In short, we believe that the Ariba Supplier Network deserves a position on the shortlist of any company considering a supplier connectivity solution. It is also one of the largest supplier networks we're aware of (including its legacy EDI competitors who are moving in new directions and will likely challenge the ASN and others in the sector). However, despite the network label, our research suggests the ASN is really not a true buyer/supplier network (i.e., architected from the ground up in a many-to-many manner), but rather a connectivity service that looks more similar to many of its competitors -- albeit with stronger capabilities in certain areas -- than an actual many-to-many marketplace.
In other words, the ASN serves its purpose as a type of next generation EDI model built to enable open connectivity standards (cXML) rather than as a true many-to-many network, offering users and companies a single profile and identity from which they can transact on both the buy and sell side (incidentally cXML is really an Ariba standard that became open, but that's an entirely other topic to explore someday). Yet both sides of the trading equation maintain segregated relationships. Consider that buyers and suppliers have different log-on pages and accounts -- you can't maintain a single profile in the system. From this, it's clear that the orientation of the ASN is to individually enable buyers with the connectivity services they require to facilitate P2P transactions and to provide suppliers with a mean to streamline their connection to customers (and hopefully get paid more quickly as a result). The service no doubt goes both ways -- and can provide immense value to both buyers and suppliers -- yet the architecture of the ASN suggests that it's really more similar to other P2P connectivity platforms than something radically different. A "cloud" many-to-many-network such as a business-to-business ebay as some outsiders may conceive is an incorrect assumption.
Despite its current model and approach, the ASN's future may be quite different. One source close to Ariba suggests that Ariba Discovery, Ariba's buyer/supplier matchmaking service is a "very interesting way of expanding capabilities of the network." Yet this person also suggests "where Ariba still has challenges is getting beyond the plumbing" and "is struggling to come up with ideas that sit on top of the network." Moreover, this insider says the model is "still very much buyer-centric once you get beyond the supplier marketing ... they are figuring out how to add value on the supplier side." However, this individual does see benefit in value-added services around the ASN like the Receivables Exchange to facilitate early payment to suppliers based on a market price for the selling of receivables. But it's unclear at this point what volume the ASN is generating in replacing traditional factors. One unverified source Spend Matters spoke with suggested that less than 2% of transactions going through the network take advantage of third-party financed early payment discounts. This clearly represents a huge opportunity for Ariba and the buyers and suppliers leveraging the system.
Stay tuned for the next post in this series.