Today, I'd like to introduce my Chicago friend, Constantine G. Limberakis, to the Spend Matters community. Constantine is a partner at a local consultancy, the Shelby Group, and an expert on all matters Ariba, including how to cheaply and effectively upgrade and slam in systems. I invited him to share some of his firm's latest research on what Ariba's legacy upgrade customers are thinking about when it comes to upgrades.
Earlier in June -- on the 19th to be exact -- Jason commented quite a bit on Ariba's overall direction in the market. Today, I'd like to offer my own analysis based on our work with Ariba customers. Like Jason, I also do not understand the direction that Ariba is taking by focusing almost solely on an SaaS/On-Demand approach and somewhat overlooking their past. Though SaaS -- or the overall trend of what Google coined with their apps as "cloud computing" -- is taking flight, I would imagine this is having an impact on its marquee customer's perception on how Ariba will meet their future needs.
For instance one of the biggest concerns for On-Demand in the past was the limitation of single back end integration with 9s1. With the recent release of 10s1, it appears this has changed allowing "connectivity to one or multiple Enterprise Resource Planning (ERP) and other back-office systems". But in speaking with Analysts and many Ariba customers, I still have a hard time imagining multi-billion dollar organizations being able to move to an On-Demand model. Frankly, the sheer number of customizations and requirements, not to mention multiple instances of the same ERP systems, would make it a challenging move for transaction intensive systems that requires a lot of integration.
In terms of the question of continuing with a CD version via the upgrade 9r1, late last year a few of us at Shelby realized the upgrade was going to be a very large question for Ariba customers running CD versions in 2009. We decided to run a survey of the Ariba user base investigating the area, in part to understand the business justification supporting the need to upgrade to Ariba 9r1 for customers maintaining their CD version. Drop me a line if you'd like to see the full findings, but I'll share some high-level thoughts below.
We examined a number of factors including the role of respondents, current perceptions and upgrade impact, influence of past upgrade experience, considerations impacting the 9r1 upgrade and alternatives to the 9r1 upgrade. Based on what we found in the survey, it's clear that Ariba as a solution is perceived as a "work horse" for many organizations -- 60% from our survey said that the Ariba CD version has been effective to very effective in meeting their spend management goals. This is good news for customers -- but not necessarily good news for Ariba, since many users aren't overly excited about upgrading (in fact many would just prefer to keep using what they have while finding ways of reducing maintenance costs and related Ariba fees).
What is the big-picture situation for Ariba's installed users? With only a few 9r1 implementations to compare their situation to, those seriously thinking about an upgrade are looking for answers on how 9r1 is working. And given the inability to predict the turnaround of the economy, in many companies, upgrading has been postponed or budgeted for a 2010 item, at earliest.
Our research also shows that there are many companies still contemplating how they should move forward with Ariba (CD) or whether they should just begin planning for P2P with their ERP provider. I have seen and heard both arguments and everything in between. By next year we should have the answer as to how/if these same legacy customers will move with Ariba's future footprint as well.
Spend Matters would like to thank Constantine for sharing his thoughts. If you'd like to get a copy of Shelby's study referenced in his post, drop a line: climberakis [at] theshelbygroup [dot] com