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“Ariba is Now a Product, Not a Company”

Categories: Commentary, Friday Rant, Industry News | Tags: , , ,

I have spent three of the past four weeks in Europe meeting with various procurement organizational leaders, technology vendors, financial services companies, consultants, business partners, and fellow industry observers. It’s been a whirlwind to say the least. One of the topics on many people’s minds (at least outside the US) appears to be the future direction of Ariba inside SAP. It would appear a number of the predictions we published following the acquisition are starting to come true, including some internal shifts in thinking regarding the future of the network (which we’re excited to hear). But there was one statement in particular I heard someone say that captured the evolution of the acquisition.

This gentleman said, off the cuff, “Ariba is now a product, not a company” inside SAP. This single statement captured the transformation that is still unfolding. In the past eight weeks, the Ariba company machine has gone a long way to being dismantled with the departure of a number of senior leaders (including Bob Calderoni and Kevin Costello) and the reorganization of reporting relationships and structure. Many who are left are no doubt seeing the writing on the wall and will assume new roles inside SAP. The sum of these actions has dissembled a well-honed sales and product company  and reassembled a changing set of solution parts under the SAP umbrella.

From a product perspective, we believe this change feels right about now. Ariba long suffered from groupthink in a variety of areas – the belief in the technical superiority of its products (the “Buyer” legacy -- note Buyer really was/is a good product architecturally), the rationalized belief structure of a sustainable supplier network fee model with percentage-based charges based on transaction volume, and of course the “steady as she goes” approach to product enhancements and innovation, which did not keep pace with a market that started to accelerate the rate of product change.

Under SAP leadership and control, this groupthink will come to an end. We believe this will be a welcome shift for customers as the new SAP will now look to build on its Ariba assets alongside its own set of procurement products (which have been all but put in the rubbish bin in the past 18 months) and more important, its own stack and infrastructure components (e.g., HANA) to deliver a next generation set of solutions which are likely to include applications, networks, platforms, and value-added services for trading partners (e.g., payment, financing).

We hope that under new procurement line management, SAP will assume a position that provides customers greater choice and access in determining the future of its own procurement products as well as the future of the Ariba suite and network. The “we know best attitude” since the close of the acquisition (e.g., aggressively suggesting migrations to Ariba P2P over upgrading legacy SRM and Buyer deployments) is one that SAP would do well to reconsider as it builds on its source-to-pay leadership role in the market.

Indeed, Ariba is now a product, not a company.

It’s about time.

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