SAP and Ariba: Morphing or Moving to Full EDI Network Replacement and Support?

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A move we’re watching closely at Spend Matters in 2015 is SAP’s and Ariba’s continued investment in expanding its supplier/business network outside of primarily enabling indirect procurement connectivity (and now contingent/services and T&E as well with Fieldglass and Concur). Indeed, the ability to support additional transactional document types and have network-based workflow, routing and translation across different standards for direct specific use cases (e.g., change orders, goods receipting and labeling) will be central to enhanced offerings for direct spend enablement. Customers are also looking for increasing levels of integration and connectivity services from their technology partners as part of a “single throat to choke.”

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But while potentially connecting greater swaths of spend natively via SAP/Ariba (e.g., with “new” network services such as AribaPay), such investments and capabilities will bring Ariba and SAP in direct conflict with partners like OpenText/GXS and IBM/Sterling. It also raises the question of whether IT, supply chain and procurement teams want to put all their eggs in one vendor basket: infrastructure, platforms (including connectivity) and applications (we won't add marketplaces to the list and re-hash that topic).

Regardless, the strategy Ariba and SAP are following is similar to what was done by taking much of the customized capability Quadrem built out with its solution (mirroring capabilities from providers like GXS, Elemica, E2open, etc.) and offering similarly specific capabilities for targeted geographies and industries to provide some level of direct spend support (e.g., BOMs/kits/bundles, complex services, multi-tier support, etc.). Ariba and SAP are also aware of the need to support specific business use cases (e.g., for logistics, freight information such as origin/destination, manifest, bill of lading, demurrage/detention, etc.), freight sourcing, discrepancy management (a big deal in logistics) and related areas.

There are 2 sides, of course, to this strategy: product/technical and commercial. When the 2 come together in a cross-industry strategy, it’s likely Ariba and SAP are going to increasingly be competing for connectivity business in areas that their network and e-invoicing competitors (aside from EDI providers) have put little to no investment in.

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