On SAP, Ariba, Networks, and More: Eternal Vigilance is the Price of Interpreting Analyst Research

I recently saw a pretty funny tweet from Tim Minahan after SAP Sapphire (see Related Articles for our coverage). It was a link citing an "industry analyst" who was writing up his experiences at Sapphire (note the marketing campaign text in the URL). In his write-up, this analyst refers to another piece of research titled “SAPs [sic] Acquisition of Ariba Visibly on Track.” As you might expect, it is “spreading the good news” of SAP’s strategy with the Ariba Business Network.

The “analyst” writes: “With Ariba… SAP will now be able to take a small slice of all transactions (or in the case of eBay, share PayPal transactional fees) – and one can quickly grasp the enormity of the revenue upside potential that lies ahead of SAP / Ariba. We can only imagine that the cash registers must be ringing in the minds of senior SAP leadership behind its Networked Economy go-to-market strategy.”

I have no idea whether SAP is his client, but since he is not a procurement-focused industry analyst, perhaps it's not “registering” that the cash from these registers will come from the supply chains of SAP customers who are looking for SAP to automate their processes, not to intermediate itself stickily into their supply chains for a percentage of the take.

In B2C social networks, the adage is that you don't buy the information products; rather you are the product. If I'm a Chief Procurement Officer, I'm not sure that I'd be very excited about all this, but markets are ultimately generally efficient, and there will always be other supplier/business networks.

I'm hopeful that SAP will honor its stated direction of connecting to multiple marketplaces (e.g., by having HANA-powered connectivity partners) and include networks like Basware, Hubwoo, IBX/Capgemini, Tungsten, Tradeshift, and others who don't charge suppliers a percentage of the transaction. Buyers like choice and I'd also venture to guess that most like their technology suppliers to be technology suppliers who automate rather than intermediate.

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