Last week, we featured our initial coverage of the ThomasNet/Ariba partnership and integrated network offering. We thought we'd continue the discussion by discussing the necessary work involved in pulling off a partnership such as the one Ariba and ThomasNet have embarked on (generically speaking). Second, we'll examine a bit of what this partnership may (or may not) signal for the direction of Ariba and its network strategy. In the final post in this series, we'll share some thoughts on the future of network cooperation and interoperability, something that excites us immensely and that we believe represents the future of business-to-business collaboration across a range of supplier network options, including what these models will bring in the future.
Many Spend Matters readers are likely versed in the basics of different types of supplier networks. Some provide a means of standardizing connectivity for document exchange (e.g., POs, invoices, ASNs) between buyers and suppliers, regardless of the system of record generating the document or notification. Others provide a means of supplier search and discovery. Still more are starting to offer a common platform/approach to keep supplier information current by having suppliers update and maintain a single profile and then publish or share this information across their customers (and/or potential customers).
If we take just one of these approaches, search and discovery and enabling interconnectivity between networks, the area may sound simple, but it's not. This is why the Ariba/ThomasNet partnership, (if it has anything behind it besides a press release -- and we believe it does), likely requires and will continue to require significant technical and business process integration to pull off. For one, Ariba and ThomasNet maintain distinct taxonomies to classify suppliers. According to their own materials, the Ariba Supplier Network "supports UNSPSC commodity codes based on ECCMA version 13.5 both for categorizing" businesses and catalogs. We believe Discovery is also based on this classification schema unless Discovery and the transactional network components remain separate. ThomasNet, in contrast, has developed its own taxonomy, which it believes confer advantages across the categories in which it supports.
Mapping the two taxonomies together is no walk in the supplier network park, and will require expert resources on both sides. Moreover, pulling off the integration on the catalog and item level for search presents a range of other hurdles, but even first, would require partners to answer a number of questions, including where and how information should appear (i.e., on what site). In short, network partnerships for supplier search have the potential to be messy and complex on the back-end and arguably the more value that buyers and suppliers will get from them, the greater the investment both partners will need to make up front and over time.
Moving on to our next subject of what this relationship means for Ariba and its network strategy, we'll share a few observations. Most important, those who follow the Ariba network closely will realize this partnership, even though it is on the Discovery side vs. P2P transactional enablement, is in line with past partnerships/relationships like OB10. Within these, Ariba continues to always manage or own at least two of the three elements of the network equation in a given buyer/supplier collaboration. First, Ariba maintains control of the hub (i.e., the connection/interchange) between the two parties. Second, Ariba maintains control of the buyer half of the experience and interface. The only part that Ariba's partners effectively control is the interconnectivity of the supplier with the rest of the process.
So while some may cheer a relationship such as the ThomasNet/Ariba deal as a broader Ariba embrace of open network connectivity and collaboration, we believe that such an observation would be incorrect. Ariba is undoubtedly partnering with other networks. But like Napoleon and Squealer in Orwell's Animal Farm it's clear who is driving the basis of control, thought, structure and interaction amongst relationships.
Looking forward, until Ariba pursues a model of true network interoperability (e.g., when Ariba does not always have to be the "hub" in addition to one more leg of a particular connectivity equation), they will be restricting buyers, suppliers and partners from enjoying the true potential benefits of a business-to-business model across all the areas where supplier networks can deliver value (briefly described at the start of this post). The challenge is that giving up control over all of the elements of the transaction itself would require Ariba to change its network operating philosophy and business model (e.g., allowing suppliers registered on Discovery to also appear on searches on ThomasNet and other sites). But we don't see this happening, at least not under the current Ariba network orchestration approach, which likes to maintain control over the other animals on -- or approaching -- its farm and how they interact with each other. Said another way under this model, "All network participants and parties are equal, but some are more equal than others."
In the last post in this series, we'll share some thoughts on what the future of network cooperation and interoperability are likely to bring.