{"id":1370,"date":"2012-05-22T17:41:00","date_gmt":"2012-05-22T17:41:00","guid":{"rendered":"http:\/\/localhost\/projects\/horsesforsources\/sap-ariba_052112\/"},"modified":"2024-09-11T11:39:27","modified_gmt":"2024-09-11T11:39:27","slug":"sap-ariba_052112","status":"publish","type":"post","link":"https:\/\/www.horsesforsources.com\/sap-ariba_052112\/","title":{"rendered":"SAP ruptures the procurement universe by scooping up Ariba"},"content":{"rendered":"
\"\"<\/p>\n

Are we in the Cloud yet?<\/p>\n<\/div>\n

With all the quick-thinking and finesse of an\u00a0Italian analyst in a Hollywood Hills salami shop, here’s HfS Research’s Tony Filippone imparting the scoop on why SAP just bought Ariba…<\/em><\/p>\n

With its $4.3 billion cash offer, SAP answered every procurement technologist\u2019s question, \u201cWho is going to buy Ariba?\u201d While this acquisition will rupture the procurement technology universe, HfS believes the real question that supply chain and finance professionals must ask is, \u201cNow that SAP finally has a credible commerce network, can I eliminate and automate processes I\u2019ve been busily outsourcing?\u201d<\/p>\n

It Didn\u2019t Happen Overnight<\/strong><\/p>\n

Give credit to Ariba\u2019s leadership. Over the last few years, Ariba\u2019s CEO Bob Calderoni and President Kevin Costello bet the farm on cloud technology and the networked economy. With the introduction of cloud-based 10s1, they took their focus off gritty areas, like category management, usability, and procurement process management, and jumped into technology\u2019s cloudy fray. This was a \u201ccheck the box\u201d exercise for any technology company. Yet, the real jewel was Ariba\u2019s supplier network. With the help of procurement teams bent on mandating its use among suppliers, Ariba\u2019s supplier network swelled to $319 billion in commerce transactions spanning 730,000 companies. Ariba\u2019s network fees doubled. SAP noticed.<\/p>\n

In the meantime, Calderoni sold Ariba\u2019s services arm to Accenture 18 months ago. This clarified Ariba\u2019s technology-focused strategy. It also eliminated the largest objection larger technology firms had about acquiring Ariba \u2013 the services. Technology firms want nothing to do with services as they can neither manage nor sell them effectively. In the end, Ariba became a feature-rich, cloud-based platform with one of the world\u2019s largest B2B commerce networks.<\/p>\n

What It Means to the Industry<\/strong><\/p>\n

SAP customers gain network capability that automates their O2C and P2P processes.<\/em> <\/strong>With an installed license base of 190,000 customers, SAP enters the cloud technology world with a real commercial network. This exposes SAP\u2019s industrial, manufacturing, and CPG clients to a modern method of conducting O2C and P2P business. SAP\u2019s customers are likely to rapidly adopt the network. In the wake of SAP customers\u2019 adoption of the Ariba network, business owners should seek to consider bolder, more transformations alternatives to outsourcing their finance and accounting processes. Quit emailing POs, and start electronically flipping them to eliminate manual effort and obtain the true contract value you negotiated.<\/p>\n

Other technology players are left picking over the leftovers.<\/em> <\/strong>SAP eliminated one its competitors, while IBM\u2019s Emptoris acquisition eliminated another. Two heavy weights are gone, and in their wakes lay a large number of low-priced, niche procurement solutions that are left to fight it out. While buyers will always have some interest in pure play solutions, choices for enterprise buyers are more limited. Expect the smaller players to focus on usability and niche process solutions, like supplier relationship management. However, seamlessly automating a company\u2019s global payables team through an established network dwarfs the differentiation of better-looking user interfaces.<\/p>\n

Outsourcing service providers face a new landscape.<\/em><\/strong> With SAP customers poised to adopt a network, finance and accounting outsourcing service providers will face lower volumes of manually transactions. Service providers that can help buyers transform their processes are positioned best to service clients and win new ones. However, this isn\u2019t a simple technology issue solved by templates. Supplier network adoption and onboarding is a complicated, tactical task and finance and procurement teams will need operational expertise to handle the transition. In addition, SAP\u2019s partner model for its On-Demand services may open new opportunities for service providers that had previously relied on Ariba\u2019s cloud suite.<\/p>\n

Procurement and supply chain gets shoved into driver\u2019s seat.<\/em><\/strong> With SAP\u2019s sales force pushing Ariba\u2019s network, expect CPO\u2019s to feel the pressure to take more control of their firms\u2019 end-to-end P2P strategy. Whereas few enterprises currently consolidate sourcing, procurement, and payables teams, Ariba\u2019s network will force organizations to reconsider if they want to tap into the true value of seamless source-to-pay processes. More importantly, supply management executives will be given a better network to manage direct goods and services. As a result, CPOs and supply chain leaders will feel the pressure to manage source-to-pay in an end-to-end fashion.<\/p>\n

\"Tony<\/a><\/p>\n

Tony Filippone is EVP for Research, HfS Research (click for bio)<\/p>\n<\/div>\n

The Bottom-Line: SAP\u2019s Acquisition is a Good One<\/span><\/p>\n

After the dust settles and SAP integrates Ariba\u2019s sourcing, procurement, and contract management capability into its suite (or vice versa, which could create quite a bit of dust, but represents a fine network-based model for B2B commerce), SAP and Ariba\u2019s customers come out as winners. Customers will get better features, a more broadly adopted cloud-based delivery model, and a rapidly expanding commerce network that reduces the inefficiencies of manual P2P processes. However, despite all the hype SAP has created about its On-Demand solutions, can the German software firm really manage a network and B2B community-based solution?<\/p>\n","protected":false},"excerpt":{"rendered":"

Are we in the Cloud yet? With all the quick-thinking and finesse of an\u00a0Italian analyst in a Hollywood Hills salami…<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[48,51,81,838,836,91,832],"tags":[780],"organization":[],"ppma_author":[19],"class_list":["post-1370","post","type-post","status-publish","format-standard","hentry","category-business-process-outsourcing-bpo","category-cloud-computing","category-it-outsourcing-it-services","category-kpo-analytics","category-procurement-engineering-supply-chain-outsourcing","category-saas","category-sourcing-best-practises","tag-tony-filippone"],"yoast_head":"\nSAP ruptures the procurement universe by scooping up Ariba - Horses for Sources | No Boundaries<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.horsesforsources.com\/sap-ariba_052112\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"SAP ruptures the procurement universe by scooping up Ariba - Horses for Sources | No Boundaries\" \/>\n<meta property=\"og:description\" content=\"Are we in the Cloud yet? 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