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What’s going on at SAP Ariba (sorry, I mean SAP Intelligent Spend Group)?

02/13/2020 By and

SAP Ariba (and before that Ariba on its own) has been the dominant vendor in the source-to-pay market for almost two decades. And it was arguably the first S2P vendor, after its acquisition of Freemarkets in 2004 (depending a bit on how you define S2P!)

Since then, other vendors have constantly compared themselves to Ariba and SAP — and bragged about “wins against” them and replacement deals. And on the end-user side, the stalwart has pretty much been a consistent presence on any procurement technology evaluation longlist and most shortlists as well. But over the last couple of years something has changed, and SAP Ariba is facing some serious challenges in keeping (or perhaps even regaining?) its dominant position in the market.

But to understand the present and gaze into the future, we must first fully appreciate the past.

In 2011 SAP started (or should we say launched?) its journey toward the cloud with the acquisition of SuccessFactors. This was the first in a series of acquisitions of cloud-based, domain-specific solutions.

This includes Ariba (2012), Fieldglass (2014) and Concur (also in 2014). Well actually, to get ahead of all the reply guys, SAP had acquired Frictionless Commerce in 2006 (Frictionless was the first vendor with an integrated upstream suite back in 2003), which at that point was sort of a cloud solution. However, it was never sold as such by SAP and was basically treated as a stopgap e-sourcing and CLM product until the Ariba acquisition. Then just last year, this combined trio of assets for SAP, became the new SAP Intelligent Spend Group.

For the first couple of years after being acquired, Ariba acted very independently of SAP, even if they brought in Walldorf wunderkind Alex Atzberger from SAP to lead Ariba. But since Alex left Ariba to take over SAP CX (which he also has left to become the CEO of Episerver) and the departure of Barry Padgett, the replacement SAP Ariba president who briefly last year became president of SAP Intelligent Spend Group before becoming the CRO of Stripe, it feels like Ariba is being pulled in more to the SAP mothership, at least organizationally.

But when it comes to the product lines and products, it’s a more complex question. This leads us to a couple of areas that we view as introducing controversy and uncertainty to customers, prospective customers and partners at the moment. Which is our focus for today*. This PRO analysis explores the following topics:

* Aging technology
* Integration and product rationalization
* Leadership turnover and reorganizations
* The rise of S/4HANA (i.e., Will the ERP offering from SAP ultimately replace the different solution sets within the Intelligent Spend Group?)

* Our analysis has been informed by dozens of discussions with SAP Ariba clients and partners. While this research brief introduces these topics on a high level, there are a lot more technical details behind the scenes, and the analysis simplifies some of the technology complexity that exists underneath and within the product stack. For example, in sorting through SAP Ariba and SAP today, there are also some key application/platform/integration strategies (e.g., master data management) that procurement and IT groups will still need to formulate in the absence of a clear stated strategy from SAP. For practitioner organizations who are wrestling with these and other decisions, please don't hesitate to contact us here.

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