Ariba, SAP, and Supplier Diversity (Part 4)

Please click here for Part 1, Part 2 and Part 3 of this series.

The final attribute we look to when measuring Ariba's and SAP's value for smaller suppliers is value. And here, the results will vary significantly based on how suppliers use the network for identifying new customers, transacting and taking advantage of other benefits associated with a given transaction (e.g., early payment discounting). Yet in general, we'd argue that for smaller suppliers that understand how to take advantage of the network in their sweet spot (i.e., reaching new customers and transacting in lower dollar volumes), Ariba and SAP present a very strong value proposition.

One of Ariba's real network strengths – which ironically too few suppliers are taking advantage of – is early payment discounting. Here, Ariba offers multiple ways for suppliers to get paid early. If customers "opt-in" to a program, they can offer discounts to suppliers who pay early. If customers "opt-out" of early payment options, suppliers can factor their invoices in a competitive environment through Ariba's partnership with The Receivables Exchange. Ariba and SAP do present a useful value proposition to suppliers around discounting (although SAP customers using other working capital management/discounting solutions such as Taulia or competing networks such as OB10 may offer similar value propositions as well).

The value equation is also in SAP and Ariba's favor in helping suppliers identify new customers through both standard P2P network connectivity and search as well as through the specialized Discovery solution (but again, only for suppliers that are skilled at selling through online channels). Here, the cost of customer acquisition can be minimal relative to other channel options. In determining where Ariba and SAP may take their network vision together, we see potential enhanced value for suppliers in the next five years in such new areas as specialized design/engineering collaboration, general collaboration, analytics (i.e., how suppliers are performing relative to peers), additional discounting capabilities and uptake by buyers, compliance, group buying/rebate programs and the like.

Indeed the value equation will only grow. But in the meantime, if all else fails and smaller vendors with the wrong invoice and transaction mix end up victim to a network fee structure that's not the right fit, supplier and buyers together can learn from Spend Matters PRO analysis of ten ways to negotiate and/or reduce supplier network fees.

- Jason Busch

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