest stars may have faded - but signs of maturity are emerging.

In the late 1990s two firms, Commerce One and Ariba, made huge splashes on the financial markets. Today they are becalmed by comparison and insist they should never have been bracketed together in the first place. Ariba says its strength was always in sourcing - the process by which products are created from raw mat-erials. Commerce One says its roots are in the later part of the organisational process when goods are acquired or sold. But the two activities are often complementary and frequently bundled together under a new term - enterprise spend management.

Part of the problem for firms and buyers in spend management was that experts and insiders over-promised. In early 1997, Giga Information Group predicted that firms could take 45 percent out of purchasing-cycle cost using such products; Ariba talked up the 80 percent of time used on paperwork rather than communicating with suppliers. Most insiders now admit such estimates were hopelessly inflated.

The excitement attracted plenty of activity. Commerce One lured Sybase founder Mark Hoffman to be its chief executive, mega-marketplaces such as Chemdex and Covisint were set up. Soon the leading brands in procurement were being valued in billions, despite trading without profit and having relatively tiny revenue streams.

"The market was created by Commerce One, Ariba and a plethora of other firms who ploughed in marketing money," said Michael Templeman, managing director of Elcom, which offers hosted procurement services. "Many customers are still struggling to get anything going."

Elcom is one firm that fits the maturing picture of procurement, based on private exchanges, partnerships and remote management rather than toolkits and public marketplaces. "We haven't tried to build everything ourselves," said Templeman. "We don't have the skills of specialist firms."

GXS, a wing of General Electric, runs along similar lines. "I think [the public marketplace is] dead in the water - I haven't seen a winner yet," said Harvey Seegers, chief executive of GXS. "It's not so much the business model as the operation of it, which is a collaboration of competitors. These are very long putts."

Experts say best practice and return-on-investment is evolving and ideas of vast cost savings have been replaced by a view that e-procurement and e-sourcing should bring order and streamline processes.

"It allows you to build a relationship and enforce company policies efficiently; it's not about screwing down suppliers with price gouging," said Chris Buckham, marketing director at Sanderson, a UK services firm that deals with the procurement centres of many local government bodies.

Procurement tools makers are no longer the darlings of Wall Street and the City, but the drive to slim down processes in the slow economy means demand is still there, especially as offerings have matured.

"The broken pieces [of online procurement] have driven me crazy but now I'm happy," said Alexsis De Raadt-St James, Commerce One chief strategy officer and a former external user of the product at Shell. "There has been a perceptible turnaround [in demand for IT services such as online procurement] - I see, feel and touch that."

But experts note that the e-procurement system decision-making process is passing by both procurement and IT specialists within the organisation. "The purchasing director does not sit on the board," says Elcom's Templeman. "The ideal is the board member who has made the decision to make his firm e-commerce enabled - maybe the operations director. Generally, an IT director would like more hardware. A hosted model means you don't have access."

Have your say: contact IT Week