Our cursory research suggests Ariba is taking partnering seriously and that some services firms playing the Ariba system are, in fact, realizing better results from Ariba compared with any other referral partners. Yet Ariba has a reason for targeting smaller firms -- larger firms have long memories about Ariba's consulting fee-hoarding past and belligerent policies. Moreover, many of these practice leads remember competing against Ariba directly, before Ariba sold off its sourcing services business (the old FreeMarkets group) to Accenture.
Yet despite the past, Ariba really does appear to have done a DNA swap in its services and partnering model. Our intelligence suggests they are actively referring sourcing and related leads to services partners with the best of intentions rather than attempting to do more internally on their own. Given the fact that customers most attracted to Ariba sourcing technologies tend to be more price conscious than most and lag the market in overall adoption and sophistication relative to those who use competitive products with more advanced capabilities in optimization and other areas, the contingency sourcing models of boutique firms are potentially a good fit on all sides.
But where does this approach leave Ariba's competitors when it comes to partnering? Within sourcing, Emptoris remains the most experienced provider in partnering with larger firms, including Ariba, IBM and Deloitte. We are aware of multiple deals Emptoris has gotten as an indirect or direct result of its relationships in the past year. The symbiotic relationship here is quite different than what Ariba offers its partners. Rather than pay a fee to Ariba, these providers usually have access to Emptoris technology that they then can "leave behind" or recommend to their own clients -- where significant customizations are often involved.
It's our belief that one provider that potentially has more at risk from existing partner/channel relationships with boutique (and some larger) consultancies is Iasta. Unless Iasta retools its partnering strategy to become a business development arm for customers or adds another layer to their partner model, the incentive of boutique firms that currently use both solutions -- or are evaluating both -- will be to work with the one generating business for them, even if one solution set is materially stronger in key functional areas. However, Iasta's relationship with the larger consultancies and BPOs that it works with is likely to remain given both the functional strengths of its solutions compared with Ariba, plus the perception that they are an easy provider to partner with. Also, from an optimization standpoint, Ariba does not even have an offering today that can compete against Iasta (let alone Emptoris, BravoSolution, Trade Extensions and CombineNet), so in sourcing, apples-to-apples comparisons are difficult.
Spend Matters believes we'll see BravoSolution begin to partner with additional global firms and BPOs as well (incidentally, the line between the two is becoming more and more blurry), building on recent success engaging these types of organizations as customers and partners. Zycus, however, is likely to pick up little in from its partnership efforts given its overall direct sales strategy and how they articulated a de-emphasis on partnering at their recent analyst day.
Still, at the end of the day, Spend Matters believes that sourcing and procurement transformation-type assignments (two of the top areas of referral in the "upstream" spend management area for Ariba partners), are not terribly interesting looking forward. We believe the next partnership battleground will occur in the area of supplier management technology and supplier management BPO and services. And it remains to be seen what Ariba -- and what Ariba's competitors -- plan to do here from a partnering engagement model perspective.