Will Blockchain Kill Ariba, Basware, D&B and Others?

supplier network

There’s only one truly open supplier network – and it’s called the Internet.

But it’s not very efficient. Lots of noise – very little signal. And it's inherently not yet solved a hard set of B2B problems for us, at least not yet.

Let me explain: buyers want rich supplier discovery to find and qualify suppliers, but there are few standards, and it’s a Wild West of B2B e-marketplaces and electronic directories all vying for the poor suppliers’ limited marketing budgets. You can’t blame the buy-side providers, though. They help solve the chicken and egg problem by building scale and then being able to dictate de facto standards. For example, you can complain about the many drawbacks of cXML, but it’s out there and getting used.

From the suppliers’ viewpoint, they just want to hang out their virtual shingle and get found, but they have to set up shop; get SEO-optimized; pay for social media advertising; and then have to pay multiple intermediaries of all forms to get exposed to various buyer communities. Even the “open supplier networks” that have freemium entry points push hard for suppliers to pay more for value-added services.

And even a provider like Google does the same thing (e.g., you can set up shop with Google and register your business, but don't expect to keep that data synchronized outside of Google). It’s not inherently bad, but while it’s better than cobbling point-to-point systems, the providers don’t really enable suppliers to connect to other buyers outside the control of the solution provider. And this is all just for supplier discovery…

Now, consider all the redundant work suppliers do to respond to buyer RFx requests that are 75-90% the same, but yet slightly different. Different requirements for certifications, for transaction formats, and for basically the same data to enter in a buyer’s supplier portal.

But imagine a new world, where the concept of a ‘supplier network’ becomes a set of discoverable and available web services and associated data that has persisted in trusted/distributed registries that buyers can access directly or through authorized channel providers. The data is written once by the supplier and accessed flexibly by the buyers and other value chain participants as needed.

In this environment, each supplier would have its own unique and non-proprietary ‘license plate’ company identifier (i.e., an open-source version of DUNS) that would be the ‘key’ to the supplier information that the supplier maintains, but that is also extended to third parties who provide additional services on the open network.

But this is just my own idea. And it brings me to a request: how can we best overcome the inefficiency of supplier discovery within ‘business networks’? How can we effectively kill first-generation, closed-network architectures?

I’ll put this to you, my friends and readers, in a major “ask” tomorrow. Stay tuned, and join me in helping crowdsource answers to one of our biggest challenges (and opportunities) in procurement and sourcing technology. If you are itching to throw your ideas on the topic into the ring, you don’t have to wait for Spend Matters’ first crowdsourcing exercise to begin. Drop me a line: pierre (at) spendmatters (dot) com, or post a comment.

Finally, per the title of this piece, let me say I’m certain Ariba, Basware and D&B will continue to provide value to customers. The ROI of e-procurement and P2P is undeniable. They won’t die — but Blockchain does have the potential to be a revolutionary disruptor in supplier networks, procurement technology, and supply risk ratings.

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Voices (6)

  1. Pete Loughlin:

    Pierre, I agree that Blockchain will not destroy Ariba et al just like digital photography didn’t destroy Kodak. Wait …

    It’s like the internet in the 90s – I don’t know what the vendors should do about Blockchain apart from not nothing. I wrote about it here: http://purchasinginsight.com/p2p-over-ip-how-blockchain-will-transform-purchase-to-pay/

    This is going to be a very interesting discussion

    1. Pierre Mitchell:

      Jonathan, thanks for the post! Fascinating. It’d be interesting to see if PEPPOL could move beyond transactions to supplier data and facilitate a registry standard – and whether ESPD could somehow get embedded in a distributed and query-able supplier registry. Perhaps an aggregator like Kompany or others could give BVD/D&B/TR/ et al a kick in the pants to do something. I think you’re right that likely it’ll be Google or other big player to REALLY do something substantive.

      Interestingly, I’ve been getting pinged privately by a few folks that there are some stealth startup firms working on this problem. As you might expect, they are very tight lipped.

      1. Ger Clancy:

        Hi Pierre,

        In your question about the PEPPOL registry standard, I wonder does PEPPOL DIrectory fit the bill? (http://directory.peppol.eu/public)
        This is an overarching “Yellow Pages ” of PEPPOL participants, and is due to be made mandatory later this year, but which already covers about 85% of PEPPOL registered participants.
        It has also been adopted by the TOOP project (http://toop.eu/) as a unifying registry

    2. Pierre Mitchell:

      Pete, I think it’s a little premature to predict Ariba’s demise. They have massive scale and their customers have infrastructure to protect and this stuff is not a consumer device – it’s global B2B digital architecture. Comparing crabapples and orange orchards. Ariba is smart. They’ll continue opening up and consumerizing their network (e.g., recent “Ariba Light enablement” is a baby step) and has opportunity to favorably disrupt themselves if they want to step up and compete against Amazon Business and other future competitors.

      I read your piece – it’s very good explanation to those getting into it. We did a whole presentation on the topic last Spring and have been a little remiss in publishing more on the topic (which will be remedied soon). Re: your comment in your article “Why would we even have purchase ledgers? What would happen to our ERP?”, a company needs to have a system of record for various purposes (data privacy/security, technology performance, internal process efficiency, etc.) and it should integrate to the blockchain registries as the “system of process” rather than being subsumed into it en masse. There have to be strong economic incentives to move off current infrastructure, and call me a luddite, but I think the transition is still many years from now. The freight trains hasn’t emerged from the midst, but the whistle sound is discernable, and slowly growing louder.

  2. richa dosi:

    I wish to be notified regarding follow up comments and new posts by e-mail.

  3. Jonathan Betts:

    I have complete sympathy with the concept of a unified information model for suppliers. It is a refrain I hear regularly from suppliers and something I’m quite passionate about but, although we’re actively addressing this, we’re part of the problem as it’s only for our small corner of the market. To promote interoperability we could open up our supplier network to other procurement platforms. There would no doubt be technical challenges but more importantly at present supplier networks are a competitive asset for providers so it could be first-mover disadvantage. A bit like the fact that all central banks understand that QE/low interest rates are killing the economy but no bank will act unilaterally for fear of a recession in the absence of a global coordinated move to raise rates.

    Could this be developed by an independent procurement interface provider? When we founded Science Warehouse with a marketplace model it was the chicken and egg conundrum like any business model requiring a critical mass of participants and I believe such communities only really develop robustly in an iterative fashion. So again, what would be the commercial driver to get networks to join together ( and I take it as a given that networks need to remain independent otherwise you run into monopoly and redundancy/resilience concerns)?

    Here in Europe we have an initiative called PEPPOL supported by the EU (and ironically now being adopted in the UK NHS). PEPPOL operates a “four corners” model meaning that any buyer of seller can subscribe to an “Access Point” and thereby transact with their trading partners independently of who their e-procurement provider is. As I’ve often said, it’s as if someone had this great idea in the mid-nineties, fell asleep for 20 years then woke up and said “right let’s go” ignoring the infrastructure developed in the market in between. (And even this “standard” has variants in different regions and major questions around governance and accountability (and hasn’t been substantively proven for anything other than invoice messaging).)

    EU legislation has also effected the European Single Procurement Document (ESPD) or ‘Selection Questionnaire’ which has been brought into UK law via the 2015 Public Contracts Regulations. The ESPD/SQ is designed to open markets by firstly standardising pre-qualification documentation and secondly by self-certification (suppliers don’t need to provide evidence (e.g. certifications) until later in the procurement process). All public bodies must accept the SQ if submitted by a supplier but I suspect most suppliers are unaware that they can be reused. This doesn’t really help with your question of supplier discovery but you can see a route to how this might happen if the information to be shared is standardised.

    So, I think the distributed ledger idea sounds like a good one but the challenge still remains of who and how the standards are created and promulgated. Typically you end up with a range of standards with the standards bodies themselves battling out all to the cost and confusion of the poor old suppliers.

    Also it’s far from obvious that the likes of PEPPOL will really maintain momentum and the history of markets points to evolution through competition rather than centrally designed plans. Would you consider the likes of Amazon to have sufficient scale to effectively provide near universal supplier discovery, if not now, at some point in the future? Maybe it’s Google themselves or others like Facebook who effectively create and control the search standards…

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