Yesterday, Bob Solomon shared a detailed update on the network business, including details on Ariba Discovery, a new free marketplace offering -- free for buyers, that is -- that harkens back to the old suppliermarket.com days (at least Ariba got something out of that deal in the end, I suppose). Essentially Discovery is a tool that combines an open RFX platform tied into other Ariba products (for Ariba customers) that allows for supplier discovery. Suppliers can register for free on the Discovery-related network, yet pay for certain access privileges to respond to RFQs. I'll offer a detailed post and tutorial on Discovery in June, but for now, it suffices to say that the vision for Discovery sounds remarkably similar to a cross-vertical / cross-category MFG.com, although with significantly smaller supplier fees (at least initially).
Perhaps a more accurate comparison is to describe it as a global Alibaba-like supplier directory service combined with the integrated RFX and sourcing discovery components of an MFG.com. In Bob's words, "suppliers pay to respond to offers/opportunities," and the offering is free for buyers. Basic supplier listings are free, but "Ariba charges for enhanced promotion" similarly to how Alibaba promotes suppliers by paying them more. Regardless of what Discovery is like / not-like, the new offering "competes in several fragmented segments based on which audience is targeted." According to Ariba's own research, it has overlap with the following markets:
- General internet search: Google, Yahoo ($6 billion market)
- Business directories: Achilles, MFG.com, Thomasnet ($160 million)
- RFQ/Posting: Buyerzone, QuoteCatcher ($30 million)
- Category specific marketplaces: MFG.com, Ecovadis ($100 million)
- LCCS: Alibaba, Global Sources ($500 million)
- Services Microlabor: eLance, oDesk, Freelance ($40 million)
- Government focused: government bids, Onvia ($80 million)
How is Ariba differentiating the solution? Bob claims that the solution is built on top of the quality of the trading community, including a "high quality buyer base from industry leading Ariba G2000 customers," providing "high quality business opportunities" to suppliers. Moreover, it provides "quality information about supplier capabilities and performance [including] real trading-based information, certification programs and robust reference rating systems."
Ariba Discovery currently provides access to "300,000 suppliers" and a "robust matching engine search to match business needs with qualified available suppliers" which in turn provides suppliers, who are paying the bill, with "access to real business opportunities." Today, Ariba Discovery is free for anyone (including non Ariba buying organizations) who wants to post an RFQ. It is also integrated into Ariba sourcing, contracts and SIM. In the future, it will be integrated into "Ariba P2P (10s3), Ariba Analysis (10s3) and CRM (e.g., Salesforce) systems for suppliers."
What's my quick take on Discovery? In terms of the value Discovery can provide, it feels like a no-brainer on the buy-side as a supplier directory search tool to complement existing sources that organizations may already be using. But from a revenue and commercialization perspective, I think Ariba will need to realize that the publishing and trade directory businesses are 100% different than anything else they've done before. This is not a software game. This game requires hounding suppliers to sign up and take the plunge to pursue opportunities. There's no field of dreams here -- it requires market making on both the supply / demand side of the equation. Ariba has a great foundation to build from, given their user base. But they should bring in some online publishing experts to run this business, especially on the revenue side. Targeting acquisitions would help quite a bit here as well.
- Jason Busch