AribaLIVE Berlin - a company of contradictions?
- AribaLIVE is underway in Berlin. We find a company enjoying success but with plenty of work to do. We also hear how SAP is 'eating its own dog food' as an Ariba customer. The insights are invaluable.
It is always good to both catch up with vendors and their customers and this event was no exception, made easier by the fact AribaLIVE is a relatively intimate affair with some 600 attendees at the European leg.
There is a certain poignancy in the event location or rather co-location at both the Berlin Marriott and Ritz-Carlton round the back of Potsdamer Platz.
That locale is slap bang in the middle of where the Cold War divided city of Berlin saw its front line. The area is still undergoing reconstruction but it is that split to which I will hark back.
A 'company of contradictions'
Ariba is a company that Jason Busch described in 2012 as a 'company of contradictions...'
...where it’s possible to interpret what they’ve recently accomplished in multiple ways. We could argue either side of the coin. For example, does Ariba’s current business and revenue approach represent a brilliant and sustainable turnaround or a potentially harmful new supplier-funded model that could alienate certain folks in its community (potentially both buyers and suppliers)? Are they a leading P2P vendor (e.g., eProcurement, e-invoicing, network plumbing) or something more, a provider with competitive end-to-end suite capability inclusive of spend analysis, contract management, supplier management, sourcing, etc.? Do they sell applications to fuel network revenue or sell the network to lock in application users?
I won't claim any intellectual superiority over Busch's extensive knowledge in this space but even a cursory discussion with both the company and its customers suggests a business continuing to find its place in the world.
It was strange for example to see a company that is owned by SAP openly talking about Oracle, Lawson and others with which it integrates. But then Ariba's customers could come from any of those stables. On the evidence I saw, there is no reason to assume that will not continue, despite SAP positioning Ariba for its own huge installed customer base of global 2000 businesses that will go all the way down to the BusinessOne group.
At the same time, I had no difficulty in meeting customers who are concerned at the cost of operating Ariba and wondering what happens when the (sometimes) substantial savings they achieve plateau and they have to find new ways to leverage their investments.
In the same vein, I can't count the number of Ariba people who asked: 'Do you think Ariba is a the number one in procurement?' My answer was the same to all. This is a highly fragmented market where it is possible to long list (according to one customer) up to 70 - yes that's seven zero - contenders. How therefore can any single company claim leadership other than by the sometimes dubious measures of customers and partners? OK, so Ariba has done extraordinarily well in P2P with deepening functionality always in mind but there is plenty of scope for extension.
Of course now that Ariba is under SAP's ownership, we can expect the company to start making all sorts of extravagant market claims, but that's par for the course in the world of enterprise applications. What really matters is the view from customers.
SAP eating its own dog food
Most impressive to me was seeing Marcell Vollmer, Chief Procurement Officer SAP on stage talking as a customer and providing some great insights into the company's workings. Vollmer threw out a slew of numbers. See the slide image below that speaks to the scale of SAP's procurement efforts.While Vollmer didn't talk to the specific savings SAP expects to make, the fact that the company spends €95 per PO for a non automated P2P process is staggering. Fujitsu, which talked about its own implementation said that similar processes in their business come in at €16 per PO. They have managed to slash costs to €2 where the process is fully automated. That represents massive savings and genuine value. As a side note, Fujitsu uses Ariba in conjunction with both its SAP and Oracle implementations (SAP for manufacturing units, Oracle for service businesses.)
SAP, like many of Ariba's customers, clearly has room to improve. More important, process improvements will need to be backed into however Ariba and SAP's ERP end up being fully integrated. I expect those experience and insights will be passed on to customers. They have to be for customers to achieve greater investment value.
When I asked Vollmer how far he thinks the company can go, I was surprised to hear him talk not just to deal values (lower end long term is around €150,000 per total contracted annual sum) but to frequency of billing. It was only when I discussed with him some of the internal workarounds I've seen by small suppliers trying to hurdle some of SAP's arcane practices, that I could see the penny dropping.
In many companies, there are massive hidden costs for dealing with the large number of very small suppliers grappling with what they see as rigid and difficult processes. For example, I routinely come across technology vendors who don't know how to use an electronic document signing service to facilitate contract creation or renewal. Haven't they heard of Docusign or EchoSign? Often the answer is 'no.'
Automation may well solve these problems and I suspect a combination of self billing and insanely simple invoice and bill processing will go a long way to improving efficiency for that large rump of small suppliers. But then those same processes will need to be flexible, something that is not so well thought out to date.
In other conversations, French telco Bouygues Telecom pointed to onboarding as a particular pain point, something with which wannabe SAP suppliers are only too familiar.
However, we should draw comfort from the fact that SAP is genuinely trying to stake out new ground. In talking about the implementation, Vollmer said that the company dispensed with its usual (ponderous) implementation methodology. Instead it used a combination of vanilla implementation, RDS and scrum methodology to complete the implementation in under three months. (See slide below)That has to be something that customers can look at with confidence for their future implementations.
There was very little hard news or product announcements and we'll have to wait until I get time with other execs to forn a better picture of the company's strategy. That comes on Day 2. However, a few nuggets emerged that any business will find interesting:
Integration is now in place for Intuit Quickbooks, Sage and Microsoft Dynamics. Put another way, Ariba is now positioned to be a partner for any sized business. How that will work out in the long term remains to be seen but I suspect that Ariba will learn valuable lessons from the SME end of the market that can be applied to the problem outlined above.
Ariba gave us a sneak peek into what is coming next in early 2014. They are re-using the SuccessFactors taxonomy in the contractor recruitment process. HR professionals coming in cold but with SuccessFactors' experience will have a much easier time understanding how Ariba works. The thing that caught my eye was the inclusion of dynamic help. It looked suspiciously like Jam to me and if true then that's a VERY good thing. Fostering genuine collaboration in the procurement process is essential if companies are to move from pure efficiency to effective buying. Or as one customer said: 'When you've finished beating up the supplier to give you the lowest price, you realize that that might not be the optimal answer. Collaborating with sellers means more than a negotiation.' Amen to that.
Disclosure: Ariba covered most of my travel and expenses. At the time of writing, SAP is a diginomica premier partner but that does not include Ariba.