Ariba Virtual LIVE: Dispatch 2 – Ariba: Present and Future

As I mentioned in my first dispatch from -- or would that be on -- Ariba virtual LIVE, I suggested that Bob Calderoni, Ariba's CEO, pulled off a good keynote. Bob is an uncomfortable speaker on most physical stages, but he nailed his virtual keynote. In this post, I'd like to share some of the facts from his presentation, as well as building upon some hints he dropped on the audience in subtle ways. But to begin, just the numbers. First, Bob suggested that today, almost 5 million users from "over 1,000" buying organizations use Ariba's applications. I'm not sure if this is seats sold or seats actively used, but the number is suggestive of a sizable user base.

Ariba's supplier count -- in the ASN and otherwise -- is now in excess of 200,000. Overall volume is roughly $450 million in a typical 24-hour period. As Bob likes to claim, this is 4x the size of eBay. Annualized, on a yearly basis, the current run-rate for purchase transactions on the Ariba tollway -- oops, I mean supplier network -- is 360,000,000. But in Ariba's defense, the tollway does not charge very much (but there are freeways out there for those willing to look and travel the extra distance to get from Point A to Point B). Moving down the numbers path, Ariba customers now manage "over 4 million" contracts using Ariba's contract management solution set. The final calculation Bob shared is that over the course of LIVE -- or at least a 24 hour segment of it -- Ariba customers will save their companies "more than $65 million", which represents a tiny sum relative to the "more than $30 billion" Ariba customers will save in 2009. Now, we all know the identified vs. implemented savings game -- we played this all the time at FreeMarkets -- but even still if you knock this number down by 30% to be conservative, it's an impressive number.

But where is Ariba heading in the future? Methinks that when Bob talks about "new supplier management solutions and risk management services" he is speaking to a business model that will increasingly become focused on leveraging and incorporating Ariba's proprietary information and even third-party market intelligence vs. simply selling software and consulting -- whether On Demand or otherwise. If they can pull it off -- as they appear to be doing already with the new Spend Visibility enhancements -- this is a game changer, especially if you consider the nearly $300 billion in savings Ariba estimates the Fortune 500 are currently leaving on the table from missing out on Spend Management opportunities. I suspect this vision will begin to manifest itself in enhanced market intelligence and content in all of Ariba's solutions -- from sourcing to payment.

As a last observation, I need to give Bob credit for quoting Ronald Reagan's famous quip: "Those who say that we're in a time when there are no heroes, they just don't know where to look." After all, Reagan's legacy is quite unpopular at the moment. Seriously, when the government is your savior -- and the UAW is soon to be your biggest non-government shareholder in the case of Chrysler and GM -- who needs heroes? You just need more handouts. Fortunately, Reagan's legacy is bound to return at some point, as the private sector can't live on nationalization of industry forever (or as Margaret Thatcher once said: "socialism is great until you run out of someone else's money"). Which perhaps explains why Atlas Shrugged has been climbing the sales charts of late. But even before the private sector comes storming back, we can all agree that spend still matters, even when the government printing presses are pulling a third shift.

Jason Busch

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