AribaLIVE 2012 - Cloud B2B Commerce Coming of Age




After a hiatus of several years, the stars and planets were again aligned for me to be able to attend the AribaLIVE conference in early April 2012. And boy, what a difference several years can make! The last time I attended, in the mid-2000s, Ariba was behind its worst times of the early 2000s and the dotcom "boom and crash." For those that are not sure what I am talking about, in the early 2000s, Ariba had quite over-invested in its resource-heavy and inflexible client-server supplier exchanges and was bleeding cash.

The turnaround started when the company decided to focus on spend management software and know-how (sourcing, contract management, spend analysis, invoice automation, etc.), rather than on merely providing the "plumbing" for procurement transactions between trading partners. While the financial performance and posture of Ariba were noticeably improved by the mid-2000s, the company was still criticized by some market observers as being too conservative and focusing on traditional solutions.



2006 – The Crossroads Time

When the dotcom bubble burst in 2000, Ariba realized that there would be a fundamental shift in the way that companies purchase and deploy software - i.e., they would no longer be interested in expensive and inflexible behind-the-firewall software. So, in the mid-2000s the vendor set about shifting its business from a traditional license model to software as a service (SaaS) and re-engineered all of its solutions so that they could be delivered on demand. Ariba was one of the only few companies in the market to make a commitment to use their on-premise source code and develop a true SaaS offering.

In addition to going the true multi-tenant universal supplier-buyer cloud hub route, several years ago Ariba also made other tough but wise decisions,  such as a separation of the Ariba Network (AN) and Ariba Buyer offerings. In other words, anyone can now be part of the network, whether they use SAP, Oracle, IBM Maximo, or Ariba for procurement. Customers love choice, and Ariba can now sell à la carte.

Fast-forward to the AribaLIVE 2012 conference, and I witnessed the amazing transformation at Ariba from providing a more efficient way to facilitate and automate transactions between known buyers and sellers and on-premises e-procurement software provider for suppliers and buyers over 15 years ago. While at that time the network and community were byproducts and afterthoughts, Ariba is now a public cloud commerce network provider first and foremost, while also offering some additional related  software if requested. Cloud commerce is definitely where the market is now, and Ariba is happy to see companies such as IBM, Oracle, and SAP validate its strategy by joining the party and jumping on the cloud bandwagon

2012 – All About the Network

Our personal consumer world is being shaped by the following macro IT trends:

  • Cloud computing

  • Social media and communities

  • Mobility

  • A sea of bit-sized applications in app stores (or market places)


These trends permeate our personal lives. We search for things using Google and Microsoft Bing; we shop and sell on Amazon.com and eBay, and pay or get paid via PayPal. In addition, we communicate through Facebook, LinkedIn, SlideShare, and Twitter, to name but a few Internet outlets. We even entertain ourselves by streaming movies as we please via Hulu or NetFlix, and by streaming music via Pandora or Spotify.

Now, these same or similar technologies are creeping into the business realm. Employees communicate and collaborate via mobile devices both within the confines of their companies and with their partners. Companies leverage cloud-based apps such as salesforce.com to manage their customer relationships, and NetSuite or FinancialForce.com to manage their accounts and projects. They tap LinkedIn to find talent and Concur (including Tripit) for their business travel needs.

Companies today are moving beyond their traditional "inside out" (or "not invented here") view of the world and IT infrastructure and looking beyond the four walls of the enterprise to connect and collaborate more efficiently with customers, suppliers, and trading partners, both across the street and around the world. Why? Because they realize that they can no longer be competitive on their own. Research shows that companies leveraging internal and external business networks and tapping their partners’ expertise are becoming market leaders.

Enterprises cannot achieve all of their cost, revenue, and cash flow goals without being able to efficiently engage and collaborate with their entire universe of trading partners. Partners who share a common business process must be able to share the underlying technology – and to access it from any device, anywhere, at any time. Astute companies are seeking a universal platform to find, qualify, and do business with all of their customers, suppliers, and peers. Without the advent of public could computing, these goals are impossible to achieve, and that is why the "old" Ariba was not successful with its initial market places idea in the 1990s and early 2000s.

ERP – Good but not Sufficient

Needless to say, traditional business models and enterprise technology solutions don’t allow for this inter-enterprise commerce. Thanks to Enterprise Resource Planning (ERP) systems, most companies have a good handle on their financial data -- they can close their books each month, generate financial reports, and comply with regulatory requirements in a timely fashion.

But collaboration is the new corporate competency. And when it comes to connecting with external trading partners, many organizations still struggle because their ERP systems stop at the walls of their enterprise. At best, most companies running, say, SAP ERP have automated only a small portion of their suppliers and commerce transactions. Many ERP users have taken steps to automate procurement as well. Still, research shows that less than 20 percent of the enterprise spend is actually managed through ERP systems.

Along similar lines, accounts payable (AP) has become a much more efficient function thanks to ERP capabilities. But within many organizations, invoice processing still takes too long, and finding billing errors is like going down the rabbit’s hole. Matching invoices to purchase orders (POs) and contracts remains inefficient. Exceptions are the rule, whereby opportunities for discounts are often lost.

So with increasing frequency, companies are turning to business networks as competitive weapons that drive innovation throughout their entire ecosystem. Much like their social counterparts (personal or business to consumer [B2C] networks), these business-to-business (B2B) networks should provide the following:

  1. Cloud-based applications that allow companies to execute the business processes they need to – be it buying, selling, or managing cash – anywhere, at any time, and from any device

  2. A community of viable and reliable partners with whom to collaborate in order to execute these processes in an efficient manner

  3. Capabilities that are only available to members of the community in the form of best practices, intelligence, analytics, workflows, and other distinctly features and functions (e.g., Angie’s List-like ratings and reviews on suppliers) to support the commerce process


But it is not just about automating processes using a different technology delivery model. Combined, the three aforementioned traits are rather about extending and creating new processes for more efficient collaboration between enterprises.

During his keynote presentation, Vivek Kundra, Executive Vice President of Emerging Markets at salesforce.com, and former US Chief Information Officer (CIO) in the White House, talked about his efforts to leverage cloud and social technologies as to lover the hefty $80 billion IT costs of the US government, with no apparent dividends. It was interesting to note his statement that the advantage of the cloud computing is not necessarily in price but rather in instant gratification, software use, and user feedback.

For their part, social data and analytics can be useful for obtaining feedback on schools (average passing grade, friendliness of the staff, etc.), hospitals (mortality rates), etc., for citizens. In addition, the government can save some money in the long term by not needing as many for inspectors on the site.

Ariba Network – A B2B Amazon.com of Sorts?

Ariba saw this networked economy trend nearly two decades ago and began building such a network, but was perhaps ahead of its time (and ahead of available IT capabilities). Nowadays the Ariba Network is the raison d’être for the company, enabling buyers and sellers to discover each other, connect, and collaborate (transact). Ariba also offers on-premises and on-demand software for these companies to be able to buy, sell, and manage cash. For more information, see TEC’s previous article entitled “Ariba's 15-Year Journey into the B2B Commerce Cloud.”

The Ariba Network is the world’s largest business network, used by more than 730,000 companies to transact more than $300 billion in commerce on an annual basis – more than double the volume of eBay.  The network is now 50 times larger than any other business network, including IBX, SciQuest, Hubwoo, Oracle Supplier Network, Ketera, etc.

One way to think of the Ariba Network is as the Amazon.com for business. It’s a shared application infrastructure that any authorized individual in the world can access to manage the entire commerce process, or just pieces of it such as procurement, sourcing, supplier performance management, or invoice automation. Just as Amazon delivers the world’s largest and most convenient network for personal shopping, Ariba’s goal is to deliver the largest and most convenient network for business commerce.

When we go to Amazon, we don’t worry about all of the individual merchants that sell there, let alone about individual supplier portals, EDI protocols, invoice types, or payment terms. Everything is done for us in the background.  Buying and payment processes are simple enough for the casual user to employ without cumbersome instructions and guidance, and Amazon gathers intelligence from the communities to make recommendations to consumers in the future.

In a similar fashion, when users go to Ariba Network they are tapping into their own supply base as well as a community of more than 700,000 other qualified suppliers. As consumers don’t worry about settling out with individual banks on Amazon – they can do it all through Amazon’s service in the background – in the Ariba Network invoices and payments can be automatically sent, received, and paid through the system via the universal commerce translator.

Amazon users don’t even need to worry about whether their purchase is the right product for them because online reviews posted by other users can help them decide. The same feedback can be gained through the Ariba community on suppliers, sourcing strategies, etc.

Catering to Both Buyers and Sellers

In addition, companies can now even find new business through Ariba Discovery, a Match.com or eHarmony service of sorts for businesses that automatically matches buyers’ requirements with sellers’ capabilities. Ariba has traditionally been buy-side (supplier/seller) focused, but a few years ago the company also opened its network to buyers with Ariba Discovery.

Suppliers could not solicit buyers in the Ariba Network since buyers typically dislike unsolicited offers and being spammed. Also, maverick buys and spot sourcing are not popular practices at many purchasing departments, but that might be changing now in the age of social commerce.

The grand idea of Ariba Discovery is for B2B environments to be able to discover a new partner like we would find an old friend on Facebook (or an ex-colleague on LinkedIn), and procure or sell something as easily as buying/selling a book on Amazon or eBay. Just like we each have a social graph that maps our personal connections, companies also have commerce graphs that outline their business relationships.

This is what cloud commerce is all about - leveraging the power of a network to make business commerce as easy as personal commerce. And this is the direction that things will continue to go at Ariba. The company has invested heavily in expanding its network and the cloud-based solutions delivered within it to extend its position as the world’s largest and most global business network. For more details, see Ariba’s YouTube channel and read the AribaLIVE 21012 report by Dana Gardner of Interarbor Solutions.

A separate article will outline my impressions from AribaLIVE 2012, both positive and negative. In the meantime, what are your comments and opinions with regards to networked economy practices and Ariba’s aforementioned capabilities? What are your current buying, selling, and managing practices and experiences with Ariba’s products and services?
 
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