Ariba: Category Management Enters "The Cloud" (Part 1)

Even though Ariba's positioning of its new announcement of cloud-based category management solutions could just as easily be described as on-demand category management services and intelligence, it further suggests a few things about Ariba's strategy in terms of what it plans to do with the legacy FreeMarkets GSO (global services organization) group. It's also a potentially telling signpost of how services and expert-category delivery might look in the future. In a series of posts looking at this announcement, we'll examine the details of the announcement as well as some of the implications for customers as well as and Ariba competitors and channel / SI partners.

According to the press release, Ariba Category Management Services are now "a unique solution delivered in the Ariba Commerce Cloud that provides the technology, capabilities and community needed to effectively manage spend by category on an end-to-end basis." Ariba suggests that companies using Ariba Category Management Services "drive savings of more than 12 percent across a range of categories." What is most interesting, however, are the leading categories that Ariba positions focuses on within "the cloud." These are: logistics, packaging, capital goods, human resources, construction and engineering, MRO, IT hardware, facilities and maintenance, marketing and communications, travel and fleet, IT services and telecom. In other words, none of the direct material categories that FreeMarkets largely built its business on made the list: metals, plastics, electronics, packaging, etc.

This suggests to me that Ariba clearly views its future in this area as focused on enabling expert technology, content, services and category consulting in the area of indirect and services spend, rather than direct materials. It also puts them in direct competition with the category and process focus areas of many of the SIs, consultants and BPOs with whom they want to partner with from a channel perspective (unless, of course, Ariba partners with them to enable their own services in these areas as well). However, Ariba could very well have a more innovative technology, services and category intelligence delivery mechanism on its hands with this approach -- one that others in the market may follow.

Stay tuned as we analyze the future of Ariba category management, as well as its components and potential components, in future installments of this series. We'll also tackle what it means for customers and competitors in more detail as well.

Jason Busch

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