What's Next: Ariba's Sourcing Services

I'm looking forward to attending Ariba's services-focused industry analyst day in early November to learn more about their new solutions capabilities. Much has changed since my FreeMarkets days, and even though the session is in the old FreeMarkets building, I don't expect to recognize the packaging of the services and offerings. Last week, I had a quick call with some of the product and solutions marketing folks at Ariba to get a sense of what might be next for the provider -- and by extension the market -- from a sourcing services perspective. A key tenant of Ariba's services direction is their movie into pre-packaged sourcing services -- in other words, services that are repeatable and possible to productize (about as far a cry as you can get from generalist sourcing consulting services).

Not wanting to spill the beans, so to speak, before the analyst day, Ariba's team kept the conversation on more of a philosophical level around what customers are looking for when it comes to services. This was fine, especially because many of their perspectives check out with what I am seeing in the market as well.

Ariba really sees two types of larger customer needs for sourcing services. The first are customers looking to drive results. These are the type of procurement organizations which might have a built a great pipeline, but are looking to drive significant and quick savings. Some might have come up behind with fiscal year-based savings goals. Others might need to accelerate their ROI-basis to nail their targets. Typically, it's the less mature procurement and operations organizations who have the largest need to drive results.

In marked contrast is the second type of customer which is looking to drive enablement. These type of users have strong internal capabilities already, but are looking to enable or accelerate their current skills and adoption. To improve their performance, for example, this type of customer might be looking for access to new skills training or targeted expertise to guide them down a path to a new level of sustainable sourcing performance.

While I know that Ariba will announce the exact packaged services bundles that they plan to offer to drive both results and enablement in the coming weeks, in the meantime, I think it is interesting to reflect on where the organization has come from given their services legacy. The shared-services sourcing organization that Kent Parker built at FreeMarkets and transitioned over to Ariba relied on a variety of internal metrics to track efficiency and performance. For example, it used Six Sigma extensively to root out quality issues and address them, not to mention to improve their own operating efficiency and margin.

When this organization was getting started, our dream at FreeMarkets was to be able to deliver services on the same platform as our customers to guarantee a smooth transition once an engagement or event was over. This would ensure customers could truly leverage the knowledge that we left with them for future use and sharing within the organization (not to mention streamlining savings implementation). But when I left FreeMarkets, we were still using multiple platforms internally and externally and it would take months -- if not years -- to realize this goal. Now, with a combined internal/external platform, Ariba is now in the somewhat unique position of having a large and expert services organization in-house as well as owning a content-driven software platform to deliver results and then transfer knowledge on. In future posts after their industry analyst day, I'll share how they plan to take advantage of it.

Jason Busch

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