Source: Epoch Partners
* Ariba ushered in a new era of focus at its analyst day presentations. The
company outlined three key areas of concentration: developing vertical
expertise, enhancing core applications, and generating return on investment
for customers.
* The company intends to concentrate on select relationships among its
partner universe of more than 80 vendors. Expanded partnerships surrounding
integration with IBM and strategic sourcing with PricewaterhouseCoopers (PWC)
demonstrate progress in deepening key relationships.
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Ariba ushered in a new era of focus at its analyst day in Las Vegas, Nev. The
company’s newly promoted CEO, Larry Mueller, outlined three key areas of
concentration for the company as its business matures. First, Ariba intends
to focus on key industries. Second, the company will continue to follow its
value-chain-management strategy and enhance existing offerings. Finally, the
company plans to focus on customer return on investment (ROI) as its
principal measure of success.
Ariba’s focus on key industries should help the company create a solution
that is more strategic to customers. The company plans to concentrate on the
following five verticals: financial services, high technology, automotive,
consumer packaged goods, and pharmaceutical. In doing this, Ariba is
essentially redoubling efforts in its core verticals. While the company
continues to emphasize its value-chain-management strategy, it also conceded
that manufacturing and design management are areas outside its focus. (This
leaves the company to concentrate on strategic sourcing, indirect
procurement, and direct procurement for commodity materials.) Ariba is also
committed to improving existing offerings across this product footprint and
to avoid stepping into new categories of functionality. Illustrating its
commitment to core solutions, Ariba is instituting a platform group within
the development organization to create a common platform for Ariba Buyer and
other acquired technologies (for instance, integration with the sourcing
functionality it acquired from Trading Dynamics and SupplierMarket). Ariba
identified customer ROI as its principal measure of success. This contrasts
with the company’s earlier focus on growth in the business and product
footprint and we believe it is a sensible approach to the current spending
environment. We think Ariba’s core offering has been successful in
demonstrating ROI for large customers that generate sizeable procurement
overhead, and focus here should continue to extend this leadership.
On the partnership front, Ariba will focus on a select group of software
and consulting partners to rationalize its existing 80-plus vendor
relationships. As evidence of this, the company announced expanded
relationships with consulting partners IBM and PWC. Ariba will support IBM’s
WebSphere integration server (support for IBM’s AIX and DB2 has been in place
for some time). PWC will work with the company to package its own strategic
sourcing offerings with Ariba’s applications and to expand Ariba training to
over 700 consultants. |
