Last Friday, we decided to have some fun at Spend Matters to better understand the actual impact of price increases for Netflix DVD customers compared with suppliers on the Ariba supplier network between 2004 and 2011. The findings suggest a conservative compound annual growth rate (CAGR) of over 20% for supplier fees paid per transacting relationship on the Ariba network during this timeframe. This large increase provides fodder to explain the bitterness we heard from many Ariba customers and larger suppliers who were upset at the fact Ariba would exercise its pricing power without creating additional value commensurate -- or at least directly linked -- to the price increase last fall. Yet flash forward a couple of quarters, and a number of Ariba CD customers have gotten past the price increase in large part because they're feeling that Ariba is, once again, paying attention to their interests.
One Ariba CD customer suggested that previously, "as a supplier, Ariba had gone to sleep for us on the CD (on-premise) side. Now, they're back for us." Another customer suggested that "while the latest round of increases created negativity," more recently, following Ariba's outreach to them, "it's died down and everyone is getting down to the business of upgrades." Indeed, Ariba's latest efforts to create a PeopleSoft-like steering group and customer council around their on-premise customers in currying favor. Ariba announced in June that they were "establishing an On-Premise Customer Council that will provide you insight into the roadmap for the solutions as well as the opportunity to provide feedback and recommendations for enhancements." Specifically, "This Council will meet in person several times per year beginning in late July or early August. Additionally, we will host On-Premise User Groups globally throughout the year."
Ariba is smart to embrace their legacy Buyer customer base. Most important, it's a move that will ultimately benefit customers for a number of reasons. It will:
- Provide continued choice for those Ariba customers wanting on-premise P2P options that factor in recent SaaS innovations
- Force SAP and Oracle to innovate on the SRM and iProcurement front to win businesses that might have otherwise automatically gone their way during the next financial upgrades at many companies
- Drive cloud/SaaS vendors to sharpen their value proposition further to supplement, enhance and/or replace installed Ariba Buyer (eProcurement) deployments