Analyzing the Human Procurement Capital: SAP and Ariba

In reading how the business and trade press has covered the SAP bid for Ariba, one thing we've read over and over is the perception that the deal is a win to bring more "cloud talent" into SAP. We think this is rubbish. What's needed inside SAP is not more cloud talent (and the Ariba team comes from enterprise software DNA), at least in the procurement space. What's needed is a network and procurement-savvy mindset that can expand on the capabilities of their own team members.

This will allow SAP to make an even more aggressive play for this market and build momentum for the Ariba network inside their customer base, which still has far too many underused SRM instances – with the network at the core to drive greater adoption of SAP tools, starting with SRM but moving far beyond. The concept of cloud here is really a proxy for much more. But when it comes to the two teams, how do they stack up and where will they mesh? Here are a few quick observations:

  • On the product management side, SAP has a strong and dedicated team, including a surprising number of ex-Ariba folks, some whom we've spoken to over the years who had solid praise for the Ariba Buyer and P2P architecture (except for the implementation times)
  • Culturally, the two product management groups should have no issue gelling, provided key members of the Ariba team stay on-board (however, it is important to note that we do not believe the Ariba product management or development organizations to be any more cloud-centric than SAP – most are cut from the same cloth and background)
  • Ariba has strongly out-marketed SAP in demand generation and awareness in procurement. SAP would be smart to leverage the Ariba talent in this area to drum up business, but we suspect that as is the case in many acquisitions, that this organization will not be the same in 6-12 months after close; we do not have solid enough intelligence to comment on how this group was impacted by the elimination of certain internal positions (impacting marketing) prior to the deal announcement
  • Ariba developed a solid culture of supplier enablement and improved their processes over the years for supplier hand-holding; SAP will gain a solid asset in the processes and people from this group (if anyone thinks that supplier onboarding is a fully automated, online process, think again, at least in most real-world circumstances involving linking supplier to buy-side systems like Ariba and SAP)
  • Both organizations would benefit from fresh outside thinking in what a next generation network architecture and network services should look like. Ariba's former network VP and visionary, Bob Solomon, would ironically be an asset to SAP if they could recruit him back

- Jason Busch

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First Voice

  1. The unnamed source:

    What SAP/Ariba really needs to juice its network strategy is a non-procurement person driving the network strategy. The network is so buyer-centric adding really no value outside of connectivity to suppliers. Sure, 730K buyers/suppliers, but most of the volume is driven from a small number of buyers and their suppliers beholden to their customers’ Buyer or P2P implementations. Seriously.

    Ariba’s procurement-centric DNA has hindered its ability to really drive a step-change in organic growth of the network. Perhaps SAP should someone more supplier centric (a CRM person?) on top of their networks.

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