From a Former Employee: Goodbye Ariba

Today we welcome a post from Spend Matters co-founder, Kevin Brooks.

Much has been written here and elsewhere about the SAP/Ariba deal, but for me the acquisition has a personal angle, having spent six years there at the intersection of marketing, solutions and communications strategy. Also, a little-known fact is that Spend Matters would never have existed if it weren't for Ariba. But more about that in a moment.

When you look across the procurement software sector, Ariba casts a long shadow. It was an early innovator -- the first 100% Java business application, the largest transacting supplier network, etc. -- and a ferocious selling machine. But more intangibly, for many people who didn't know a thing about enterprise software, Ariba (and to a lesser extent, arch-rival Commerce One) came to represent an exuberant spirit of global commerce back when that was seen as a good thing. With charismatic leadership, a simple value proposition (B2B!), high flying stock and an explosion of content-hungry business media outlets, Ariba benefitted from the perfect storm of hype.

My career started in earnest with Ariba back in 2000. I had previously been with ADP, a respectable old-guard technology firm that was synonymous with payroll processing, but it wasn't until I got to Ariba that I realized how dull all other jobs had been. These were heady days in the white-hot intensity just after the IPO, and as Ariba's market cap zoomed to $40 billion we began believing our own PR. I was part of the famous early marketing team, working alongside smart and creative individuals who could out-write, out-design, out execute and just plain out-think anyone I had ever encountered before.

I came to Ariba knowing little about this industry. Six years later I emerged with good stories and more than a few battle scars. The era saw a number of key developments in global business commerce and enterprise software: the rise and fall of online marketplaces; globalization and the great tech outsourcing rush to India and China; supplier networks; e-Sourcing; CRM and the birth of; software-as-a-service (SaaS). Through it all I met business leaders, analysts, politicians, musicians, sports stars, geniuses and psychopaths. And even though Ariba epitomized the rapid rise and catastrophic fall of so many companies of that time, I still had career-making opportunities, terrific employees, smart colleagues and a fortunate run of bosses. In short, I was lucky.

From the outside, things may have looked rosy at Ariba in the early days, but there was always significant internal friction. Any company with seven co-founders and a relatively horizontal org chart is asking for trouble, but from internal differences of opinion on everything from the company's name (founding CEO Keith Krach famously preferred "ProcureSoft" over "Ariba" when it was first presented) to the usefulness of a supplier network emerged a culture of experimentation and rapid prototyping. Basically, if you thought your idea could work, you had to prove it! There was little in the way of employee guidance -- I don't think anyone ever gave me a real job description when I started -- but neither were there hard rules about what you couldn't do. This way of thinking is now standard operating procedure at places like Google and Facebook, but it was radically different than the approach taken by monolithic giants SAP, Oracle, IBM and others who were making a lot of money selling mediocre solutions to procurement and finance departments.

Inevitably, the market crash changed things. I worked directly with all three of Ariba's CEOs over the years, and I don't think you could script a more divergent set of personalities or styles. It is fitting that Bob Calderoni, Ariba's longest tenured (and now final) CEO, engineered a comeback from the abyss that took down nearly every other player in the space by focusing on core strengths and by ruthlessly managing costs. These are procurement and finance virtues, and they were in sync with the attitudes of Ariba's customers. Slowly, quarter by quarter, deal by deal, Ariba clawed its way back from an historic drop in market value ($40 billion down to around $300 million) to re-emerge as a viable long-term success.

In the midst of this turnaround came "Spend Management" -- a messaging strategy championed by then-CMO Michael Schmitt and born from more than a year of meticulous research and testing. "Spend Management" was intended to radically re-shape the industry conversation around sourcing and e-procurement solutions. The whole purpose of Spend Matters as first conceived was to accelerate the adoption of "Spend Management" as a solutions category and to build an alternative voice (and back-door content feed) to the traditional business press, analyst firms, trade and technology publications. Sure, we at Ariba had our own magazine back in the B2B heyday (archives, remarkably, are still available here, but these were leaner days. And blogs were cheap.

When Spend Matters launched in 2004, it was hosted -- somewhat subversively -- on Ariba servers. This was because blogs at that time were not well understood by the business world. Ariba management was skeptical of the idea, and only tolerated it because the writing was solid and because I was able to carve out a tiny part of the PR spend to fund it. We were also extremely fortunate in connecting with Jason Busch at just the right point, and we were lucky to hit on an ideal communication channel just ahead of its mainstream curve. The rest, as they say, is history.

In using non-standard, low-end market delivery and making the presumed strengths of the competition a liability, Spend Matters was a classic disruptive solution in an established sector. That's how many small tech companies start, including Ariba. It is easy to forget the once nearly universal dominance of siloed, on-premise, client-server applications. Using the web to deliver a business service back then was borderline blasphemy. Okay for buying something on, but for business? Ariba was a major force in changing that mindset at some of the largest companies in the world, and it was the crack that opened the way for later SaaS and cloud strategies to take hold.

One of the things you learn when you get close to a business function like procurement is that price is not cost and that buying is not the same thing as acquiring. Today, Ariba is more aligned with the giants of the industry. The acquisition by SAP is many things, but for me it marks the close of an era that shaped my personal and professional life. Smaller, hungrier players now inherit the mantle (and the peril) of growing into the next Ariba.

When I first heard about the Ariba acquisition, I had a flash of a long ago evening in Scottsdale, Arizona, at the annual AMR Research conference. In the pool below the terrace bar, where analysts and tech gurus mingle, an impromptu pool volleyball match has sprung up between two groups. Someone says that it is PeopleSoft and Oracle. A splash and a cheer went up from the PeopleSoft side as they scored a winning point. Drinks and smiles all around, as conversation continued well into the night. The news broke the next morning.

Thanks for everything, Ariba. I'll miss you.

- Kevin Brooks

Voices (5)

  1. Jason Busch:

    Look at some of Ariba’s and FreeMarket’s peer group and where they ended up …

    i2 — sold for $400MM
    Commerce One — not sure, but not much
    PurchasePro — management team ended up in jail (at least Junior did, I think)
    VerticalNet — tiny exit (only assets that ended up worth anything were Atlas, spend analysis and home grown — not the original marketplace stuff)

    In comparison, Ariba’s exit was much stronger than previous B2B peers.

  2. HA:

    Impressive results? Bob took two (2) three hundred million dollar ($300M) organizations and ‘peaked’ at $445M in combined revenue – by my math, 3+3=4.45 is not impressive.

  3. Market Watcher:

    Impressive results, even though Bob was voted as one of the most overpaid CEOs in the US:

  4. Anonymous:
  5. PR:

    Well said Kevin. I took the journey for 2 short years, but everything you said resonates – and I would add – no idea was left unexplored, there were no real job descriptions – you did what was needed (i especially loved the scrum period) and thrived!

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