“Ariba Doesn’t Have Customers, It Has Prisoners”

You can always count on the young (and hyper-competitive) Christian Lanng (Tradeshift's CEO and co-founder) for a good one-liner on the competition. Earlier this week, I met Christian for a quick coffee in San Francisco to hear his perspective on the latest happenings in the US supplier network and e-invoicing market. About halfway through the conversation, he sprung the one-liner on me: "Ariba doesn't have customers, it has prisoners."

As someone who knows Ariba – products, customers, partners and a number of employees – at least somewhat well, I could have easily dismissed this statement based on the fact that procurement and AP organizations use Ariba's tools willingly. After all, they've paid for these procurement and accounts payable tools. Yet Christian has a point. And it's one that anyone who is in the market for (or currently using) Ariba SaaS technology should keep in mind.

Those in the market for purchasing and invoicing technology who have seen what Ariba offers are aware that it's rare that a best of breed provider can price aggressively, at what appears to be the bottom of the market. One of the knocks on Salesforce, for example, relative to other CRM tools and platforms, is that once you start adding users, capabilities and modules, the price increases dramatically.

Yet Ariba can be inexpensive – at least based on volume, users, etc. – relative to just about all of its competitors, including upstarts such as Tradeshift (e-invoicing/supplier network platform) and Coupa (eProcurement and many related modules), especially if it knows there is competition for a deal. In fact, we can't point to a single case where Ariba has lost a P2P deal on price (or at least price alone).

Ariba is able to price its modules so aggressively because of supplier fees. Ariba mandates its hosted P2P tool users also use the Ariba network for all connectivity with suppliers, even in cases where suppliers are connected to other networks that then connect to Ariba's in the same transaction stream (e.g., sending a PO via Ariba but invoicing via OB10).

Ariba's fees account for roughly 15.5 basis points (.115%) for vendors meeting certain volume levels. For those who have tracked Ariba's supplier network history, this represents a 55% price increase from the previous 10 basis point cost prior to September 2010 (e.g., a $10,000 invoice now incurs a $15.50 fee versus 10 bucks before).

What do suppliers get for this? Well, visibility for one. They also save a stamp – or the time to send an email online. And lets not forget they can also factor their receivables through the Ariba supplier network or take a buyer-led discount. No doubt, whether the value equation works for suppliers depends on their invoice and volume mix, cash needs and the like.

But for these suppliers, the Ariba network is not optional. It's mandatory if their customers are using Ariba's tools in a cloud environment. And compared with other fixed cost or free e-invoicing options, it's clear they're paying more than they need to. Or would need to if they had a choice in the matter. But are they prisoners, as Christian suggests?

Drop a line or post a comment. We're curious to know what you think.

Next Friday, we'll share the hypothetical case of three suppliers with different profiles (customer mix, volume mix, etc.) and offer our own thoughts on whether each one is a prisoner -- or not.

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Voices (96)

  1. Mikey:

    SAP Ariba is a scam software the unwitting used in many government sectors to procure directly from suppliers resulting in decentralisation and rise of fifedoms. This resulted in loss of purchasing powers as compared to direct online purchasing now. Unless SAP Ariba has an integrated inventory control it would be useless for government or multi coporations to even use it.

  2. JohnB:

    Ariba claims we owe them over $1,000 and refuse to process our invoices anymore. We are a small company selling services to a single industry. Our customers buy our solutions because they fit their uniques needs. You cannot buy these services in a marketplace. This is extortion.

    Who would like to organize? I just checked and the URL http://aribacustomersarehostages.com is available. Anyone with me?

    1. Adam:

      Send a letter directly to your clients telling them that due to Ariba’s predatory business practices you are ceasing to do business through them. Tell them you were happy to continue to provide your services but that you require purchase orders sent directly to you and that you will be sending invoices via email. Either that or accept credit card orders. Stand up to them. Win this battle.

    2. Tim Iseminger:

      All,
      I’d like to get current thoughts from the supplier (seller) side, as I run a procurement group for a medium-size medical device/ cell therapies company and am shopping for a full Source-to-Settle (S2S) suite. As a large player, we are looking at Ariba, Coupa, and Zycus most. I see the pain Ariba has imposed through fees and some comments on clunky systems and lack of integration to supplier ERP/systems.
      My questions/ request for comment would center on:
      – Ariba says fees are gone unless supplier signs up for added services. True or False? Comments on impact to picking the “free service” vs subscription?
      – Overall usability of the Ariba system/ network from the supplier side. I’ve seen (a lot of) negative comments. Are folks still not easily able to either integrate systems or, alternately, simply “flip” the PO to invoice…as the Ariba sales reps say? If having to operate current ERP and do data entry into Ariba…can you give me a sense for the extra effort? Any sense of the pain you are feeling helps me.
      – What else about Ariba that is either a benefit or a pain to your teams?
      – Have you participated in selling via Coupa or Zycus portals? If so, would love to know your thoughts re any costs (soft/ hard) and/or benefits.
      My goal is to gain scalability on the indirect spend side…and really need a platform system to do so…so want input from sell side. I’m also reaching out to my current supply base to ask the same.
      Thanks in advance…and appreciate all of you taking time to help shed the light!

      1. Jason Busch:

        Tim, Thanks for your note. I’m sure the audience will chime in, but we’re happy to have a call with you to share some additional insights. Please feel free to call our office (773-525-7406) or reach out to Sheena Smith (ssmith(at)spendmatters(dot).com) who can get some time scheduled and provide some background on how we think about selection and analysis prior to the call.

        1. Tim Iseminger:

          Jason: thx and have PM’d Sheena. BTW, thanks for all that SM does to create an environment of discovery, dialogue w/in the industry, and thoughtful research about how to leverage the future given current trends.

      2. Bronia Szczygiel:

        The system is clunky and not free for suppliers. We are forced to use it for one client just for invoices. They base the annual fee on your usage in a short window. In our case all our activity for the year happened in that window so whilst our annual usage meant it should be free, they charged us a higher level fee and wouldn’t reduce it regardless of our appeals. It is an extra layer of complexity as the system is antiquated and so much more difficult than sending an invoice and getting paid, which is how all our others clients (thankfully) do business.

  3. Ed:

    I can’t stand this Ariba thing

    1. Matt S:

      We use it not through choice to invoice ONE customer. No interest in their terrible “networking” claims. They have just quadrupled our charges and it looks like we have to pay over £2000 a year just to invoice ONE customer.
      Is there anything that can be done? It’s scandalous.
      They “upgraded” us with no notice but of course won’t answer their customer support number.

      1. Free At Last:

        If you gave them a credit card to pay for the service, remove it, or cancel it. Do whatever you have to do. Don’t pay the bill. Do you think they can afford to actually cancel you? It would be very hard to get the large companies to buy the service if they can’t engage with their suppliers. Seriously, just stop paying. Cancel every optional service they add to your account and STOP PAYING THE RANSOM!

        1. Matt:

          Sadly I was too late on this one – they’ve “invented” a new fixed annual charge based on the number of transactions and that is ON TOP of the percentage billed. I have demanded it be paid back or I’ll report them to the Authorities.
          And many here are right – their invoices are extremely vague and incorrect. Making it hard to claim them back.
          Honestly this joke outfit must have had a VERY slick sales team because this client is a very large household name and they’ve fallen for it.
          But yes, I have cancelled my credit card and don’t plan on paying them a single bean again.

          1. Free At Last:

            Did you use a credit card? If so, inform your credit card in writing that you are refusing to pay. And at a minimum, remove the credit card from the Ariba website or they will continue to bill you. If you have to – cancel your current credit card # and get a new one.

            To you other point, it is likely only the very large companies that are using this. They are the only ones who think that they can bully suppliers into paying for their AP system (do you think YOUR suppliers would agree to use this system to sell you someting???? Not a chance). I refuse to pay them and and I couldn’t be happier. Ariba has yet to cancel my service. Their business model would fall apart if they do.

            And don’t forget to tack on the “Ariba Tax” like others have suggested. You should be compensated for having to deal with the wasted overhead of this crappy and redundant system to invoice your ONE client that uses it.

  4. Rochelle:

    They started issuing me (ridiculous, incomprehensive, and inaccurate) invoices this year, and I’ve been ignoring them for going on 3 months now. I keep getting emails from the ‘Collections’ department telling me to pay to avoid disruption, but so far I’ve been able to continue receiving POs and sending invoices and geting paid without trouble. I keep replying to the Collections emails explaining that I haven’t reached the threshold for having to pay fees, but never get an actual reply – just more auto-reminder emails. I’ll keep not paying until they do try to disrupt my service. At that point I suppose I’d have to give in since my main client insists on using this terrible “service”. But as some others here have suggested, they probably don’t have the nerve to follow through since they are presumably enjoying getting paid by their actual customers (not just us suppliers/hostages).

    1. Neo:

      Stick to your guns Rochelle! I’ve been getting those emails for 18 months. Refuse!!! If they shut us off and those company’s who bought their BS can’t place orders then their business appeal begins to diminish, doesn’t it…. I refuse to pay! Cut me off, I dare you!

      To the Ariba manager reading this…I know you’re out there. I know that you’re afraid… you’re afraid of us. You’re afraid of change. I don’t know the future. I didn’t come here to tell you how this is going to end. I came here to tell you how it’s going to begin.

  5. Rick:

    I’ve always been amazed at the nerve of Ariba’s business model. The “qualifying volume” that I pay extortion on consists not only of every invoiced $, but every $ of PO that is issued to my company. They get you coming AND going. Last year my average cost per invoice to ExxonMobil was $148/invoice.

  6. Suzanne Balmer:

    Imagine my surprise when I received an email from Ariba telling me in order to keep my business’s good credit standing, I needed to pay my overdue amount of $248. As I am a Supplier of a Customer who uses Ariba, I assumed their system had been hacked and someone had sent me a scam email. Not so! The next time I logged in to Ariba to enter the invoice for my customer (something else I can’t get my head around – I do the invoice work twice), I saw the same message asking me to pay MY overdue amount. The details showed it was for my subscription to Ariba. I feel this is extortion. In order to have my customer invoice paid, I was FORCED to use Ariba and now I am being FORCED to be Ariba’s customer. And apparently until I do, I don’t get paid! I would have thought this was illegal. Surely, you can’t force your business on someone?

    1. Adam:

      Don’t do it. Stand up to them. Send your invoice directly to your customer and let them enter it into their system. If they refuse, you refuse to deliver the product/service OR let them accept an Ariba Tax line item on you invoice of 5% of the service cost PLUS a $1000/year fee to compensate you for the hassle of having to use this piece of trash Ariba

      1. Neil:

        I loathe SAP Ariba. I had to use it as my customer mandated it. It’s expensive for me, cumbersome, and inflexible.

        I and many other suppliers lobbied the customer and thankfully SAP Ariba has been dropped and we can again invoice in the normal way. Thank God!!

        But SAP Ariba is still pursuing us for a completely spurious £4,000 “fee”. We reply to sender “Les Bali” (probably a made up name) but “Les” never replies or enagegs, and just sends the same crap next month. This has been going on for nearly 2 years!

        Despicable business model. Despicable company.

  7. Ariba Support:

    Guys, now you can stop paying as Ariba provides the thing called ‘light enablement account’. If you are low volume vendor you can convert your account to a non-chargable one.

    1. Gary:

      Nonsense! This is only if our customer is willing to have two systems for POs and invoicing! Also, it has so many limitations and exclusions, it will be unusable for most! Stop this extortion!

      1. Andy:

        Tell them like it is Gary.

        I believe that we can’t convince Arriba to stop the extortion. The extortionist rarely has the compassion to do what is right. The other option of course is to not pay the extortion. That is what I have done. I haven’t written them a check in over a year, but the account remains active. They are too chicken to actually shut it off, because their big customers will not like it much if they can’t acquire goods and services from their vendors. Just stop paying.

  8. Jack Fleming:

    This system actually stinks!!!!

    Im on hold to their help desk for 37 minutes and counting.

  9. Bob:

    Ariba just put their 2017 subsrciption fees up from $500pa to $5,500pa. An 1100% increase.
    Completely agree with most of the comments above. The software is rubbish. i could get a company in India to produce a better product for little more than their annual subscription fee

    1. Robert:

      Yes they are crooked as hell some one should investigate they are about to put me out of business.my customer Ryder started using them haven’t had but 2invoices paid in 6months never have I cut off a customer until now shame on you crushing the small business owner you are so American.

      1. Bridget:

        That’s exactly what is happening with us.
        Charging the vendor to get paid is fundamentally wrong on so many levels!!

    2. Gary:

      We just received the same 2017 subscription fee…invoiced in advance based on last years volume! Except, our volume with this customer is going to almost zero in 2017, yet we still have to pay! I can’t believe there is not a national revolt…this is legal extortion. It’s bad enough paying to get paid, but this has to be the worst software in history. It must have been designed by a 7th grader after a few classes in design.

      1. Adam:

        And what if you don’t pay Gary? If they start turning off suppliers, then their primary users will not be happy. I’d suggest not paying it; I doubt Ariba will do anything about it. Or just cancel you subscription. Do you really need the headache? Tell your low-volume customer that they will need to figure out another way to pay you (they do have other ways).

        1. Gary:

          If we don’t pay, our account will be suspended, and we will be unable to receive POs or send invoices. We would lose our customer and income! We have contacted Ariba, and have received no replies! Legal extortion! This is no different than someone telling us, if we want to do business, we have to give them a cut of the profits!

          1. Adam:

            Gary,

            I haven’t paid….and the account hasn’t been suspended.

  10. Bronia:

    Having been scammed out of over £500 for a years subscription based on their flawed assessment of our ‘usage’ and having no option but to pay or lose a valued new client, I can honestly say their customer service is truly appalling – the worst I have ever encountered.

    Incredibly frustrating to pay over the odds for a clunky, out of date system that is not user friendly just for one client. But we are held to ransom if we want to continue to do business with them.

  11. Lars:

    I am a procurement manager in a global company that uses ariba. This software is by far the worst i have ever worked with, fees or no fees. I do certainly not understand why companies invest millions to implement this system, which mostly reminds me of software build in the late 90’s…as a company this system is a stay-away! No useability, badly shaped for items which are already handled in Sap pm, and not useable for services.

    1. Michelle:

      when did you implement Ariba?

    2. Evan McEwen:

      Hi Lars, have you looked at any other solutions?

  12. Mark:

    Ariba observations

    Customer (Supllier) Service – non existent – at best appalling . The only time you can get them to talk to you is when they ring up from India chasing the £1200 fee for emailing 10 invoices in the year.

    Ariba Account managers – non existent – as we are handing over large amounts of cash for a “service” I would expect to be able to discuss my increasing annoyance at the demands for money with menace, preferably with a highly trained individual aware of all the wonderful benefits handing this cash over brings . They have no account managers. Presumably they have been unable to locate any individuals stupid enough to take on what is undoubtedly going to be a challenging role.

    Ariba supplier benefits – non existent – Since our client has started using the Ariba “service” our administration has changed from pressing the “send invoice” button in the accounts package to spending hours wrestling with what can best be described as “My first crack at developing a User Interface” – looks like someone whose just done the “hello world” php tutorial cracked on and knocked up a few forms in their bedroom one night after getting back from a late bar having spent far too much on beer and blow.

    Apart from that its great.

    1. Evan McEwen:

      Hi Mark, I’ve been seeing a number of procurement professionals, like yourself, with the same complaints about Ariba. Luckily there is a company out there that offers a better solution with better user integration and NO FEES! Would you be available to discuss further sometime next week?

  13. Pierre Mitchell:

    Ariba has quietly rolled out its new “Supplier Light Enablement” capability. It lets you do a basic PO Flip without having to join the supplier network. It has a few issues, but definitely step in the right direction. There’s a video here you can check out.. https://youtu.be/pVMwkqIFFd4
    And for the record, again, I will offer up praise just as freely as criticism with any provider – SAP/Ariba included.

  14. Jay:

    I thought I would come back to post that I have just sent my last Ariba invoice! Today is truly a great day. My only client that uses Ariba has just given up on them and is moving to another system. Hallelujah! From this point forth, should another client want to use my services but requests that I use Ariba, I will tell them to look for services elsewhere. Goodbye Ariba. Go tax someone else!

  15. Joa:

    Hi!
    We just recieved a “invitation” to ARIBA from a customer.
    Are there any possible way to stay away from this?
    Send invoice by mail to the system maybe directly from our ERP system?
    \\Kim

    1. Jay:

      Hopefully they can accept invoices directly and pay you independently. I would do your best to resist assimilation. If your customer claims that’s the only way they can pay you, tell them you will have to charge them a $500/yr support fee for a separate invoicing system, plus a 5% per-transaction Ariba Tax.

      If they refuse…do you really need them as a customer? Do you want the headache? This notion that individual customers can force suppliers to pay-to-play and to maintain a multitude of invoicing platforms is ridiculous. Once their suppliers start refusing to comply, things will change.

  16. John Chiappetta:

    Complete and total waste of time and money. It has all of the integrity of a 3-card monte game. If they wanted it to be legitimate they would have clients scout the available vendors, choose a few and request a bid.

    The way they do it is simply to glean as much money as possible. Stay away!

  17. Rob:

    I haven’t started any transactions with ARIBA as of yet, but have read some of your comments to this travesty of business practice. It is almost the same as the credit card machines they made you use in the past. In order to use this service the company supplying this devise would charge you a fee for doing absolutely nothing. ARIBA is the same concept. By charging the “ARIBA FEE” and letting the customer know about this up front is a start. Most buyers would understand and agree.
    Does anyone fear any reprisal from ARIBA for posting comments.

    1. Clare Jones:

      Hi Rob – not at all!

  18. Samantha:

    I find Ariba to be double work for me honestly. We use our own Accounting system to track our invoices and then I have to “invoice” through Ariba when a PO comes through and then there is a fee every month depending on the amount of work that is invoices. I would love to bill the client for the fees I need to pay out for this time waster, but it is different every month. Payment from clients haven’t improved. I really am not impressed, mostly angry.

    1. Elizabeth:

      I don’t think you’re using SAP Ariba correctly then. After the PO is sent to the supplier upon submitting the order, the Supplier confirms an order. The invoice will arrive to the buyer, but how Ariba works is that you create proper interface with ERP like SAP or Oracle or any other accounting system to be processed in the external system, but the great thing is that it’s automated, and the PO details and every transaction from strategic sourcing to procurement is recorded in the system with proper approval flow and terms& conditions as well, and you don’t ever process invoice using Ariba, but it’s linked to your ERP. You can adjust an order in Ariba, and the order’s final accounting data is sent to external ERP system, and we actuallly have a tool for that.

      Many customers who complain about SAP Ariba has not implemented the system properly, and not getting the most out of the system. You definitely can’t use SAP Ariba out of box off the shelf and you should know that, without putting proper configuration effort to it, just like you just cannot purchase SAP ERP solution or any other enterprise-level software such as Oracle financial out of box and expect it to work.

      1. Sam:

        Agree with you Elizabeth, Ariba requires proper implementation !!

  19. freeleaseagreementtemplate.org:

    Thanks for finally writing about “Ariba
    Doesn’t Have Customers, It Has Prisoners” Spend Matters … Loved it!

  20. Kindergarten:

    Great post.

  21. Pawan:

    Interesting comments and helpful

  22. Tim Norris:

    I’m currently going through the Ariba process as a supplier, and can safely say it’s the worst piece of “technology” I have ever had the misfortune to use!

  23. Ba Hung:

    Let’s put it this way: I’m a buyer with money to spend. I want to spend on goods and services from sellers of my choice. I am prepared to pay to the seller whatever is deemed reasonable and fits in with my spending capacity.

    Ariba Network is like a Shopping Mall (like Westfield) where I would go to shop for several reasons: 1) convenience (to buy all products and services from one place), 2) safe (no hawkers or unsolicited sellers); and 3) as a net outcome: value for money TO THE BUYERS, sellers’ cusotmers.

    On the other hand, the sellers (shop owners) can charge me whatever they like for the cost they are prepared to put up with. At the end of the day is a match in exchange for goods and services and ones who prepared to pay for just that.

    I’ve not heard of any Shopping Mall that would charge a customer (buyer) in entering for admission (or any other fees like parking).

    It’s a seller’s choice to pass any charges and costs onto its customers and it is the skills of a seller to be and maintain its competitiveness.

    Ariba is merely a platform of choice for many buyers and sellers to do business.

    Terms of trading between the buyers and sellers are just that!

    1. Jay:

      …Except that in malls, sellers decide on their own to locate there because it is rich in buyer traffic, and in the end serves to increase sales and profit.

      When you to apply this analogy to Ariba, you need enhance your story a bit. Picture a small shop owner located in a quaint village who sells products that ARE NOT BENEFITED BY FOOT TRAFFIC. He likes is little shop. Then a VERY LARGE buyer grabs the small shop owner by his collar, drags him against his will into the shopping mall, and throws him into a cramped dingy storefront. Then he is required to pay fees. He notes that NONE of the other shoppers in the mall EVER visit this shop. He still has to keep his shop in the village though because that’s how ALL OF HIS OTHER CLIENTS buy his service. The shop owner is sad because driving back and forth between his shops is a pain in the *** and it wastes his time. He has also started to gain weight because the mall food is high in calories. Ariba is bad, and fattening. The End.

  24. stevef:

    We were forced to sign up with Ariba for one project with one customer. After the project ended (at which point we had no more need for Ariba at all) we received an invoice from Ariba because we passed some kind of $50,000 threshold that nobody told us about. We now have a dilemma of either paying the fee for something we don’t want and don’t need, or refusing to pay and possibly getting blacklisted by Ariba for possible future work. I talked to their support group and they were no help at all. From now on, we’ll avoid their whole system.

    1. Jay:

      Just don’t pay it. When and if you have another client that needs to hire you, Ariba will have to bring you back on board. They can’t dictate who their subscribers can and can’t use. When you need to be reactivated, Ariba will undoubtedly require you pay, but in that case make SURE to charge your client the “Ariba Tax”. Make it worthwhile, try 5%.

  25. hansjkt:

    Agree with many of you guys…Ariba is from the “first internet e-procurement platforms” tradeshift and many others like tbxone.com provides you no “handcuffs: to collaborate with ALL your trading partners. They are the disruptors of the current supply chain collaboration providers with state-of-the-art supply chain collaboration platforms and great business models. The challenge for corporates is integration but nowadays integration with ERP systems is not a challenge to make it happen anymore. tbxone and tradeshift are the “new kids on the block” with more agile business models without complexity of subscriptions!

  26. Jada:

    Our company was arm-twisted into doing business with Ariba when a large customer adopted the system. I was already familiar with their extortionist business model from a previous job though, so when I got the news, I was enraged. If we hadn’t needed this particular business, I might have told them to take a flying eff through a donut hole.

    As a small company in a niche industry, there is no benefit whatsoever for us in Ariba’s supplier “services.” We do not need or want a public catalog, and the bid solicitations we were getting were completely irrelevant to our business until I figured out how to turn them off completely. We have only one AR person who is already working at full capacity, and keying invoices into Ariba’s draconian SaaS program is a time-waster and completely disruptive to our billing process. When there is a problem with a PO or a payment, issues take more time to resolve than ever before, but to be fair, they appear equally frustrating for the nice internal AP people that we had great relationships with previously.

    I would love to charge an Ariba Tax, but in our tiny industry, there are only a few competitors. When you are a small producer like us, competing against a multinational behemoth (whose name you all would recognize,) sometimes the margins are razor thin, and winning the business is basically a game of “chicken” ending with a scrabble in the dirt over a handful of pennies. There’s no way I could bill this to them transparently and frankly, there isn’t room to absorb it in the pricing.

    The last time I had to speak with an Ariba representative about another client who has adopted their system (I am resisting participation), I said I would like to receive something from them that explains to suppliers the benefits of doing business through them. Surely there are some marketing materials or white papers available that they use to convince unsuspecting victims to drink their Kool Aid. I requested 3 times and never heard back from them. Maybe someone else can explain this to me because making it easier for the Ariba client to purchase has not increased their volumes with our company. All I can see is that it’s costing us money, and in spite of Ariba’s fabulous value proposition, their client still posted a multi-billion dollar loss after announcing before fiscal 2015 that it planned to create long-term value by reducing admin expenses and improving supply chain efficiencies. Lulz.

    1. hansjkt:

      I do agree with all of you. Ariba is from the 1st internet boom around 1995. Their subscription model does not apply anymore with disruptors as Tradeshift, TBXONE, Basware and other b2b platform providers. The challenge is now that large corporate with a long tail of trading partners have to change their connectivity. In those time integration is still a challenge while nowadays ERP integration to their trading partners is “easy and fast. TBXONE and Tradeshift connecting users has a 100% FREE to use plans. Giving more value than what they provide now.

  27. Vivek:

    If the customer is not on the Ariba cloud then I think Supplier have to register to Ariba’s network “ONLY” if the customer send order or receive invoice through Ariba’s network .
    Most of the ariba customers that I have seen have customized the product so that they dont need to use Ariba’s network anymore.
    Eg of few simple customizations.
    1. Sending orders directly to supplier through email.
    2. Sending orders by pushing the order to other existing ERP through which they might have some other mean of interacting with supplier.

    So based on the business model /infrastructure customer can change the process of sending orders and receiving invoices.

    If customer is not ready to customize the product accordingly then it is obvious for the supplier to charge the customer a bit extra.

  28. Jay:

    That would depend on your customer. Most customers have no issue with paying above the purchase order for items like sales tax and shipping costs. I would call the line item “Arriba tax” and see how it goes.

    Alternatively you can refuse the purchase order and have them add the Arriba tax line item before excepting it. In my case that is what I did. In my quote for services there was an Arriba tax line item.

    Have strength! make it clear that costs cannot be forced upon you!

  29. Tony Fenn:

    A terrible system forced on me by my one customer. I’m a software developer and I must say this is one of the saddest pieces of software I’ve ever used. Extremely difficult to find anything. Why can it not show more than 14 days of invoices at a time? How useless is that ! I don’t bother to fill in anything but the essential bunch of rubbish to complete an invoice as most anything else is not accepted, with no feedback or guidance to why not. Luckily the Indian staff who support my customers use of Ariba either could care less that little detail is given or don’t know how to use it themselves. I have to chase most invoices by an email as they don’t get processed on time. I just got the ‘prisoner’ bill which had me searching for answers and I ended up here reading these comments. I will just charge to my customer as others do. I hope Ariba crashes and burns.

    1. Bryan Doyle:

      One of our customers has notified us that we have to become a prisoner as you say. I like the adding the cost back to the invoice but if that differs from their PO does this cause a problem because of the delta? Possibly delaying the payment?

  30. Jon moor:

    Ariba is one way, I have seen most people who have registered don’t use the tool due to complex structure and they charge lot of money for stupid things which your ERP can anyhow do.

    The core module eSourcing does not work well, rest is just an ERP which you already might be using. So agreed Ariba does not work.

  31. David Kramer:

    I’m definitely a prisoner to Ariba’s deceptive pricing. Our customer asked us to create an account with Ariba in order to be approved as a vendor. We went through the process and at no point was there any description of fees. 4 months after engaging with our customer and only after they issued their PO did we get an invoice from Ariba for $4k!!! We had created 4 invoice in 4 months through their system. Outrageous!! We of course will refuse to pay this or will pass this cost through to our customer who required us to use the system. But Ariba’s system is TERRIBLE, their customer service is AWFUL and their pricing is DECEPTIVE.

    1. James:

      What and how did they justify a $4K invoice for their invoice service? What were you selling? Ships of oil? I have seen .115% which is nothing for invoices, so how are they screwing people over? Nobody on this SpendMatters site has given numbers or percentages or told how Ariba is screwing them over except you. I’m about to become “enslaved” but would like some advice about how to make sure I don’t get screwed over and like everyone else this customer and my invoices to them are too much to say so long because of Ariba..but I wouldn’t mind anyone reading this to be specific on what to expect..my year end invoices with this customer is over $150K..how much is subscription?

      1. Jay:

        Your email reads a little condescending, but I’ll assume you aren’t accusing David of exaggerating.

        You can find Ariba’s published rates here:

        http://www.ariba.com/suppliers/subscriptions-and-pricing/supplier-membership-program/pricing

        You’ll pay that 0.155 % transaction free along with a fixed subscription package, based on your gross volume. THEN they will tack items on to your invoice like the “Ariba Discovery Advantage Program” which can be many times more than the cost of the subscription package. Did you order the Discovery Advantage Program? No, of course not. Then why did they automatically sign you up and invoice you for it? Yes, you can call and have them remove the charges, but I wonder how many AP departments pay the invoice without questioning it? I can tell you, if I invoiced my clients with line items that they did not order, they would stop doing business with me.

        So go ahead and sign up for Ariba because this one key customer of yours is forcing you to (the “enslavement” part). Just make sure to raise your prices to compensate (Ariba Tax!), and look at your invoice for the cute extras, that you didn’t order, that Ariba tacks on. Also, enjoy the extra time it takes to to receive every PO and create every invoice. You have your own system for doing these tasks on your end and your going to have to keep that in place, but now you’re going to have to replicate it on the Ariba site for this one $^&@ client (I consider that the “screwing people over” part). My time is valuable and Ariba wastes it.

        1. Jessica:

          Has anyone contacted the better business bureau I left messages, contacted them with a complaint I sent proof of what we are paid for 2016 in which we paid til 1/16-1/1/17 and have stopped using them due to our customers has changed facility and new owners so I hadn’t invoice them since 7/2016 but yet they want monies for 1/17/2017-1/2018 not only that we made under what they state no managers have called, also they told me sorry that the person that was working on out account is no longer there.. I have sent proof of Ariba invoices charges and our charges to our customers

      2. Peggy Rogers:

        James: How nice for you that .115% is “nothing”, except the price list i just received stated the transaction fee as .155% PLUS they want between .75% and 3% for timely payment AND, in my case, a minimum of $2250 or a more likely $5500 per year (over and under 500 transactions per year). It is unclear to me at this point whether payments and PO’s that are issued by them also count into the document count (in which case I’m definitely on the hook for the $5500). So, this thing is going to cost me between 8000 — 10K per year (if there is no increase in volume) and, as near as I can tell, the only “benefit” for me is to make more work for my tiny accounting staff as they now have to enter invoices twice — once in Quickbooks for my accounting and costing systems and once in Ariba just because a large client decided that I must.

        1. Bryan:

          I am in the exact same predicament. My largest client was gobbled up by a massive behemoth of a company, and in order to interface with them, we had to use Ariba. Ariba has done nothing for my company other than adding an additional $10,000+ annual expense and stretched my small accounting staff to the limits. We will likely have to expand our administrative staff just to handle the additional emailing, PO shuffling, and other assorted nonsense that comes with Ariba. Its a nightmare.

          1. Jonathan:

            Bryan,

            Put a $3000/month line-item on the bill called “Ariba Tax”, that will cover the fees and a new bookeeper.

            Stand up to them. Be a wolf.

      3. Mark:

        On our experience this will cost you at least $900 – we had 15 invoices totalling approx £200,000 and have so far had demands for around £1100 – look out for the “special” packages which are optional but added discretely to your invoice

  32. Clare:

    We have just one customer who uses the Ariba network. I can’t make head nor tail of it. Anyway, I have notified our customer, today, that we will not accept future orders through the Ariba network. Luckily the value of the invoices are small and the customer has another purchasing outlet which is simple and costs nothing. All we want to do is send our customer our own invoice, in the format we want. Simple. Totally resent being blackmailed into registering with a company whose system is complicated and just not needed or wanted. Grrrr……

    1. Jay:

      Hello Clare,
      Why not just take on a 3% “Ariba Tax” to everything they order. Do it as a separate line item. You’ll make more money of off it and they’ll see how much this accounting tool is really costing them.

      1. Clare:

        That idea has merits Jay! I have been reading Ariba’s ‘Frequently Asked Questions’ pages and it states that the fees we are charged is to cover the networks running costs. And that ‘our customer’ does not accept these maintenance charges either directly or indirectly. But I get your point.

  33. Chris:

    Been imprisoned on Ariba for 5 years. Every year my cost to use the network has doubled and I too only have 1 customer whom I put my invoices into their account system so I can be paid. This business model should be illegal. I’ll be writing my state attorney general office.

  34. Jay:

    I was recently notified by Ariba that our “free account” that we signed up (forced signup because one our clients adopted Ariba) now has been granted an opprtunity upgrade to a select account. This is another way of saying “pay us or don’t get paid”. These blackmail tactics are disgusting. I will be adding an “Ariba Tax” to all future invoices to this client. I seriously hope Ariba goes belly up.

    1. Vignan:

      “Ariba Tax”…I love this!

      1. Jay:

        I thought I would report that I did follow through on this. I now add separate line items: Ariba’s “Network Select Fee”, their “Network Transaction Fee”, and a line item that accounts for the time I waste following the Ariba process. I think this is important for my client to know explicitly what they are paying for rather than to hide it as an increase in my general time & expense line item. Otherwise, my client’s accounting department may believe that they have cut costs, when what they’ve really done is shift it to the department that is using my services. As a separate line item the “Ariba Tax” can me more easily allocated to the finance department to deal with in their budget. My client’s department head actually likes that approach. You should try it too. Transparency is good.

  35. Stuart:

    As an industrial machinery supplier, our company has decided to add 3% to all parts pricing for one customer that have forced us into Ariba. Typically, parts sales represent about half of the customer’s annual spend with us (150K). I would assume that we are not alone in responding disproportionately to the cost. Nobody likes to be told dictated to in business relationships.

    1. Jay:

      That’s a good idea. I originally just passed the actual costs through to to my only client that uses Ariba. It would be better if I instead tacked on a flat 3% Ariba Tax. Why allow bad behavior to get by with “actual” damages. Adding a “punitive” component may help change behavior. Thanks Stuart. Everyone, lets agree on a standard 3% Ariba tax. Suppliers unite!

  36. Eric:

    Ariba offers little to no value for a one-person 1099 contractor, especially when that contractor has been 100% responsible for establishing the client relationship and securing the contract. To that one-person company who has full-time work at a stable client and no interest in seekign additional clients, Ariba simply serves as a billing system. And it is not a good system at that. It is clunky and overly convoluted. The user interface is average at best. A monthly bill can be created in a few seconds using Excel or similar. So Ariba adds either no value or negative value to the contractor. But as many have pointed out, if the client uses Ariba, then the contractor is a prisoner of Ariba and all of the mandatory fees. If you don’t pay, then you don’t get paid. It certainly is akin to extortion for many of us. Seems quite unethical. They are charging us just because they can, and we can’t do anything about it. Obviously they are well aware of their position of power and they take advantage of it.

  37. Thomas G:

    Our company also feels like a prisoners of the Ariba Network. We do some machine shop services for a major University that forced us to do business with them by way of the Ariba Network. Before Ariba, the University sent us a PO and we sent them back an invoice when finished. Now we have this “middleman” that does nothing but generate more non-productive work. So far I have gotten away from paying them by not finishing the signup for invoicing through them. I get the PO from Ariba which I confirm but then I still send the Invoice by snail mail to the University and we get paid by check. It may take a few days longer and is not direct deposited but we get the full amount. Otherwise we would have to raise our prices to make up for the Ariba Mafia cut for invoicing.

  38. D. Phelan:

    As an Ariba ‘Prisoner’ I despise having to effectively ‘pay to get paid’.

  39. Mike Peterson:

    One of our longstanding customers decided to use the Ariba Network system to handle their invoice submission system. Prior to joining this network we sent them an invoice for services we provided them and they sent us a check. Besides creating and submitting an invoice to them for payment we now have to also resubmit this information on the Ariba Network. What’s worse is that Ariba now considers us a customer and charges us a quarterly fee based on the total dollar amount of invoices that have been entered on their system. If we don’t pay Ariba this quarterly fee then we will not get paid. I’m sure that Ariba is collecting a fee from both companies even though it’s only providing a service to our client. Our company feels as though it’s a prisoner of this Ariba system. Are we the only ones that get absolutely no benefit from this system but are nonetheless subjection to this quarterly extortion. And to make matters worse, they have a collection department that’s quick to come after you for payment even after funds have been withdrawn from your account. Has anyone in our position figured out a way to avoid paying these “fees” and still get payment for services provided to Ariba’s customers?

  40. Michael Oelrich:

    “As a convenience to our customers, we automatically sign you up for our premier service package unless you respond to this email within 30 days.” I resent having to use their service at all – I’m one of the prisoners. But when they try and scam me out of an additional $500 every single year, my blood boils. They carefully hide the cancel button for the premier service deep in the bowels of their web page.

  41. Andrea Gimbar:

    As stated earlier, the supplier is the prisoner, since they have no choice in the matter. The customer willingly signed up for the Ariba service. We charge back the fees to the 2 customer that have forced us to use Ariba to enter an invoice. The sad part of all this is the Ariba system is inefficient. We had an invoice that was overdue, requiring numerous correspondence with the buyer, requisitioner and A/P (who is India, by the way) to push the invoice for payment. When the invoice was finally paid, the Ariba system still showed the invoice was received but not scheduled for payment yet! The left hand doesn’t even know what the right hand is doing! What a waste of money for our 2 customers, who have contracted with this pathetic system. There is no way it is cost effective for the customer.

  42. Gary Stevenson:

    Whilst eProcurement is a specialist area, Cloud-based offerings are reducing the cost and commitment required to run an efficient and effective procurement process. As more and more organisations and departments use eProcurement, users will increasingly fall outside of the realm of procurement professionals. This is where the real win is and it means that the flexibility and usability will be crucial. It also means that systems that enable organisations to learn and improve their process rather than just upload and download documents will deliver the best value.

  43. U.K.:

    I wonder if this procedure complies with European competition law.
    Well, I guess it must, yet having my customer dictate which system to use – at my own cost – just does not sound right.
    If both parties benefit from the deal (i.e. significant process improvements and/or cost saving) it might be fine; in any other case it still sounds like blackmail to me.

  44. Christian Lanng:

    "Shifting the cost to the buyer side from Supplier side would increase the total cost of the product or service in considerable cases."

    That assumes that charging suppliers 0.15 basis points for sending some kilobytes of data is anywhere the real cost of an transaction, but it’s not. That’s the flaw of this model, the existing vendors all try to tell everyone it’s a zerosum game and if cost go out of the supplier side it has to be added to the buyer side, that is only true for them because they have inflated the prices to begin with due to a lock-in on the supplier population. We can easily remove the supplier side cost because it has never been factored into our model to begin with, never promised to our investors and not a real operational cost.

    I think you are right on the second point though, this is not going to be about price, but technology and product. An area where we have already proven that we have been setting a strong pace of innovation for the last two years, with products like CloudScan, Tradeshift Apps, and automated large scale on-boarding we have won deals, not on price, but the strength of our product and against Ariba in most cases, for us it’s always about the total value we provide to our customers.

  45. Senthil:

    Point # 3 is more important as always the total cost across the supply chain matters at the end of the day. Shifting the cost to the buyer side from Supplier side would increase the total cost of the product or service in considerable cases. Most of the places suppliers’ overheads and costs are less compared to that of the buying side and buyer is more than ok to optimize the cost even if the supplier adds up the so called “Supplier fee” in the total cost. Also suppliers’ operate with volatile margins and bargain better to bring down the price and are more aggressive than the buying community who are in the other side of the table. This over a time decreases the total cost across the supply chain and results in reduced product / service cost. There are competitors for Ariba and nothing wrong to admit that though! But we need to see how many of them are sustainable, stable, innovative, financially well managed and offer the net value on the table at the end of the day providing an end to end solution to the customers. All the competitors’ benchmark product is Ariba and that shows the product credibility, leave alone the pricing mix which is where the competitors can target and crib about as they can’t point their fingers at anything else.

  46. Jason Busch:

    Coming to Ariba’s defense (since no one else will) … few quick thoughts.

    1) The price of visibility into invoice status and payment date is valuable for a small business (trust me on this one — especially trying to get year end receivables from clients paid!) We can assign something to this.

    2) If a customer is not using a capability from someone like a Taulia or OB10 which provides discounting and/or various early payment capability types, then at least Ariba has an option for suppliers whether a buyer "opts in" by having an internally managed program.

    3) Suppliers can bill back customers for fees. They’re doing it already in various cases we’ve seen, usually indirectly over a period of time. As long as procurement teams know this will happen, they can budget accordingly without a larger upfront or initial monthly commitment to Ariba. Think of it as more of a string of balloon payments on a lease overtime (to keep costs down upfront). If there is a prisoner in this case, it is the buyer. But they put themselves in jail by admission and design by supporting the fee structure in the first place.

  47. e-Sourcing:

    Great point Christian and keep putting up a good fight.

    The "supplier pays" model is hugely flawed in our view as well. It hinders adoption and it is akin to blackmail (give us money else you won’t get paid!). If both parties received tangible value from the product, then it would be fair to make both pay, otherwise just the one side should.

    Inevitably, if we were a supplier on such systems, I would increase my pricing to account for the invoice fee. So, who is paying then? The buyer. Twice.

    In fact, this is exactly what we have done when we registered for one such catalogue here in the UK, as that demanded a 1% fee per transactions.

    Now we both become prisoners to the system!

    1. Brian:

      As a supplier to many customers, when we see predatory fees, we certainly build that into a pricing model on a go-forward basis.

      In terms of visibility into Ariba as a SMB, it depends on what parts have been deployed for the customer. Most customers what a cheap entry point and so visibility for the supplier is quite limiting. It has certainly not replaced the emails and phone calls.

      Additionally, I see too many procurement folks buy into Ariba without thinking about streamlining their business processes. We had one example in Las Vegas where a few changes to their process vastly improved their procurement process and reduced their business costs by over $15 million. It’s really important to get this stuff done upfront and then you can tender to multiple procurement vendors in an apples-to-apples comparison; that is you’ll understand the big picture for both yourselves and your suppliers.

      1. Adnan:

        Can you elaborate on what the one example in Las Vegas changed in their process which improved their procurement process and reduced their business costs by over $15 million?

  48. Christian Lanng:

    Hi Jason,

    I’m glad you picked up on the fact that we are competitive, for me competition is always two dimensions value offered and price point. On the buyer side you can always argue about a certain price in relation to the value the buyer get, what tools they need and how there process is, but the end result we most often see is that none of that matters if their suppliers don’t use the chosen solution.

    On the supplier side, I’ve never met a SINGLE supplier who were willing to stand-up and say, yes it has value for us to pay 15.5 basis points to send an invoice, no matter their invoice mix, volume or size. I’ve met plenty though that say they will do it because their buyer have forced them to. That’s not a customer, but a prisoner.

    That is why we reverse the model, offering free transactions to suppliers increase the uptake the buyer gets and the business-case for both sides, it’s win-win.

    /Christian

  49. Henry:

    Jason, You noticed the price increase per transaction since 2010, but you failed to mention that Ariba eliminated the exception previously provided to our MWBE suppliers and lowered the qualification criteria to be a "chargeable" supplier. The lowering of the criteria is what drove the increase in supplier fees and any growth posted by Ariba during this time.
    The beauty of this for Ariba was that they previously had few competitors with truly competitive solutions and a better model for supplier enablement and participation. Because that has changed, SAP may be surprised to find out that they bought at the peak.

    1. Choco:

      hi~ im want to know what is the business model for this corporation (Freemarkets online), im doing some research for this company, and im lil bit confused with the business model, and lastly what is the problem with this company ? hopefully you can reply me. thanks a bunch

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