What’s happening with Ariba?

By : |October 23, 2013 0

MUMBAI, INDIA: It looks like a buzzing hive of a market. According to a Gartner report, around 60 per cent of organizations plan to increase their investment on cloud services over the next two years to five years. Now picture markets like India spending quite a slice on contract management, amidst annual spends globally to the tune of $450 billion; more than 23 million POs processed annually; over 60 million invoices processed annually; and transactions happening in 190 countries and 70 currencies; and we can see how this honeypot is only getting thicker.

And with over 1 million global trading partners, a 99 percent seller retention rate Ariba is surely sitting on a ripe jar. This solution covers the order-to-cash and source-to-settle chains between buyers and sellers. It boasts of reduction in sourcing cycle times for buyers by 70 per cent and invoice processing costs by more than 60 per cent; or a 15-20 per cent reduction in days sales outstanding and 10-20 per cent gain in productivity for suppliers; besides plugging contract leakage and allowing the transparency and automation advantages for purchase orders or invoicing. 

Essentially an e-commerce vendor by DNA, Ariba’s platform focus on business-to-business commerce transactions, and this made it a good fit of sorts for what SAP tags as ‘broad customer base’ or ‘deep business process expertise’, when the big change happened last year.

After coming under SAP’s hood (which had already taken into its fold a cloud specialist in HR domain with another billion dollar acquisition of SuccessFactors and ironically a similar-procurement-software-gene-pool-company called Crossgate) Ariba became an interesting arrow to watch for on that dart board called enterprise market.

Let’s see how sharply it is aiming on to a segment that can get easily quiver with worries about sync-in issues, IP control, stack-or-single choices and cloud companies getting canned (and caned too) before a customer can blink well. A chat with Amit Bhatia, Head Sales – India Subcontinent, Ariba Inc to understand the wrinkles and the ironing better.

Usually consolidations take time to show the real impact on both the acquirer’s and acquired’s markets. Are you observing any signs of industry’s response? Would you be eyeing SAP’s installed base or other segments like those ruled by Access or home-grown systems?

Ariba was in good form both from revenue and market-cap views. After the acquisition, the growth has only been on upward curve. There has been a 20 per cent increase over last year’s revenue. We have seen a 40 to 50 per cent YoY (Year on Year) growth speed in India. SAP’s acquisition has definitely helped if you see the prospects that come with its acquired base. Earlier we were strong in pharma, mining, hospitals, BFSI etc but post the change new industries like consumer durables, paints, chemicals, auto, retail, cement etc have come in as well. The spread has surely increased. So far it was a warm period and three quarters down the acquisition we can say that now we are at a tipping point of adoption. This will be seen on both the installed base as well as non-SAP customers. We see a lot of engines of growth happening, specially in non-traditional industries.
When se hear Oracle scooping in ATG, Fatwire or SAP leaning in towards Hybris, is it a signal that completing the cycle in on front-burners now?

Would we see more stacks or more niche elements?

I can not comment on Oracle’s moves but yes, companies are looking for specialized offerings that can bring in ROI to solve a problem efficiently. This probably works better than a stack. More so with last year’s economic environments that’s the trend that I see.

So it is still vital to connect pieces like CRM or inventory or accounting suites with contract software?

It is completely integrated with back-end, from inside systems and ERP software to anything that matters outside the walls. CRM is still much into play here but spectrums like inventory management or financial accounting is something that Ariba is integrating very well.

Would it mean it’s easy even if a customer has competition’s suite or some DIY (Do it Yourself) incumbency?

Yes, onboarding and registrations are crucial parts here. So irrespective of who is coming in, the system is open to any kind of back-end fixture.

Has Ariba showed progress on technology parts after and through the acquisition?

Customers should get complete transparency and control, even when we are thinking non-IT-savvy suppliers, which is possible in markets like India because of constraints and evolution phases. From that angle, ensuring a great Usability Interface and connectivity parts along with enough intuitive strength, is what has been our focus. That’s where algorithms are happening. We are also serious about local statutory requirements, support for local languages and catering to recovery procedures or certifications.

Ariba being quintessentially Cloud, would you say that doubts are resurfacing on that front with the recent curtains-down on Nirvanix? More so with the IP flavor that contract management is heavily loaded with?

The doubts are not completely irrelevant when a customer is wondering about betting on Cloud. Ariba offers a combination of public and private cloud. Top banks and pharma companies are investing seriously in Ariba. They have done due diligence on security and control. We are also making a lot of investments in making sure to give complete confidence to customers. There is a lot of traction and customers like Emami, Himadri Chemicals, Medanta, Medicity, Max Hospital, Olam Agro, SRF, Benetton, Ranbaxy, Cairn energy, L&T or Ranbaxy or Dabur are examples enough to validate that confidence.


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