SAP and Ariba – so many questions! (Products, customers, staff ….)

The shockwaves from the announcement that SAP are acquiring Ariba are still reverberating around the procurement universe this morning. Jason Busch at our US sister site wrote two more pieces yesterday which are worth reading – in this one, he goes back to a piece he wrote in 2009, suggesting why SAP should buy Ariba! Although some of the reasons he gave then have changed – SAP’s procurement offering being stronger now – much still holds, he says.

And in this article, he looks at some of the questions that immediately come to mind, for instance:

  • Will SAP focus the Ariba acquisition on building network escape velocity or to round out the holes in its source-to-pay suite to build truly best-of-breed capability end-to-end (and what additional tuck-in deals might SAP make as a result if this is the case like sourcing, services procurement, etc.) -- or both?
  • How will SAP and Ariba rationalize their solution suite? It will be possible to do basic supplier performance management in something like five products, by our count. For supplier management, companies will have at least four options. And for sourcing, eProcurement, spend analysis and contract management, at least two. E-invoicing is easier to see a rationalizing path -- SAP will likely kill off their partnerships in this area and adopt Ariba.

Those rationalisation issues will be of great interest to users I’m sure, and we’ll explore what it all means for procurement practitioners and organisations over the next weeks. But it’s also going to be interesting – to say the least – for the many competitors (or previous collaborators) of those firms. Where does this leave IBM? Oracle? Hubwoo?

And last but not least, we should consider the staff in the two companies. Not for purely humanitarian reasons, but because the importance of the people side of things is not to be under-estimated. One of the key and critical success factors for mergers and acquisitions is the integration process, and much of that depends on the people.

What any organisation needs is a positive process, with staff working together well, and new roles and responsibilities quickly clarified. That new structure can then form a solid backdrop for the inevitable discussions about product and customer strategy and rationalisation, allowing those decisions to be made in a considered manner, rather than being linked to turf wars around personal issues.

I’ve personally in my career seen this go very well – and not so well. (The RBS take-over of NatWest was pretty well-handled in this regard). And it will ultimately make a major difference to everyone, including the customer base, if this process is successful here.

On the conference call last night, it sounded almost like a “reverse takeover” with Ariba in effect taking control of the SAP procurement and supply chain line of business, under Bob Calderoni, Ariba’s CEO. Nothing wrong with that, but it will be interesting to see how SAP staff feel about that, and whether the recent innovation we’ve seen coming from SAP (InfoNet for example) in sourcing-related products continues, or whether the emphasis becomes much more on the network side of things, which is where Ariba has focused in recent time.

Anyway, look out for more coverage of that and other issues here and on Spend Matters US.

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