I've been thinking quite a bit about the partnership that SAP made public with Ariba at their event last week. And the more I analyze it, the more that I think it is good news for the Spend Management market. Vendors, end-users, and even consultants and analysts (who will help users sort through what it all means) stand to benefit.
But there's one loser in this deal. Clearly, Oracle is the odd man out. Ariba's deal with SAP signals at least a tacit endorsement of the NetWeaver stack. Currently, SAP and Oracle are at war over control of the "Applistructure" market. According to Erik Keller, an enterprise applications luminary, Applistructure is the "merger of enterprise application and infrastructure technology". The merging of technical infrastructure and enterprise applications is still a new and emerging vision. But both Oracle, with Fusion, and SAP, with NetWeaver, hope to make it a reality. According to Keller, Applistructure will bring five key benefits to users:
- Continuously decrease the operational cost of information technology
- Permit a fast and flexible reconfiguration of business processes
- Deliver secure and reliable service levels
- Permit upgrades and product enhancements on the fly
- Allow different technology providers as well as custom/legacy code to plug and play seamlessly
Applistructure is a word you'll hear more and more as the decade progresses. But in the meantime, in regards to the SAP and Ariba relationship, it's not clear to me whether Ariba has committed at this point to building on the NetWeaver stack. Regardless, the alliance is a signal that they might do so in the future -- which would be a boon for SAP, as it aims to drive NetWeaver adoption with ISVs and end-users alike. At the same time, it appears to be a good deal for Ariba as well, as the relationship will give them better access to offer the Ariba Supplier Network (ASN) directly to SAP SRM customers (the network, incidentally, was opened-up to non-Ariba customers earlier this year). It will most likely also give Ariba a chance to up-sell other products to SAP customers where Ariba still has a competitive advantage over its ERP brethren.
But what about the e-Procurement market, you might ask, where SAP and Ariba compete directly? Even with the partnership, companies will have to decide on a case-by-case basis which application -- whether it's SAP, Ariba, Oracle, ePlus, or another vendor -- is right for them.