Ariba, SAP and Financing the Supply Chain: What’s Next – Partnerships, Acquisitions and Other Ideas


Earlier this week, I shared a quick update on where Ariba stood as a quiet but material player in the invoice discounting market. It’s important to note, however, that invoice discounting alone is but one small – and barely penetrated – sub-sector from an adoption standpoint within the tech and purchase-to-pay (P2P) enabled trade financing area.

Ariba and SAP have significant opportunity to become a leader in this still exceptionally fragmented and nascent market segment. While it’s unlikely they will truly remake their procurement, accounts payable and treasury business lines around the next wave of trade financing – as Basware and others are placing significant bets on – we firmly expect to hear much more from the ERP and cloud giant in 2016.

Below are some speculative partnerships and moves we expect Ariba, Concur, Fieldglass and SAP to consider as they expand their presence in the trade financing market:

  • Supply chain finance – a partnership with Prime Revenue could significantly round-out SAP and Ariba’s offering and go-to-market approach already plugging a number of holes todayin the sector , including supply chain finance. If Prime Revenue could break out from a revenue perspective in the next year as Fieldglass emerged in the vendor management system (VMS) space, an acquisition could also eventually cement SAP’s play in the broader trade financing market. As SAP has already proven its willingness to pay premiums, we don’t suspect valuation would be an issue, provided the top-line and growth numbers match up.
  • Treasury management and factoring – Getting closer to Kyriba – likely only an acquisition would make sense – could expand the broader cloud portfolio play to treasury management, platform-enabled factoring and related areas. While SAP may be “acquisitioned out” and Kyriba is arguably more down market vs. enterprise, compared with the bread and butter of Ariba and Fieldglass, a Kyriba acquisition could potentially fit well with the broader cloud strategy and certainly help accelerate SAP’s overall trade financing initiatives through building closer relationships with treasury groups – a part of the organization Ariba has always had weak ties to.
  • Card and payment – Ariba already has a partnership with Discover for AribaPay. AribaPay, in which, as we have noted before, “all of the historical information associated with the payment is available on the Ariba Network including the full invoice information, the PO and contract information associated with the payment (when present) and suppliers maintain bank account details in the Discover Network infrastructure, and any changes in bank accounts are managed there.” Further, “All buyers and sellers rely on Discover´s integration into the Ariba Network for bank account management, eliminating the need to send, maintaining or updating the account information with several trading partners.” Building on AribaPay, there are potentially some interesting plays Ariba could make with Discover, Mastercard or others that build on AribaPay that offer financing capability with the potential to dis-intermediate bank-financing (i.e., using third-party capital or a company’s own balance sheet) while still running on card rails, among other potential offerings.
  • Know your customer / on-boarding – Ariba should consider expanding its network on-boarding and engagement approach to span know-your-customer (KYC) type level management. Combined with other trade financing offerings, this could allow Ariba to more strategically handle the long-tail of suppliers while providing assurance to banks and other partners.

We suspect SAP and Ariba are not yet done when it comes to making more strategic moves in the trade financing area. To “waste” what is approaching a near $1 trillion in annual volume on the network without delivering comprehensive receivables and payables financing approaches would shortcut the vision of the Ariba acquisition. And that, we believe, will not happen.

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