SAP and Ariba Take A Baby Step Toward Making the Network “Free” for SMBs

Earlier this month, SAP and Ariba took what might be described as “baby steps” toward creating the Ariba supplier network for small- and medium-sized businesses (SMBs). In an announcement from SAP marketing, the procurement and ERP provider notes that:

"SMEs can also connect to Ariba Network free of charge … Using the network, businesses of all sizes are able to connect with a global network of partners anywhere, at any time, from any application or device to buy, sell and manage their cash more efficiently and effectively."

Further commentary on the announcement comes courtesy of coverage in a channel-centric trade publication that notes during its global SME summit, “SAP announced some new initiatives specifically targeted at its smaller customers and the channel partners who serve them.”

Kevin Gilroy, senior vice president and general manager of global indirect channels and SME at SAP, is quoted in the article saying, “This will let SMEs be on the network for free … They can come on it, and put their product and solutions on it. With the free option, they only list, and can’t bid, but the idea is to get them to come on board, and not to get in the bidding process.”

It appears Gilroy is specifically referencing Ariba’s Discovery services (tied to customer sourcing initiatives rather than transactional buying or P2P) and potentially the managing of basic profile and generic catalog information that would be visible to customers in a supplier search context within P2P. Yet Ariba is not making the network “free” from a transactional perspective for SMBs.

Still, small businesses should not be the ones complaining. Spend Matters quantitative analysis of Ariba/SAP supplier network fees suggest it is the larger suppliers that end up paying disproportionately compared with the value received for network connectivity to exchange transactional information (e.g., purchase orders, invoices, ship notifications, etc.)

It is also important to note that when Ariba did provide broader account services including dedicated account management staff to its largest suppliers, these vendors on the network were not as vocal in their opposition to fees as some are now in conversations with Spend Matters. SAP reduced the level of service provided to these largest suppliers on the network (including full-time supplier account managers) following the Ariba acquisition.

Regardless, what could SAP really do to drive greater SME participation and value through Ariba and the Ariba network? We’ll offer up some thoughts in a Spend Matters PRO analysis in the coming weeks, and welcome our reader commentary as well.

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