Earlier this morning, Ariba announced they were partnering with KDS, a European-based provider of On Demand travel and expense solutions. In the past few weeks, I've had a chance to dig into the KDS solution a bit -- as well as the hooks into Ariba -- and it seems that this partnership is about as far from a Barney "I love you, you love me" type of announcement as you can get. It appears that both organizations are investing significant time and development resources to, in Ariba's words, "allow travel procurement executives to improve cost control efforts, create process efficiencies, drive compliance with managed travel programs and deliver greater results and return on investment."
Now, I have no interest in repeating Ariba's or KDS's marketing spin. But it does appear that both vendors have thought through what it truly means to have an embedded, broad-based travel and expense application fully integrated with Ariba. From a payment, invoicing, contract management, spend analysis, and sourcing perspective, this makes a lot of sense. Why? Because with travel management and booking fully integrated with the Ariba solution suite, it will allow procurement organizations to better manage individual travel categories on an overall basis, saving money through enhanced negotiating leverage and driving compliance. In other words, it will extend procurement's sphere of influence into a number of large spend categories which historically have been challenging to actively manage.
When I had the chance to demo the application last week, I found that the KDS booking punch-out -- Ariba treats the actual booking piece as punch out like any other third party catalog -- to have a decent UI. Now, it's not in the same class as Rearden Commerce -- nor does it have the same level of T&E category coverage -- but it's solid. And it is 1000% better than most antiquated corporate booking tools that I've seen in the past. But where the system really shines is in the integration between both providers. There's a cXML-based messaging system between KDS and Ariba. And both bring business rules engines to the table to enable flexible workflow, routing and approvals.
It would appear that Ariba and KDS have thought through a lot of business and technical integration issues in co-designing this joint solution. For one, if a ticket price changes while a requisitioned ticket is going through the approval process, there's a pre-configured rule to allow the item to be approved if the new price falls within a given percentage of the initial price. And on the expense side, a 2 step itemization wizard greatly simplifies things relative to past Ariba T&E downstream expense reporting approaches. Together, both parties are staying agency and GDS neutral -- and the pricing (which is based on the number of expense reports) does not include agency fulfillment. Essentially, users of this joint solution will get unlimited booking per expense report.
The primary target this new On Demand solution is companies with revenues between $200 million to $4 billion+ in annual sales. From a roll-out perspective, Ariba and KDS are in the process of getting some signed customers up and running (but the formal release will be available by Q4). And by Q4, Ariba will include this capability automatically for companies that purchase their On Demand P2P application. From a behind-the-firewall approach, there's not an integrated KDS solution in the cards for this year, but Ariba will offer custom integration and deployments to installed customers who want to extend their travel and expense solutions.
In my view, this announcement is pitting Ariba and Amex on a collision Spend Management course in the middle market. In this battle, it is clear to me that Ariba has broader overall procurement expertise as a solutions provider. But Amex has a huge customer base and great distribution (not to mention a phenomenal travel solution -- OK, it offers far more than just travel, but read the above-linked post for more details -- in the form of a privately branded Rearden marketplace). Fortunately, this opportunity is large enough to keep both providers -- and their shareholders -- satiated if they can execute on their ambitions. However, a bit of competition can only be good for the market.