Bob Solomon, Ariba's Senior Vice President in charge of emerging solution areas, provided a number of insights into the new market opportunities and products that fall under his organization during the analyst lunch at the LIVE. In this post, my plan is to share with Spend Matters readers more about these emerging programs.
First, Bob oversees the Ariba Supplier Network (ASN) which provides order routing and management, catalog management, and payment / remittance capabilities today. According to Bob, there have been 12 new supplier enablement deals involving the network in recent quarters. But this is only a start. In the future, Ariba's plan is to offer supplier discovery, sourcing, procurement, and advanced financial and financing flows over the network as well, which should drive additional revenue and business. Emerging ASN services will include dynamic discounting, allowing the fine-tuning of buyer DPOs (days payables outstanding) with supplier DSOs (days sales outstanding). This creates a tremendous arbitrage opportunity for Ariba to capture a few basis points -- I'd argue somewhere between 5-25 points -- on transactions going through the network by offering financing capabilities for early payment. Very cool stuff in my book. This will benefit buyers and suppliers alike and should also eat into the P-Card market, which offers loan-shark financing rates in comparison. It's a win-win for everyone involved.
Bob also runs Ariba’s Managed Services Offering (which I'll discuss in detail in a future post) as well as the vendor's middle market initiatives. From a middle market perspective, Ariba's goal is to leverage the lower total cost of ownership (TCO) of on-demand offerings to penetrate companies between $100 million and $2 billion per year in revenue. In the past two quarters, Ariba has signed six new middle-market customers, but once the sales and marketing efforts are fully ramped, these numbers should represent a fraction of new deal flow.
Ariba will go after the middle market opportunity with both an On-Demand sourcing suite (including visibility, strategic sourcing, and contract management) and an On-Demand procure-to-pay (P2P) suite. Bob discussed how Ariba is building a new sales and marketing organization based around higher volume, lower priced deals for this middle market (as well as launching new marketing campaigns to drive sales). Ariba is also exploring channel partnership for their P2P offering in this segment (a great move, in my book, as this segment is completely untapped from an eProcurement perspective, and there is very little competition, outside of Ketera, and Oracle to a very limited degree).