Ariba, SAP, and Supplier Diversity (Part 3)

Please click here for Part 1 and Part 2 of this series.

Frankly, in looking at today's topic areas for discussion, Ariba does better than on the first one we considered: cost. Now let's talk reach and value. For reach, Ariba has one of the largest supplier networks (depending on how you count volume across different types of networks and connectivity models, other providers including GXS, Sterling, and Basware can claim to be a similar size or larger), especially in the ability to find new business versus simply push documentation tied to a transaction back and forth.

Especially in North America, Ariba has the biggest indirect procurement network linking middle and larger-sized buying organizations with suppliers of all shapes and sizes, including SMBs and certified diverse businesses. Some suppliers have even specialized in selling through the Ariba channel. In an earlier post, Spend Matters interviewed Kevin Govin, CEO of MarkMaster, a supplier that Ariba has offered to the press for years to speak with, who remains an honest advocate for the network.

Govin notes that, "Fees are inconsequential. For our organization, as a manufacturer focused on custom products, it is the cheapest way to acquire customers. For MarkMaster, being on a platform (i.e., Ariba) reminds people to order ... This is a great value from a marketing perspective." The only negative Govin cites about Ariba's price is that they "bill us once a year; if they could do it monthly, it would be easier to accrue and easier to take."

Govin is undoubtedly an advocate of how Ariba has helped grow his organization's business through integration. Given the high volume and relative low value of each transaction, he supports the current and planned value-based fee structure. The "volume fee is better for us based on our size," Govin suggests. However, "Customers need to realize the fee structure is changing and that the supplier fees are ultimately added back into the product cost."

For MarkMaster, the reach of the Ariba and SAP network has created a great online channel. But it should be noted that MarkMaster excels at reaching new customers anyway (one only need see Govin working the crowd at ISM or other events to realize how successful they are across procurement channels). For suppliers who can't take advantage of the reach SAP offers – i.e., those who aren't good at positioning their capabilities and selling past select customers in general – the reach benefits of the SAP and Ariba network will be minimal.

- Jason Busch

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