Ariba StartSourcing/StartContracts — Commendable SMB Effort, Not as Cheap as It Seems (Part 2)

In the first installment of this post, we explored the basic capabilities of Ariba StartSourcing and StartContracts, two new low-end configurations of popular Ariba products aimed towards the small business market. In today's continuation of this analysis, we'll focus on whether or not these products are priced competitively and what customers can expect once the "teaser" price period of $199 per user per month expires. In my view, many small and medium-sized organizations considering these products might be tempted by the $199 teaser price -- but this price point is quite misrepresentative of what companies will actually pay over time.

Consider my attempt to configure my own solution for our growing business (see Order Details, below). Granted, I was optimistic in my scenario of needing five seats, but this is not unreasonable for a $150-$250 million company, especially when combining both sourcing and contract management. At this usage level, the twelve-month price comes to $29,940. Yet the intro-level teaser price for the same period comes only to $2,985 (which represents just over a 60% discount off of pricing for a similar period outside of the initial trial period).

As you can see, the pricing climbs dramatically, especially relative to other solutions in the market. Even SAP's Sourcing On Demand solution is less. SAP's updated pricing for its "standard" Sourcing On Demand product, which offers significantly more capabilities than Ariba's equivalent SMB offering -- it's not an apples to apples comparison in anyway -- starts at 300 euro per month for a single seat and can drop to as low as 30 euro per month for additional seats beyond a certain threshold.

Or compare Ketera's Sourcing offering with Ariba's. Ketera offers a free trial period (and considerably lower pricing over time). Ivalua's pricing is also materially less on a per seat basis, and offers significantly more capability. Or you can go the free or very low-cost route with something like, whose new platform delivers many of the capabilities of Ariba (including supplier discovery in certain verticals) at no or low-costs depending on configuration.

As you can see, the longer-term Ariba price equation for its "Start" products really is quite larger than it might first appear (perhaps this is why Ariba doesn't provide the same type of cost breakdown and total cost modeling capabilities in its "Start" configuration of sourcing). Still, I have no doubt that the value that Ariba -- and Ariba's competitors -- can bring to the small and medium-sized business market will significantly outweigh the costs of the platform, provided the tools don't sit on the proverbial sourcing (and contracting) shelf. Above all, I urge all small businesses to consider the benefits of the solution rather than getting hung up on what vendor to use (provided an organization can get comfortable with the price). Honestly, whether you go with Ariba or someone else, you really can't go wrong from a basic functional perspective.

Jason Busch

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