07 Nov Has Ariba lost its sparkle?
Ariba is falling behind. It’s falling behind in customer growth and it’s failing to innovate. So why has Ariba got such a rosy future?
I’ve been reading with great interest Jason Busch’s analysis of the recently announced Ariba numbers. Ariba’s headline results are very healthy but Jason digs a little further into the detail and draws some interesting conclusions. While revenue is up for both software subscriptions and network revenue, much of this growth can be attributed to an increase in fees and, when compared to its competitors, new customer numbers are unimpressive. What’s more, from a product perspective, compared to the sparkling innovator is was a decade ago, Ariba now appears somewhat lacklustre having, as Jason puts it, “a largely dated set of products, slow development on existing platforms/solutions, multiple and not always fully compatible/interchangeable architectures “
Increased industry focus
Forrester made this observation recently and we wrote about it here. Increased industry focus is an important force driving the growth of supplier networks. This was always going to happen. E-procurement found its limitations fairly quickly in the early days. It’s one thing to automate the purchasing process for indirects but translating that kind of simplistic automation to direct materials or, in fact, anything much more complex than stationery, proved challenging. Things have moved on over the last decade of course and there are solutions for many difficult categories but to drive further growth, industry specific solutions are required. That’s why we’ve seen the impressive growth of companies like SciQuest, who specialize in scientific research and healthcare sectors, and Birch Street who focus on the hospitality industry. But despite Ariba’s shortcomings and the growing strength of their competition, we’re not seeing the end of Ariba. Far from it. Again quoting Jason Busch: “Ariba is executing commercially”.
So why should Ariba innovate? So what if they’re not winning new clients at the rate of their competitors. In the supplier network pond, Ariba is one of the big fish. There’s going to be lots of fierce competition happening in the market soon and perhaps it makes more sense just now for Ariba to hold off investing in innovation and think a few moves ahead.
Think about it. Who will be the supplier network winners in the coming years? Is it going to be the innovators who crack new spend categories and new industries? Will it be ones with the biggest networks? Or will it be the one with the biggest war chest to be able to take best strategic advantage of the land grab that is going happen next year as e-invoicing adoption rockets? I know which my money’s on.