Analyzing the Ariba Supplier Network — Forget the Alternatives and Examine the Original (Part 2)

(See the first part of this post here).

In its own marketing, Ariba makes some pretty powerful claims about the supplier benefit of the Ariba Supplier Network. From reducing DSOs by 15-20% to cutting error rates by 45-60% (which not only decreases administrative costs through eliminating error reconciliation rework, but actually increases the speed with which a typical supplier is paid due to errors) the network certainly benefits suppliers, based on the claims Ariba makes. And that's in addition to the ability of the ASN to not only cut down on paper on the buy-side -- Spend Matters is aware of one organization that left the network for a competitive solution and found that it still needed to hire a small army of temporary workers just to keep up with the subsequent additional paper that resulted -- but to help redefine the role of transactional procurement and A/P from facilitating transactions to better managing cash and overall spend.

One expert close to Ariba suggested that the network "does a great job in core document exchange -- POs, invoices, ASNs, etc." The network tends to meet or exceed "all service levels Ariba sets out for customers," this individual continues. Yet at the same time, companies should not rely on the network as a permanent system of record for archiving information. Even though it is likely that most if not all companies leveraging the Ariba network on the buy-side are likely to archive their own information, there is the chance supplier suppliers may not, and our sources suggest Ariba does not guarantee document storage (in their defense, neither do most of their competitors).

This person also suggests that value-added services for the network paid for by buying organizations can be relatively expensive (e.g., catalog enablement). Our source suggests that much of the labor and heavy lifting for these services is done onshore through the Ariba GSO organization in Pittsburgh, which may explain pricing compared with offshore competitive options. At the same time, however, customers suggest that the level of service they receive from Ariba has exceeded that of providers performing similar enablement and value-added services off-shore or through on-shore consulting resources without the organization and structure of the Ariba service delivery/supplier enablement model.

The Ariba Supplier Network remains loosely integrated today with non-P2P/Buyer applications (and Supplier Management is not integrated in a many-to-many manner). For example, integration to Ariba Sourcing requires that suppliers log in to two systems to receive RFQs from the same buying organization depending on where they are created (Ariba Sourcing and Ariba Discovery). However, Discovery is tightly integrated into the network. This same person suggested that while the value for buyers using the network has consistently improved, Ariba needs to continue to focus on "developing an enhanced strategy on adding value for suppliers" including spending time rebalancing the benefit equation by adding "more development cycles to supplier-focused features" in future releases.

Stay tuned for the third post in this series as we offer Spend Matters' view on how Ariba's core network capabilities stack up in the market. From a buyer perspective, our cursory analysis suggests that many of Ariba's competitors are still playing catch-up in a range of core network areas, yet at the same time, Ariba may get outflanked by a number of upstarts in some value-added areas at the periphery of the network value proposition. And there's always the threat of SAP and Oracle taking the network area more seriously (which the former of the two ERP vendors appears to be doing).

Jason Busch

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