Author: Pete Loughlin

I don’t write much about Ariba. We don’t say much about SAP or Oracle either. They’re old news and there isn’t much to say that hasn’t been said before. Besides, there are better analysts like Jason Busch who understand the intricacies of the functionality of procurement software to a much greater extent than I do. But there is one aspect about Ariba that really intrigues me and that’s their pricing model. Unlike many other commentators, I don’t have an issue with Ariba’s supplier pricing model - in principle at least. There’s a price and there’s the value that’s added and you can’t look at one without the other. A high price is perfectly appropriate when there’s proportionate value added. But in my view, there’s something very wrong with the model that Ariba has chosen to adopt especially when you look at it as it relates to e-invoicing.

e-invoicing sounds to most like a boring bit of back office business but in Latin America, the issue of e-invoicing and in particular the issue of getting it right is a little bit more on the edge. Getting its wrong can have serious and dramatic consequences which is why it good news for Tradeshift to have partnered with the leading solution provider in the region, Invoiceware International, to deliver guaranteed compliance.

There are lots of reasons to do e-procurement but most of the stated reasons are not the real reason at all. Indeed, most of the reasons stated for implementing e-procurement are impossible to deliver. But there is one very good reason to implement e-procurement and oddly, the functionality that delivers it is usually not available from the e-procurement vendors.

I've been working with e-procurement in a wide variety of guises and in many different organizations for nearly 20 years. Before the widespread use of the internet there were some proprietary on-line purchasing systems that were, by and large, the same as a modern incarnation of a web based e-procurement system. And they all have one thing in common - they don't work. To be fair, they're getting better but still, most implementations are an expensive set of broken promises. It's not always the technology that's at fault - sometimes it's the promises that are wrong - expectations are set unrealistically. Or its the functional design that's wrong - business requirements ignored or misunderstood. And it's such a shame because e-procurement was such a good idea. So what's gone wrong?

Industry experts are increasingly calling for an e-invoicing mandate. In the USA as well as Europe, disappointing adoption rates over the last decade look rather embarrassing when compared to the dramatic success in Latin America where the use of electronic invoices for many businesses is not optional. But while a mandate could be seen as enforcing common sense, could there be some unintended consequences that will actually mean that mandating e-invoicing will be counter productive?

When anyone tells you something is a win-win, they’re usually lying. Where there’s a winner there’s always a loser. But sometimes it does look very compelling. Supply Chain Finance (SCF) offers the possibility of a supplier getting paid early, lowering their cost of working capital and at the same time, the buyer gets to extend their DPO. When something looks too good to be true it usually is. There must be a catch. And actually, there is.