Ariba, SAP, and Supplier Diversity (Part 1)

We often spend a lot of time on the notion of supplier diversity in choosing the right set of localized suppliers (see recent coverage here, here, here, and here, as examples). We've even seen supplier diversity strategies reflected in accounts payable and working capital programs designed to get smaller, more vulnerable suppliers paid early without the types of onerous APRs charged by card providers. Yet it's rare that supplier diversity thinking extends to generalized source-to-pay tools selection, especially in the eProcurement arena. However, perhaps it should, given that providers like SAP and Ariba are increasingly turning to supplier fees to offset lower costs for buying organizations purchasing P2P systems.

In a recent E-Week article, we're more broadly introduced to SAP's interest in the middle market. Pointing to a recent Economist Survey sponsored by SAP that was presented at a recent SME summit in NYC, SAP pushed the message: "We do small, too." And small, from a systems perspective, appears to be increasingly important given the opportunity the market presents. Consider the case of small businesses in NYC alone, according to the survey:

"In New York City, small businesses make up 99 percent of all businesses. Loosely defined, SMEs are those with revenue of $500 million or less, though more than 90 percent of those in the SAP study had revenue below $50 million. The SAP study found that 94 percent point to growth as their top priority. Secondary priorities include attracting and retaining talent (65 percent), developing new products and services (59 percent), and accessing funds and capital (59 percent)."

Curiously, two of these top four items tie directly to sales for suppliers (including general growth, at 94%) – not necessarily selling core financial back-end systems, which has been the bread and butter for SAP to date (and which occupied nearly all of its SMB attention until it recently turned its attention to "business networks"). This of course raises a question around the role of the Ariba supplier network specifically, which SAP is already trying to position as supplier sales opportunity nirvana for vendors. Yet is the Ariba supplier network friendly to smaller business compared with the broader supply base using it at large? Check back for Part 2 of this post later today as we investigate.

- Jason Busch

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