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Ariba/SAP, Fees and Future Networks

Ariba has many suppliers paying thousands – sometimes tens of thousands or more – per year to transact across their network with multiple trading partners. This helps offset the cost of their P2P application for buyers, and allows Ariba to compete on price as well as product. Many procurement professionals though, believe that suppliers will factor any additional transaction costs they may incur into their pricing.

And Ariba keeps the upper hand. Their SaaS-based P2P deals require companies to only work with other companies through the network. Ariba CD customers have options to take suppliers off the network, something providers such as Vinimaya, Hubwoo, WALLMEDIEN, OB10, Transcepta and others can theoretically enable – and have, in certain cases.

Ariba believes it has pricing power in the network. Why? A few years ago, Ariba made the important strategic decision to shift away from buyers carrying the bulk of the P2P fee burden, instead putting these costs onto suppliers as transaction-based (dollar volume) network fees.

This research, previously only available to Spend Matters PRO members, looks through the pros and cons of Ariba’s strategy, exploring what it means for both buyers and suppliers. We also examine some providers who are taking a new approach to supply-side network connectivity – and we hope it helps to understand the magnitude of the SAP/Ariba acquisition and how to strategize going forward.

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