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The long-term benefits of SAP’s acquisition of Ariba: A Q&A with SAP mentor Prashant Mendki

by Dave Hannon

December 11, 2012

By Dave Hannon
@Daveatwispubs 


In the weeks since SAP wrapped up its acquisition of Ariba, there has been a lot of discussion about how the Ariba products and technologies will be delivered to the SAP installed base. There was some information announced at the SAPPHIRE NOW conference in Madrid, but SAP users want to know more.

To help us better understand this, I recently spoke with Prashant Mendki, a consultant and SAP mentor (@pmendki) specializing in procurement. Following is a transcript of our interview.

What have you heard from SAP procurement users since the acquisition of Ariba was announced? Have they been enthusiastic, cautious, surprised, not surprised?

As with many large mergers, the users I heard from were cautious. SAP and Ariba were competitors in the procurement market – especially in a supplier network area – so most of the users are looking for information on what will be done in areas of functionality overlap and products that offer the same or similar functionality. There are also a lot of questions about how the two formerly competing ecosystems will merge.


What do you see as that biggest functionality benefit SAP users stand to gain from this acquisition in the short term?

The biggest benefit for SAP users right now is access to the Ariba supplier network, which is th e backbone of the Ariba solution suite. Ariba touts it as “the world’s largest business network with more than 730,000 companies transacting over $340 billion annually among 5 million users.”

And there are other advantages of course. Among them, cloud-based solution availability and the strength of the end-to-end procurement solution that will be available from SAP. For example, catalog management, which Ariba really pioneered, will be available in the SAP portfolio. The scenario SAP foresees is that the Ariba network will become a “one-stop shop for all supplier relations.”

A lot has been said about the benefit of Ariba’s cloud expertise. How important is that to users of SAP procurement solutions today?

Cloud is certainly a game-changer today and it’s very important for SAP customers, especially the SME customers. Of course, customers prioritize functionality over anything else to start with, but when it comes to comparing solutions, the upfront cost is definitely a decision maker. If there is an option available to get the same functionality and spread the cost over multiple years, customers are more eager to choose that. Cloud solutions provide this option. 

In the short-term, SAP NetWeaver Process Integration (PI) and SAP Information Interchange OnDemand will definitely play a larger role at the technological integration level.


Is there anything about this acquisition that you think hasn’t received as much attention as it should?

The go-to-market model around this acquisition has not been discussed all that much. SAP traditionally works closely with its partners on implementation and delivery of SAP solutions. Ariba historically has not leveraged partners as much for its implementations because it had its o wn consulting division.
So right now it’s unclear how SAP will approach this. Will it continue to be partner-focused with Ariba implementations? If so, how will it enable partners? There is much to discuss here.

Lastly, SAP not only acquired Ariba, but also named Ariba’s CEO to the managing board and featured Ariba on the keynote stage at SAPPHIRE NOW in Madrid. What do you think all of this says about SAP’s commitment to procurement functionality in the long-term?

I think all of this shows that SAP is strongly committed to its procurement roadmap for the future. Many analysts have pointed out that supply chain and procurement is a prime area for optimization. In today’s market of shrinking margins, increased competition and increasing costs, there is a lot of space to identify, analyze and optimize the supply chain. And suppliers are the key to this.

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