Even if looked at from relative size and comparative marketplace perspectives alone, OB10 is clearly a fascinating network provider in today's market (to the point, see below, where Ariba is paying them extra attention). While it is not yet likely over $100MM in revenues based on those we've spoken to in the market (outside of OB10), the provider is still in the directly in the crosshairs of the largest indirect P2P/e-invoicing network player in the market: Ariba. In fact, according to our sources, right around the time of the SAP acquisition announcement, Ariba sent out an invitation to business partners to attend a session in May titled: "Ariba and OB10: It's All About the Network," which offered a chance for Ariba to explain "how it differentiates itself from other commerce networks such as OB10" and "learning how to sell the value of the Ariba Network" versus OB10 and the rest of "the competition."
It's not surprising that Ariba would call out a competitor in such a session. This is good partner development and training and we should commend Ariba for being on top of the competition. But usually the target a focus group like this is a much larger provider (at least the headline target). The fact that Ariba has put OB10 in the competitive crosshairs despite its relative size compared to Ariba's network business (revenues) suggests how potentially threatening Ariba believes OB10 is to their core model and business -- even if it does have functional advantages over OB10 in certain areas.
What's clear, though, is that OB10 is narrowing functional gaps with Ariba in certain areas, including supplier portal views and access. They're also expanding their overall vision, which is probably what scares Ariba the most (especially given the cost advantage of OB10 for managing larger suppliers) if they approach parity with the functionality of Ariba's network and capabilities/applications (e.g., discounting, supplier search/discovery). Specifically, OB10 told Spend Matters that their "vision and core purpose is to be the world's most recommend trading network -- not just an e-invoicing [connectivity provider]."
Earlier this summer, OB10 gave Spend Matters a detailed update, including a current company overview, demonstrations and even a walking tour of their supplier enablement/onboarding facility in London. What we learned is impressive, and it should concern Ariba, if nothing for the fact that OB10's focus on per-document pricing for network connectivity is a big threat to the dollar volume-based pricing Ariba charges suppliers. Moreover, OB10 is strong where Ariba has less traction compared with North America, South America and Australia -- in the UK and Europe, primarily (although OB10 did get 39% of its volume from the Americas).
In short, OB10 is not only riding the wave of e-invoicing and supplier network marketplace growth. It's one of the top independent network operators left in the market by volume. But what is driving OB10 forward, and where will it head in the remainder of 2012 and into 2013? In this series looking at OB10, we'll explore the latest from the provider, including a glimpse into how it goes beyond software and network connectivity to really sell suppliers on the value of joining an invoicing network environment (lessons that are applicable for just about any e-invoicing or network provider).
Stay tuned as we investigate OB10, which is now in its twelfth year since incorporating (they launched the first solution back in 2001, winning their first client Fisher Scientific). We suspect you'll likely come to the same conclusion after this series that we have: given the marketplace network hype at the moment and OB10's material traction (and dominant traction in certain markets) it's unlikely that OB10 will remain independent for another 12 years (or even 12 months). But regardless of how long OB10 continues to grow independent of another organization, it's clear they have quite a bit up their sleeve as they leverage network connectivity to build new capabilities for buyers and suppliers on each side of the transaction.