SAP and Ariba – good news for shareholders and competitors alike

SAP and Ariba – good news for shareholders and competitors alike

Posted by Pete Loughlin in Dynamic Discounting, e-invoicing, e-Procurement, e-Procurement Software, Electronic Invoicing, Financial Supply Chain Management, Purchase to Pay, Purchase to Pay Process, Supplier Networks, Supply Chain Finance, The Rest 11 Jun 2012

The more I look at the proposed acquisition of Ariba by SAP, the less sense it makes. SAP didn’t need the functionality. They didn’t need the brand. The Ariba shareholders will clearly be pleased to see this deal go through but what, I wonder, would an SAP sales guy be thinking and what would Ariba’s competitors be making of it all?


Purchasing Insight logoActually SAP already have e-procurement in spades. The new SRM v7 is as credible as anything on the market. Ariba doesn’t add anything substantial to the current proposition apart from an integration layer. The guys and girls at Coupa can sleep well at night.

Supply Chain Finance

It’s the next big thing but Ariba has failed to set the world alight with their supply chain finance offering so far. Why would an SAP sales person embarrass him or herself by pushing an Ariba solution against a superior, native SAP offering. No sleepless nights for the Taulia team either.


This is something that the SAP guys could and arguably should get excited about. e-invoicing per se isn’t, from a functional point of view, a big deal but but Ariba’s supplier network is a jewel in the crown of this deal. Having said that, the SAP sales people that remember the Commerce One acquisition will be hoping for a better execution this time around.

What would the competition at Tradeshift, OB10, Basware etc etc be thinking? Suddenly, one of their biggest competitors just got bigger? Possibly. But the e-invoicing model is changing and the switched on players know that e-invoicing isn’t the future – not on it’s own anyway. e-invoicing is just one of the enablers. An enabler to holistic P2P that opens up new opportunities for trading partners to be more profitable. Tradeshift get that. Basware absolutely get that and OB10 know it too. So although the new SAP/Ariba will remain a force to be reckoned with, they will need to keep up and demonstrate that they see the end game too.

  • Jason Busch June 12, 2012 at 3:03 am /

    We’ve been up late writing a detailed comparison of the SAP / Ariba e-invoicing capabilities / solutions … see part 1 here (subscription required);

    There’s more to comparing the two offerings (integrated or separate) than meets the eye. I actually think certain competitors are likely to benefit more than others … and e-invoicing is one area — especially if you include SCF — where a combined SAP/Ariba are more likely to finally get things right, than separate.

  • Pete Loughlin June 12, 2012 at 9:44 am /

    Thanks Jason

    For those who don’t already read Spendmatters, Jason’s commentary on the SAP ariba deal is probably the most insightful you’ll find and I’d strongly recommend following Jason’s link.

    .. although I don’t agree with him about SCF and over the coming weeks I’ll explain why. There’s some seriously interesting stuff coming up.

  • Brady Behrman June 13, 2012 at 2:52 pm /

    Well Done Pete and Jason! I am the CEO of PunchOut2Go – We develop Punchout Catalogs. We have had many calls recently regarding Punchout on Coupa/SciQuest/Ariba from current SAP Buyers/Suppliers – It seems as if some buyers are possibly shifting from SAP/OCI to Coupa/SciQuest/Ariba via CXML. I am subscribed and look forward to seeing what else unfolds.

  • john mardle June 21, 2012 at 11:45 am /

    Interesting posts but we believe the ‘win, win’ for SAP is the fact that Ariba gives them the ‘process’ piece that delivers the real metrics that will make trade working capital easier for public entitities/corporates/SMe’s to understand, measure, monitor and manage. The reporting requirements and the way investors now ‘want’ not just need, robust cash flow reports and visibility to certain strategic initiatives means this is a great ‘buy. We at CashPerform have delivered metrics and strategies that deliver the real enhancements to cash but it requires unique ‘processes’ to be fully integrate ‘non financial’ metrics to the statutory accounts!

  • john webster June 21, 2012 at 12:57 pm /

    for me, the key issue here (and why this acquisition will fail to deliver on its promises) is Ariba’s pricing model for the supplier network offering, which represents a problem for both buyers and supplier participants.  That pricing model – which levies a 0.1% fee on the value of business transactions between a buyer and a supplier (above certain thresholds) results in most revenue coming from a small number of suppliers – some of these suppliers that send high value transactions face irrationally high transaction charges for using the Ariba nework offering … causing dissatisfaction within both supplier and buyer camps…  other providers, incl. Basware of course, offer lower cost alternatives for suppliers (and their customers). My view: e-invoicing adoption is by no means certain based on the unsuitability of existing pricing models for the global supply market (not just the US)  .. any attempt to correct that error by SAP will have the knock on effect of reducing supplier network revenues… so interesting times ahead as SAP try to grapple with this acquisition and deliver against the promised ROI required to offset the commercial loan taken to fund the acquisition… interesting times indeed.

  • Jamie Montoya June 26, 2012 at 7:29 am /

    I agree with John, I am all for the win-win.

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