Creating a Legacy at SAP and Beyond: Where Barry Padgett Plans to Lead Ariba

The new year has brought procurement professionals an increasingly complex technology landscape to keep track of, and several new names to remember, too. One of those names to know is Barry Padgett, who took over as president of SAP Ariba in January.

Succeeding Alex Atzberger, now president of SAP Hybris, Padgett stands at the helm of a business network that SAP Ariba told Spend Matters now “connects more than 3 million buyers and suppliers transacting $1.6 trillion annually.” As he begins to leave his mark on the cloud software giant, Padgett sat down for a wide-ranging interview with Jason Busch, managing director, SolutionMap and strategic advisory at Spend Matters, on where he hopes to lead SAP Ariba in 2018, what customer areas he’s targeting and the biggest lessons he has learned about creating a platform business.

Jason Busch: How do you see Ariba fitting into SAP in 2018?

Barry Padgett: Either SAP was just an incredible visionary at the time they made the Ariba purchase, or they got a little bit lucky, or a bit of both. We’re seeing a ton of customers pair S/4 HANA with SAP Ariba because they can deploy our solutions and pay for their S/4 migration with the savings they generate. So when you look at what’s happening with SAP in terms of the evolution to S/4 HANA and its approach to the migration of its on-prem customer base to the cloud, SAP Ariba is really front-and-center. Almost every region has a playbook with respect to how important SAP Ariba will be to the overall story within SAP, not just as a line of business or as a cloud entity on its own.

JB: What legacy do you want to leave at Ariba?

BP: SAP Ariba has this amazing lineage and great DNA. And there’s a huge opportunity for us to think about, “What does the next decade look like?”

Certainly, moving to more of a platform orientation where we’re creating this really rich ecosystem of partners and app developers who are creating a network effect in terms of the value that they can create for our joint customers is number one.

Second, we have more than 3 million buyers and suppliers on the Ariba Network and they’re transacting $1.6 trillion on an annual basis. That’s more than twice as big as Alibaba, eBay and Amazon combined. When you look at that sort of scale and you add some of the technology that we have available to us now — whether that’s blockchain to drive provenance and authenticity in the supply chain or artificial intelligence to create smarter processes in purchasing and eliminate risk — all of this stuff is available to us, and you can really have immense impact very, very quickly.

JB: Let’s talk about both the existing areas Ariba serves — call this “source-to-pay” — and “white space” that Ariba could pursue. I’m curious about what you think are the biggest opportunities within each area.

BP: What we’re seeing is, counter to your question, the elimination of the silos that peg you as a buyer or as a supplier or as something in between the two. Instead, you’re seeing this more holistic approach following the transaction itself from cradle to grave. One of the things that we’re investing heavily in is this end-to-end concept around, “Every buyer’s a seller and every seller’s a buyer.”

When you think each of your constituent parts that way, it allows you to bring a holistic experience to them from a technology perspective, from a services perspective and from an overall set of solutions perspective. You should expect to see just as much effort on the buy side on the supply side, as well. That hasn’t necessarily always been the case. I wouldn’t say those two worlds have always been thought of equally, both in terms of opportunity, in terms of the amount of innovation that they’ve received, but I think, more and more, at least from SAP Ariba, you’re going to see a more community-oriented approach to ensuring that the transaction is the first-class citizen and that there is a rich set of components that either create, enrich, nourish, consume or in some way improve upon that transaction throughout its lifetime.

We aren’t going to pigeonhole buyers and suppliers and say, “Okay, well, on the source-to-pay, let’s go create these pieces of functionality or this new set of features for our buy-side customers. We’re going to think beyond these kind of silos about business events and business objects and how they flow and how they ought to flow and how you create a set of experiences around them that’s much broader than just a purchase order and a sales order and an invoice.

I like to think of the fact that we’ve got 3 million potential CRM customers on the supply side. When you think about Salesforce, they’ve got 180,000 CRM customers. What could we do if we started to really focus on the supply side and make sure that they’re every bit as important as folks on the buy side and you treat them as a community and they all have a vested interest in making sure there’s transparency and there’s efficiency and there’s cost savings and there’s value. That has really been the Holy Grail for the last couple decades in terms of why these networks were created.

JB: Excellent. You answered a little bit of the white space question, but are there any other areas of white space you want to call attention to as you see it?

BP: SAP Ariba has been investing pretty heavily in small business, going down-market for the first time with SAP Ariba Snap. I think a lot of companies that start out in the large marketspace and go down as opposed to maybe like a Salesforce who started in a small business space and went up, the knee-jerk reaction is, “Take your big, crazy flagship product, and then pull the shiny bits off of it, reprice it, and then call it a small subcompact.”

The reality is, if you take that car and take all the shiny stuff of it, if you start with a Cadillac, it’s still going to get crappy gas mileage no matter what you package it as or how you sell it, and it’s still going to be really expensive to maintain and to get parts for. We haven’t done that with SAP Ariba Snap. We’ve actually created a really valuable mid-market tool with a set of pricing and services and an experience and a deployment model that really makes sense for the segment.

We’re a really good cloud company right now, but the further down-market we go, it’s going to force us to be great because large-market customers benefit from you being good in the small-business space, because large-market customers want some of the same things, right?

They want delightful user experiences. They want simple setup. They want standard deployments. They want self-service tools when they want to use them either in support or services or wherever it happens to be. So you’re going to see us continue to spend a lot of time and effort on mid-market this year.

You’re also going to see continued momentum on this transformation from a product to a platform and continued investment, as we’ve already been making in 2017, on user experience and really delighting users, not just creating a better UX, but really delighting them.

JB: Ariba has taken some baby steps in moving toward a platform-as-a-service (PaaS) based set of capabilities and model. For example, we liked the early “platform” moves with the Extension Studio and related areas. What are your biggest lessons learned in creating a platform business?

BP: The number one lesson by far is that you need to go in with the right drivers. The wrong driver is, “I have a bunch of data. How do I make money on the data?” There are a lot of examples where platforms have come out of the desire to monetize a resource or an asset that you already have, and that is a terrible model — number one, because you end up building the wrong set of services, and, number two, in general, you find over time that people aren’t really willing to pay for it. So you end up doing a bunch of pivots to figure out what your platform story really should be.

When you go into platform transformation, you really need to do it from the lens of the customer. You have to think about “How does the customer get value out what they’ve already bought from you?” rather than, “How do I charge the customer more, or how do I take what the customer’s generating and create more opportunity for myself financially?” When you really think about it from a customer value perspective, you build out the right set of services in the right way.

This interview has been edited and condensed.