Ariba's network strategy

Den Howlett Profile picture for user gonzodaddy June 6, 2013
Summary:
Ariba's networks strategy is a long vision of how indirect spend gets optimized. It's a vision I find compelling.

We're not usually huge fans of marketing people coming on video but on this occasion we are making an exception because there are aspects of Ariba's strategy that are important to understand yet which we believe need more explanation.

At AribaLIVE, I got to spend quality time with Tim Minahan, SVP network strategies and outgoing CMO. The video runs longer than is usual for us but I think it is worth the effort to listen all the way through.

What comes across loud and clear is:

  • Ariba is working hard to remove friction regardless of the size of business. The recent announcements of adapters for Sage, Quickbooks and Microsoft Dynamics GP go a long way towards achieving that nirvana, and preventing small businesses from being forced into adopting technical solutions that are way beyond their understanding.
  • The days of procurement solely being a function that puts the seller's financial nuts in a vice are over. Buyers have realized that there is much more that can be done with sellers. Dynamic discounting for early settlement, ideation for product assembly, discovery for buyers and sellers and genuine vendor relationship management based upon trust figure large in the future.
  • Over arching all of this, Minahan talks about the value of the network as the underpinning technology for achieving this happy state of affairs.

This is an exciting area for many reasons, not least is the potential to unlock the numerous inefficiencies in the supply chain. Some years ago, I recall AMR Research suggesting that up to $1.3 trillion is caught up in supply chains. Releasing just a small fraction of that amount via procurement networks would have a massive impact on value delivery.

The question is how long it will take for companies to understand and implement what is needed to get there. If my observations are worth a reckoning, then Ariba has plenty of work to do. With a few exceptions, the bulk of attendees I spoke with seem to have only made modest progress. The good news is that there are fine examples of what can be achieved. Minhana believes it is a multi year effort. I am not surprised given the complexities involved and the many steps needed to get from 'here' to 'there.'

This is a topic we shall revisit.

In the meantime, enjoy the conversation above.

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