Procurement Intelligence Unit

At yesterday's analysts' presentation, the Ariba management team laid out their vision of the future for the spend management company. At the heart of this vision is a movement away from 'spend management' to become pioneers of the 'commerce cloud'. In short, Ariba's Commerce Cloud does not really offer any new products to its customer base, but it marks the point where all current Ariba solutions are now available On-Demand and are, in theory, fully integrated.

Ariba's Commerce Cloud also moves the focus of the business outside of the procurement world, bringing in sales and finance.

Ariba's Commerce Cloud for Sales

The value proposition of Ariba to sales is its ability to win business with new customers via the soon to be integrated Ariba Discovery and Ariba Network, allowing buying companies to open up their RFXs to sections or the whole of the Ariba Supplier Network. As with most things in life, there is no such thing as a free lunch, so Ariba will be making these chargable relationships, providing a new revenue stream - with charging for listings and also premium placement.

Ariba's management team likened Ariba Discovery to popular dating site eHarmony, providing buyers and suppliers with a controlled, safe platform to build new relationships. However, a closer comparision would be both MFG and Ketera, who have been running this model for sometime now. In fact yesterday's overview of Ariba Network/Discovery gave me a flashback to my meeting with Ketera's CEO Stephen Savignano last summer. The Ariba team were very open that they were actively looking to acquire other networks to expand their growth - given the new parallels with Ketera, maybe they are at the top of the shopping list.

Ariba's Commerce Cloud for Finance

On the finance side Ariba are looking to give CFOs and FDs a platform for better cash management on both the buyer and supplier side, which comes in the form of Ariba's Supply Chain Finance and working capital solutions. The quicker Ariba can expand the number of transactions through the network, the better chance they will have of owning this "point of payment", which I believe is an area of focus for a number of companies. This also fuels my thoughts that OB10, the global e-invoicing network, may also be one of the other companies Ariba might look to acquire in 2010.

The Ariba team seemed to be very bullish about this new positioning and growth plans, but the proof of the pudding will be in implementation - and it will not be simple task for Ariba's current customers to open up all their RFX to the network and/or opt in for a buyer-led Supply Chain Finance programme.

We'll provide some more thoughts on Ariba's Commerce Cloud in the coming days/weeks as we understand more about their approach, so stay posted.

Here is (Ariba CEO) Bob Calderoni's take on the Commerce Cloud: 

"The first wave of enterprise efficiency focused on automating and streamlining internal operations [...] Yet, companies still rely on costly, manual, and inefficient processes for managing external commercial relationships. The next wave of productivity will come from more efficient and effective collaboration between companies. The Ariba Commerce Cloud provides the technology, community, and capabilities required for better collaborative buying, selling, and financial management." 

And some of Ariba's customers provide their thoughts:

"Finally, we in procurement can make decisions on how to use technology to facilitate best practices that match the way our supply chains actually interact, rather than adjusting our processes to match inflexible and cumbersome software and IT policies that don't coincide with our objectives," said Kevin Castle, Director, Global Procurement, Varian Inc. "By lowering the barrier to entry, I was easily able to prove to my organisation that the investment in Ariba's solution had an acceptable risk-to-return ratio. And the speed of success, when compared to the struggles with ERP deployments, was so compelling that it was easy to gain additional support for further investments." 

"We were able to build a software catalog for a client who uses the Ariba Commerce Cloud in less than two weeks," said Patricia Spugani, Programme Director, Global Web Sales Strategy for ibm.com. "The process was quick and efficient for both the customer and IBM. We were able to transact business very quickly, resulting in increased client satisfaction and a new sales opportunity."

"The Ariba Commerce Cloud plays a vital role in our aggregation, segmentation and visibility of data within the indirect purchasing space, allowing for expeditious market basket strategies and nearly real-time supplier responses in an economic environment where raw materials are volatile and strategic sourcing decisions are critical for the bottom line," said Michael S. Clem, Director of Global Purchasing - North America, AGCO Corporation.

"The Ariba Network has proven to be an effective source for new sales and customer retention within the corporate market. We have enjoyed a 99 percent retention rate and 30 percent increase in our e-procurement customer base over the last eight years," said Chip Graham, Director of Marketing, EBSCO. "With Ariba, we spend less time finding business and more time growing it." 

"Ariba has helped us to transform our business," said Kevin Govin, CEO, MarkMaster. "Through Ariba, we have created a robust online sales channel that has allowed us to expand our base of new customers by 65 percent and grow our overall business 20 percent year-over-year for the past six years."

Here's the official positioning of Ariba's Commerce Cloud: 

What is the Ariba Commerce Cloud?

The Ariba Commerce Cloud is the most efficient, effective and universally adopted platform for global commerce between businesses. Whether buying, managing cash or selling, companies can do it better in the Ariba Commerce Cloud.

What's in the Ariba Commerce Cloud?

The Ariba Commerce Cloud gives companies everything they need for agile business commerce, including:

• Market-leading applications for Spend Management, Collaborative Financial Management and Sales Acceleration Management – all delivered as scalable, cost-effective and burden-free cloud-based services. 
• The Ariba Network, the world's largest web-based trading community, empowering more than 300,000 global businesses to discover, connect and collaborate for better commerce.
• Ariba Exchange, the industry-leading customer community, where companies can network, share best practices and collaborate with partners and peers.
• Market, category, technical, strategic and other expert capabilities that can be accessed on-site or remotely via the web as needed to support ever-changing business needs and objectives. 

Whether looking to control supply chain costs, increase sales, minimise risk, or enhance cash flow and operations, companies can do it better in the Ariba Commerce Cloud.