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Building the Networked Business of the Future

by Marcell Vollmer | SAPinsider, Volume 16, Issue 2

April 2, 2015

Enterprises are now seeking the same level of ease, scale, and efficiency to run their core business operations that users have come to expect from their day-to-day personal networks. In this interview, Marcell Vollmer — Chief Operating Officer of Ariba, an SAP company — shares how the cloud-based Ariba Network is delivering the convenience and reach of personal networks to businesses with a multi-enterprise platform that connects, simplifies, and fully automates transactions and collaborations.

 

         
       

The cloud has become a powerful catalyst for digital transformation in the 21st century. Through the cloud and the Internet of Things, the machines used to run factories, facilities, infrastructure, and homes are increasingly becoming digitally connected, creating interconnected networks that enable new types of predictive maintenance, new insights, and new models for consumption and operations. For instance, Union Pacific installed acoustic sensors on the undersides of its rail cars to identify any out-of-the-ordinary ball bearing noises and transmit that data back to the railroad’s operations center — before a bad bearing causes a derailment.

Enterprises are now seeking the same level of ease, scale, and efficiency to run their core business operations — combined with the simple and seamless experience users have come to expect from their day-to-day personal networks, from connecting with friends on social media to internet shopping. In this interview, Marcell Vollmer, Chief Operating Officer of Ariba, an SAP company, shares how the cloud-based Ariba Network is delivering the convenience and reach of personal networks to the business world. 

      
         

Q: SAP talks a lot about business networks, and with the acquisitions of Ariba, Fieldglass, and most recently Concur, it seems to be betting big on them. What is your strategy and how will it benefit SAP customers?

A: The strategy is pretty simple: Better connect businesses and simplify commerce for organizations everywhere. And we are committed to enabling new levels of business productivity and insight for our customers by delivering a multi-enterprise platform that connects, simplifies, and fully automates transactions and collaborations, from sourcing and orders through invoice and payment. SAP manages 74% of the world’s transactions. We do business in 25 industries and manage mission-critical systems worldwide. Connecting these systems across businesses is a logical next step.

Q: What is driving SAP’s business network strategy?

A: Most 21st century businesses are digital, and great strides have been made in sharing information between employees and departments, but there are still tremendous inefficiencies in how organizations do business with one another.

Too many purchases, invoices, and other transactions take place offline or in a partially automated way, involving lots of paper and people, and resulting in inefficiencies and higher costs. Inter-enterprise inefficiency affects nearly every corporate function and hinders even the best-performing companies.

Let me give you a few examples:

  • At the plant level and on the manufacturing floor, plant managers have poor visibility into order status, resulting in greater stock outs, higher inventory levels, and poor buying and supply chain practices.
  • In procurement, limited order confirmation and status from suppliers leads to uncertainty about parts availability and delivery, keeping manufacturers from taking new customer orders.
  • In HR and other departments, leaders are challenged to identify, engage, and retain the skills and talent pools needed to compete in a rapidly changing global marketplace.
  • Accounts payable groups are drowning in paper, waiting on invoices, rekeying data into their core systems, and trying to work with procurement and suppliers to resolve resulting exceptions and disputes.
  • Treasury wants to do more with short-term payables cash, but limited visibility into invoice status makes it impossible to forecast, plan, or optimize terms.
  • IT struggles with managing multiple and often costly methods for integration with external suppliers, customers, banks, and other partners.

Helping customers address these inefficiencies is at the heart of SAP’s business network strategy.

 

The strategy is pretty simple: Better connect businesses and simplify commerce for organizations everywhere.

Q: How does the Ariba Network help SAP customers meet these challenges?

A: The Ariba Network was designed to overcome these types of obstacles. It connects buyers, suppliers, and partners across the globe via a single, scalable, cloud-based, software-as-a-service platform that integrates easily with any back-office system, enabling organizations to take a networked approach to managing their resources, both within and beyond company walls.1 The ability to automate and enable shared processes, such as invoicing and payment, increases efficiency, and collaboration capabilities provide real-time visibility into the status of every transaction.

Going forward, a key indicator of business success will be how products and services are delivered, and how the financial supply chain is managed. With the Ariba Network, you can combine these elements into a very lean process that provides tangible benefits — including the ability to reduce operating costs by 60%, drive 50% to 75% faster transaction cycles and 20% faster payment cycles, improve order accuracy by 60%, increase revenue by 20% with new customers, and achieve 30% greater wallet share with existing customers.

Q: How does the Ariba Network work?

A: Think of the Ariba Network as Facebook and Amazon for business. You use Facebook to manage your personal relationships because the majority of your family and friends use it. Companies use the Ariba Network to manage their business relationships for the same reason. With more than 1.7 million companies in 190 countries transacting over $700 billion of commerce annually on the network, chances are that the partners you need and want to do business with are already connected.

Similar to Amazon, everything companies need to manage commerce — from sourcing and orders through invoice and payment — is all done for them on the Ariba Network. With a few clicks, companies can negotiate contracts and place and manage orders. When it comes to payments, they can decide whether they want to pay early in return for a discount or automatically transfer the funds when they are due. And they can do it across all major business spend categories — from indirect, direct, and logistics to contingent labor and services to travel and capital expenditures.

Q: What does it take for a business network to be successful?

A: Over time, we have learned that there are three criteria for a successful business network.

The first is an open, secure, and highly available architecture. The Ariba Network is built on advanced open network technology that enables a secure, multi-enterprise collaboration platform that is accessible from any system or device. The network isn’t limited to SAP customers; in fact, more than two-thirds of the companies connected to the network use a competitive solution. It is also proven to scale to support mission-critical business process transactions for the world’s largest multinational enterprises, and it can handle large volumes of data with zero downtime.

The second criterion is services that create value on both sides of the equation — that is, value for both buyers and sellers. The Ariba Network incorporates intelligent business process logic to make this possible, enabling buyers and sellers to execute secure transactions and collaborative processes across the complete commerce life cycle — from discovering and qualifying new partners and business opportunities to automating key purchase, invoice, and payment transactions. The network also provides access to community-based insights and services such as dynamic discounting, receivables financing, and ratings and market data. In addition, we complement the core capabilities of the network with a host of value services — including benchmarking, commerce expertise, deep industry experience, and a dedicated customer adoption team — to ensure that network members realize and optimize results across their value chains.

The third criterion for a successful business network is ongoing innovation. With the Ariba Network, we continue to leverage our internal assets to provide customers with new capabilities such as business discovery, financing, and intelligence services to increase engagement and value creation for seller organizations. We also continue to deliver new functionality that empowers network members to collaborate in new ways across business processes, including supply chain, logistics, human capital and contingent workforce, collaborative design, and financing processes. And we continue to harness 16-plus years of network information and the power of SAP HANA to deliver new business intelligence services such as pricing and process benchmarks and trading partner ratings and recommendations.

Q: What does the future hold for the Ariba Network and SAP customers?

A: The future is a fully networked environment for delivering services, and SAP will continue to empower its customers on this path. We are expanding our partnerships to add new network nodes and members to the Ariba Network and to quickly scale our growth. For instance, we are partnering with financial institutions like Discover Financial Services to deliver innovative payment solutions such as AribaPay, which coordinates the ordering, billing, and settlement processes between buyers and sellers, and integrates with a global payments infrastructure to provide a secure and accurate way for businesses to exchange payments electronically.2 In addition, we are building local network extensions in locations such as Japan, China, and Korea, where a strong local partnership can help a business win the game.

At SAP, we believe that every business process that touches the edge of the enterprise can be improved and made more efficient by a business network. Whether it’s providing real-time transparency into your logistics network, tapping into knowledge and innovation across a community of experts and partners to develop the next great product or service, or enhancing the aftermarket customer experience by detecting and servicing a piece of equipment before there is even a problem — all of this can be improved through a business network. SAP is focused on making these scenarios a reality, and we have only just begun.

 

 

1 To learn more about resource management with business networks, see “Simplifying Resource Management with Business Networks” by Alex Saric in this issue of SAPinsider. [back]

2 To learn more about how business networks can simplify electronic payments, see “Modernize Your B2B Payment Processing” by Drew Hofler in this issue of SAPinsider. [back]

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Marcell Vollmer
Marcell Vollmer

Chief Operating Officer
Ariba, an SAP company



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