At Ariba LIVE this spring, I got a walkthrough and demo of Ariba's latest release, Discovery, a web marketplace that most closely resembles sites like MFG.com and cBoxBid, matching buyers and sellers in an environment that is free to buyers -- or as Ariba likes to say, in their marketing spin, "matching buyers and sellers in the cloud." I'll be candid in my take -- Discovery is impressive and could prove disruptive to existing marketplace business models -- not just based on its underlying architecture and future integration into Ariba products (and maybe other providers as well), but because it appears that Ariba will lower the barrier of entry to suppliers in the marketplace world. Suppliers frequently complain about the high costs of participation in similar offerings, paying hundreds or thousands of dollars for the opportunity to bid on business, and we suspect Ariba will charge less than competing sites like MFG.com.
What does Discovery do at its core? I previously wrote that "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 [or will pay in the future]. The vision for Discovery sounds remarkably similar to a cross-vertical / cross-category MFG.com. 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 the words of one Ariba executive, "suppliers pay to respond to offers / opportunities." Moreover, "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. 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.'"
In the previous write-up, I also noted that "Ariba Discovery currently provides access to '300,000 suppliers.' 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."
Clearly, Discovery will play a central role to the growth and expanded value proposition of the Ariba supplier network going forward. At LIVE, Ahmed Rubaie, Ariba's CFO, suggested at the analyst day that: "We are expecting a better fiscal year 2011 ... [solutions like] Discovery are opening up a bigger and new addressable market." But how does the application feel and what type of value does it actually deliver?
In the next installments of this series looking at Discovery, we'll walk through what the application feels like to use and what it does -- and describe the general value proposition to buyers and suppliers alike and whether it currently delivers on its promises. We'll also provide some details on the traction Ariba is seeing with the product so far, based on some insights I was able to glean from LIVE.