ThomasNet and Ariba Partner: A Minor Breakthrough in Network Cooperation (Part 1)

Last week, Ariba and ThomasNet announced a new partnership to expose the ThomasNet directory of suppliers (paid advertisers) to buying organizations using Ariba Discovery. While terms of the deal were not disclosed around how ThomasNet Discovery suppliers will pay to show up in searches and respond to RFPs on Ariba Discovery -- let alone more complicated fee scenarios, such as when a supplier is a supplier on both systems but is discovered via a search on Ariba Discovery rather than the ThomasNet portal and must pay to respond to individual RFPs based on their lower-level Standard or Advantage-level membership with Ariba -- it's clear that the relationship came with some material forethought and technical integration between the two platforms.

According to the announcement, Ariba "is joining forces with Thomas Industrial Network to connect more buyers and sellers around more commerce in the fast-growing category of industrial MRO. Under the terms of a newly-formed partnership, Thomas Industrial Network (ThomasNet.com), an online division of Thomas Publishing Company that provides procurement professionals, engineers, and plant and facilities management with access to the detailed information needed to make purchasing or specifying decisions, will offer services to enable the more than 650,000 suppliers that it currently supports to do business on the Ariba(R) Network. Ariba, in turn, will automatically match the capabilities of Thomas' suppliers to the requirements of Ariba buyers and provide a common platform through which they can connect and transact business."

Further, "In addition to Thomas' suppliers, buying organizations on the Ariba Network will have access to ThomasNet's comprehensive, attribute-rich private catalogs which they can integrate with their procurement solutions, including ERP systems, to enhance and accelerate the results that they deliver...Ariba will distribute leads to ThomasNet's suppliers through Ariba Discovery." While we strongly disagree with the accuracy of the claim that "Ariba Network is fast becoming the de facto standard for sourcing industrial MRO and direct materials" -- the volume number simply don't support this assertion -- in the announcement, it's our view that the partnership might be indicative of things to come for different -- and sometimes competing/overlapping -- providers in the supplier network marketplace.

Without question, ThomasNet has more overall activity, and runs a marketplace business significantly larger than Ariba. You need only to look at the relative web traffic ratings of Ariba and ThomasNet on Alexa and other sources to see that the true volume of business-to-business activity comparing the two is an order of magnitude different (Ariba.com, inclusive of Discovery and the Network, looks to be roughly 10% the size or less of ThomasNet). Ariba is much, much smaller. But with limited sourcing/RFX capability on ThomasNet, the actual buying decision/evaluation is technically made outside the marketplace itself. Hence whether ThomasNet is a real marketplace as Ariba would define it might be open to interpretation. We think it is, mind you, as adding RFX capability is not exactly difficult.

In Spend Matters view, adding RFX features to a search is the easy part. Creating and mapping taxonomies, catalog structures (for parts that can be cataloged) and matching buyer requirements with supplier capabilities (e.g., the part attributes of a stamping to the machining capabilities/type required) is the hard stuff. And domain experts like ThomasNet excel relative to software-driven marketplace concepts. Indeed, while Ariba may have developed some slick capabilities (we like it) on Discovery, copying what they've done would be far easier for a third-party than re-engineering what ThomasNet has behind the scenes, its taxonomy and catalog structure included. Perhaps this explains why ThomasNet is seeking out multiple partners for content distribution, beyond Ariba, as it did with Ketera (now Rearden).

When it comes to Ariba Discovery, the bigger question that both users and investors should be asking is around the broader commitment and focus to the business inside Ariba, as there has been a reshuffling of some Discovery resources in recent quarters (Spend Matters has confirmed this from multiple sources). More important for users, one wonders if the Ariba network and Discovery is as "poised for growth" as Ariba claims, why they're not adding significantly more fuel to the fire rather than limiting the flow of investment oxygen needed for the thing to break away. Given the potential power of Discovery and our positive experience with it, we hope that Ariba supports its marketing claims and original investment with the resources, partnerships and capabilities that Discovery deserves. The ThomasNet partnership is a good start, but we'd put greater and greater firepower behind Discovery if it were up to us. Press releases alone and select partnerships aren't enough.

- Jason Busch

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