LIVE Dispatch: Ariba's Solution Strategy

At the analyst lunch at Ariba LIVE, Craig Federighi, the vendor's long-time CTO, gave an informative presentation on Ariba's product and solution strategy. While it was not as captivating as his comic "Dora the Explorer" Ariba child brain-washing introduction during his main-stage presentation, I found it quite information to say the least. Craig began his talk by discussing the history of Ariba's software development and how that all of its current technology (with the exception of data enrichment, which came from Softface) is homegrown and based on a single code base, some of which dates to the late nineties. When Ariba (Nasdaq: ARBA) acquired providers like FreeMarkets, they kept the IP, but ultimately redeveloped the applications rather than provide in Craig's words "a series duck-tapped applications" like that of so many other software vendors that grew through acquisition.

According to Craig, all of Ariba's applications are designed based on a multi-partition, multi-organization architecture. Even before the current On-Demand release, he noted that Ariba has deployed their core applications in the past to dozens of business units in Global 2000 organizations in what amounts to multi-tenant, SaaS model (albeit installed behind the customer's firewall). In addition, the Ariba Supplier Network (ASN), which has operated since 1999, was also built from the ground-up in a multi-tenant, SaaS model. Hence, the On-Demand announcement this week, while representative of significant application modifications, did not require Ariba to rebuild their applications from scratch.

Craig noted that there are three key objectives driving Ariba's On-Demand platform strategy. These are:

1) To make it easier for large customers to expand their use of Ariba’s solutions

2) To make it easier for growing enterprises (i.e., the middle market) to buy

3) To provide more value to suppliers through the Ariba network

To meet these objectives, Ariba's new on-demand capabilities will be available in three flavors: Basic, Professional (which supports more complex buying needs and offers advanced features, enhanced configurability, and better support), and Enterprise (which is a not a multi-tenant deployment, but is hosted by Ariba). A common code line serves the entire product suite which should make it easier for Ariba to deploy new releases to customers, while allowing for a more seamless upgrade and up-sell capability as well.

Craig believes the sweet spot for multi-tenant On-Demand deployments will be companies with $5 billion and below in revenue. Ariba was pleasantly surprised that prospects at this revenue level and below offered little push-back about security and other concerns when asked if they would consider an On-Demand deployment model.

As a final aside, outside of On-Demand, much of Ariba's new positioning is based around helping companies extend the use of their ERP applications to gain greater benefits from their existing investments. For example, Ariba's supplier connectivity solutions (including the ASN) can enable organizations that are using SAP, Oracle, or other ERP SRM applications to capture more spend and realize faster returns from their current investments. Don't scrap it, make it better, could have been the mantra of the day.

Jason Busch

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