Ariba Supplier Network Alternatives: Basware (Summary Analysis — Part 4)

See Part 1, Part 2, and Part 3 of this post here, here, and here.

Basware has among the most advanced integration track records of any provider in the invoice automation and supplier connectivity sector (including one user with connections to 30 different purchasing systems and matching and validation for both POs and invoices). Basware's philosophy driving system-to-system integration -- including the ability to connect to both internal and supplier systems in real-time -- focuses on the master data level, including the master vendor list, accounting data (cost centers, account codes, VAT codes, etc.) and organizational information (business units, users, approval limits, related cost centers, etc.).

From an Ariba integration standpoint, Basware does not have a standing agreement with Ariba for connectivity via the Ariba Supplier Network as an inter-operator partner. Spend Matters analysis suggests that Ariba views its network as a private cloud where interoperability would limit its ability to charge current rates while enabling competition by third parties offering similar value-added capabilities. However, Spend Matters has spoken to numerous Basware references and is aware of significant integrations that have/are taking place, including into one of Ariba's larger customers in Europe. Still, it is important to note Basware's different philosophy than Ariba when it comes to integration.

Basware told Spend Matters that it believes its Open Network approach, which does not force suppliers to change solutions, has inherent advantages over closed models like Ariba. These include the "ease of entry to e-invoicing for both suppliers and buyers, independent supplier operator selection, no extra time spent editing documents, point-to-point elimination, greater scalability, implementation speed for supplier activity, reduced procurement organization and A/P on-boarding workload."

Spend Matters reference checks with Basware customers confirm usage of their Connectivity Services at a truly industrial scale. Indeed, the very latest numbers we have heard from Basware regarding the number of transactions suggest greater accelerating transaction volume than Ariba (57% year-over-year). Moreover, given Basware's strategy to not shy away from the largest and most complicated customer environments in Europe -- which adds many orders of complexities because of inter-operator agreements and VAT rules compared with North America -- Spend Matters analysis suggests that for Basware customers, integrating into an Ariba environment represents just another system to connect with.

Basware has been challenged in North America by a limited brand and marketing exposure relative to Ariba. Yet if its traction in Europe is any indication (including traction within some of Ariba's largest regional customers and references), then it will only be a matter of time before Basware is better known across the pond for their supplier network and connectivity services. Customer criticisms of Basware were minimal in our recent and past reference discussions and were limited to the time required for certain mailed invoices within the EU to reach the Basware scan and capture facility within the UK market (when presented with this point of criticism, Basware suggested this was a customer choice as other, closer, scan/capture facilities are available). For suppliers transacting electronically and looking at Basware's Connectivity Services as an alternative to the Ariba Supplier Network, this should not be a significant issue.

In summary, Spend Matters can recommend Basware as an alternative to the Ariba Supplier Network both in cases where customers are looking to avoid high supplier-paid fees (i.e., an inexpensive network alternative) and also for companies looking for a next level of overall invoice management capability and wanting to make a broader investment in a best-in-class invoice management platform. Spend Matters believes that Basware will continue to focus on consolidating the overall market by buying out other operators (e.g., like the recent TNT Post acquisition) and charging flat at-market rates for document exchange while offering additional value-added services as premium offerings as the network continues to scale.

Jason Busch

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