Make smart and accurate
software selection decisions
Podcasts, Webinars, and Videos
Interactive Case Studies
ERGO Decision Support System
Private Label Partnerships
TEC Case Studies
Software Evaluation Reports
Meet TEC's Experts
News and Press Releases
Working at TEC
Partner with TEC
AribaLIVE 2012: What Was Jolly Good (and What Could Improve) - Part 2
AribaLIVE 2012: What Was Jolly Good (and What Could Improve) - Part 2
June 27 2012
Part 1 of this blog series analyzed the positive impressions from my attendance of the
. Still, while it might appear that Ariba is firing on all cylinders, as is typically the case, Ariba is not all things to all people and no company is without issues. Thus this post will discuss some challenges and related rooms for improvement.
To date, Ariba has been offering a focused solution and this strategy is working. If the company continues to grow, a “focus vs. breadth” balance may be the best approach, since only a few companies have become one-stop-shop providers. Perhaps by taking a federated or loosely integrated approach Ariba might be able to move into adjacent product and services categories?
I always thought that if Ariba really attempted to be a full suite provider of financial management, some large
enterprise resource planning (ERP)
player might eventually acquire it.
has done it, could this be the next generation of ERP in the making
One Cannot Be All Things to All People
For indirect or commodity type products, Ariba’s marketplace and accompanying spend management software seem to work well. The jury is still out about sourcing and procuring complex or “to order” type of manufactured products. In any case, there are a number of current challenges or opportunities for Ariba. For one, Ariba is not necessarily the best solution in the following realms:
in light of
– in light of
(and perhaps Emptoris,
, etc.). Ariba can handle most of the use cases for sourcing optimization which is over 95 percent of the requests from customers, though CombineNet and TradeExtensions can handle very large complex scenarios not specifically related to sourcing per se, such as involving transportation network optimization.
might present easier deployments in some cases. On the other hand, Coupa and Proactis can be limited on scalability and the ability to handle multi-business unit deployments.
tout more ease in data import handling, implementation, and use. To be fair, Ariba is the only solution that offers market and supplier data enrichment as an integral part of the solution along with an assigned country based project manager. The
Ariba Spend Visibility
provides quality and reliability of final data outputs after the cleansing process complemented by its partnership with
, which has the largest supplier data content in the world.
E-invoicing and presentment
– since in some markets
are more prevalent
Complex services procurement
-- as compared to
, IBM Emptoris (former
Still, the sum of Ariba is often bigger than its parts. Ariba’s clients are not looking for individual features in a solution. Instead, customers see value in Ariba's vision -- having a complete seamless suite from source-to-settle plus the services, best practices, and aggregate market information provided by a financially stable company. Ariba promotes the fact that it's technology, community and services that comprise the total value of a solution. But perhaps the most critical is
’s value proposition
: Being able to easily plug into a network of over 800,000 supplier and buyers (without which, the value of software cannot be fully realized).
In addition, perhaps Ariba could offer some App Store of sorts where these niche specialists can offer their extensions, a la
? On second thought, since packaged integration is hard in these types of products, a plug-and-play app store might not necessarily work. However, tighter partnerships that would build on Ariba’s portfolio by vertical or business process might be the answer.
More Challenges & Opportunities
Ariba does not necessarily have the strongest network and sourcing capabilities for some complex and tricky industries, especially with the “to order” manufacturing and asset management angles, e.g., utilities, telecom, hi-tech, etc. For example,
has been selected over Ariba at some utilities in the United States, while IBM Emptoris has a stronghold in complex machined parts,
in hi-tech, etc. Still, from a Strategic Sourcing and Supplier Management perspective, Ariba customers in these verticals (Manufacturing, Automotive, Telecom, High-tech, and Utilities) is many multiples more than all of the competitors listed above. In addition, Power Advocate does not have many utility customers outside of the USA.
On the other hand,
soon) is a potential competitor for
(where buyers and sellers do the matchmaking themselves to find each other). Still, while the discovery of indirect parts may be provided by several players, integration into the sourcing and payment systems is also often required, where Ariba has a wealth of experience.
Sure, the comparison of Ariba Discovery to Google might seem as totally heretic now. While Google is a search engine, Ariba Discovery with its patented matching algorithm is a Seller Matching service. This is not even like comparing apples to oranges, but rather like comparing apples to asparagus (or something like that). A quick test is to try a simple search on Google to find "Truckload Transportation suppliers" (you will end with a bunch of links with no relevance).
Yet Google will always be a competitor for any product or service which relies on search. For its part, Facebook is currently more of an individual gathering place (a.k.a., water cooler) rather than a time tested B2B gathering place to find products and services. The ease of implementation and integration is the value play. Without this, users would simply use their ERP systems. One will not get this value prop from Google or Facebook any time soon, but Ariba (and soon SAP) might want to watch its back.
In spite of acquiring the
network (in Southern Hemisphere) and
(in France), there is still a lot of room for improvement in terms of geographies, languages, tax regulations, and even industry languages (vernaculars, data interchange standards, etc.). As testified by some presenters at AribaLIVE 2102, emerging markets have lots of unsophisticated suppliers that still use fax and snail mail for communication (e.g., South Africa), whereas in Brazil tax calculation is a "sport" of sorts.
To be fair, how many US software products have become global providers of financial management systems? To play in every market is hard and costly, and Ariba will have to painstakingly pick its battles, perhaps via more selective acquisitions and alliances.
Time will only tell how SAP will manage its ongoing network and electronic invoicing alliances in light of the impending Ariba acquisition, especially its longstanding relationships with
Finding a Right Balance in the Age of Social Commerce
Ariba must also be careful to find the right balance between useful recommendations and solicitations in the Ariba Network without buyers feeling spammed, and thus annoyed and deterred. We all, as users of
, might appreciate some useful solicitations, but certainly not all of them. Thus, a smart recommendation engine development should be in the works at Ariba (perhaps with the help from SAP HANA's "big data" capabilities and
’ social tools).
In addition, some buyers invest a lot of energy and money to make their suppliers compliant, and they might not want the Ariba Network to make them publicly available to other companies (even worse, to competitors) that did not invest in grooming them. Perhaps providing private groups and virtual private networks would be an option here? In general, Ariba must constantly improve its value prop so that its network members (especially suppliers) do not feel as though they are being “nickeled & dimed to death” after a certain amount of spend and transactions.
For its part, the
-based contract management solution,
Ariba Contracts on Force.com
, is admittedly experiencing slower traction than expected. The reason is that it is not a low-touch solution, i.e., it requires some services and channel drive after all.
is really tailored for simplicity and flexibility, whereas automated payments and user connectivity must be rigid by default. The trick is again in finding a good balance between providing enough customization work for a reseller to round out the solution without becoming prohibitively expensive for the customer.
Last but not least, Ariba’s relationships with
IBM must be somewhat strained after their respective acquisitions of
. Still, these two consulting giants still offer a less complete spend management solution than Ariba does. When some software and consulting powerhouses sell a portion of a solution, they can perhaps ramp the business up but how do they continue to grow the solution? To provide the complete solution, they have to put in either an ERP system or Ariba’s software pieces. This situation then creates a vicious circle of costs and complexity ramping up while margins shrink. For more
information on how Ariba might affect SAP’s ecosystem, see the recent
blog post here
While the merger with SAP has an enormous potential, in the short term, until a unified strategy by SAP and Ariba has some legs and teeth, new Ariba deals might be somewhat stalled. Experience teaches us that in the interim the primary focus for Ariba sales reps will likely be on key SAP accounts and/or keeping their jobs. At the same time, Ariba’s competitors will likely blitz non-SAP users of Ariba and offer them sweetened deal to re-evaluate their Ariba decisions and/or renewals.
Dear readers, what are your comments and opinions with regards to social commerce practices, and Ariba’s aforementioned capabilities and challenges? What are your current buying, selling, and managing practices and experiences with Ariba’s products and services? What are your thoughts on Ariba’s prospects as part of SAP?
comments powered by Disqus.
comments powered by
Interested in a better way to make software decisions?
Give us a call now: 1-800-496-1303 ext:404
Software Requirements Sets and Comparison Reports
Click here to leverage the experience of our 360 industry perspective