Setting the Bar High: Big Goals for 2020
SAP Ariba has set themselves some big goals for the next five years. By 2020, they want to increase the annual volume of transactions flowing through the Ariba platform to $5 Trillion (up from $1 Trillion today), and grow the network to 5 million suppliers (from 2 million today), 50 million users, and $2 Trillion in payments. SAP Ariba Live showed big changes afoot that just might enable them to get there.
Larger companies often have multiple procurement systems. They might have one system for buying office supplies and equipment, another for facilities request, another for IT services, and so forth. This makes it difficult for the user. To solve this, SAP Ariba is building a front end ‘guided buying’ solution to provide one single place to buy — a common starting point for all purchases, regardless of which system the purchase is ultimately made on (including non-Ariba systems). This enables a single set of policies to be created and enforced across all purchasing systems, simplifying purchasing policy management and ensuring more consistent compliance. More importantly, the user does not have to read manuals or‘procurement guides’ to understand the buying process. The system guides them through the right process depending on a personalized context like user’s location or department and what they are trying to buy.
One of SAP Ariba’s key goals for guided buying is to help users move more to a self-service approach and decrease the workload on procurement personnel. Sudhir Bhojwani, SVP Products & Innovation and head of Ariba Application suite gave a demo of guided buying, and I have to say the user interface (at right) was much cleaner, simpler, and more intuitive than past versions of Ariba that I’ve seen.1 The first scenario they showed was a simple purchase of a Microsoft Surface Pro, that was going to be a gift. Finding the item looked very easy. Because it was a gift, it automatically asked for a reason/justification as part of the checkout process (yellow box at top of screen to the right) and along the bottom displayed a clean, simple approval workflow diagram, showing clearly the next step (approval by the risk manager) and status. I felt that this was the kind of clean modern UX that Ariba needs in order to remain competitive.
Next they demoed a more complex buy. In this case the user clicked on ‘Facilities Services’ on the main guided buying screen and saw a list of the services specific for their location, such as cleaning services, building services, workspace setup, infrastructure services, etc. They selected the type of facilities services they needed and it brought up a curated landing page, set up to make that specific category of buying easier. A customizable form is available to make the request. It showed that the policy required at least three supplier bids since the expected spend was greater than $50,000 and brought up a list of suppliers, using the new Ariba supplier management solution that delivers a ‘vendor master in the cloud,’ along with ratings for each supplier.2 Next they showed the process for inviting a new supplier to bid. The invitation required only four pieces of information (e.g. email, phone, contact name, and company name). Thus the process of inviting a new supplier took just a moment and was an easy, integral part of the requisition process, all in one step. The screen for showing the next steps was more complex than the previous scenario, but still very clean and easy to understand. The idea behind ‘Guided Buying’ is to empower not only casual users but also ‘functional buyers.’ Functional Buyers are people in jobs like IT or Marketing and Facilities who are not part of the procurement department, but whose job requires them to buy a lot of goods and services. Guided Buying converts many of the currently tactical but somewhat complex use cases which currently require a lot of ‘high-touch’ bandwidth from the procurement team into low-touch or even ‘no-touch’ self-service scenarios.
Discovery and Spot Buy
Ariba provides a couple of tools for finding vendors that are not part of previously negotiated catalogs or products. Ariba Discovery is geared more towards finding services and complex goods, whereas Spot Buy is good for providing catalog items. Discovery lets the user put their requirements in a form with some structure to it and then the network is searched to match up potential sellers. It can automatically send the potential suppliers invitations to bid. Spot Buy brings in high quality, ready-to-go content from many sellers and eBay. Each company decides which portion of their catalog content they want to manage themselves and which content they want Spot Buy to manage. In any case, Ariba is able to provide a single UI with intelligent search for inventory items, Spot Buy, and catalog items. They are adding intelligence so that the most relevant items show up at the top of the search results.
Ariba-SAP Vendor Master Synch
A universal challenge is keeping the vendor data up-to-date and clean (e.g. no duplicates). To help with this, Ariba is building a new Supplier Management Solution. This ‘vendor master in the cloud’ solution provides two-way synchronization between SAP’s ERP vendor master and the Ariba cloud solution, with the ability for the customer to set policies and synchronization rules. The vendor master data model can be quite complex, so this is not a trivial task, but worth the effort as clean vendor data is critical to preventing mistakes and headaches in the procurement processes. Native integration to Ariba Network will allow suppliers to manage some of the critical data directly themselves, reducing errors and workloads on the buyer’s IT staff. As well, integration of this master data into procurement processes, like guided buying, brings richer supplier information, such as preferred suppliers or ratings, into the buying process for users.
Rich procurement functionality provides no value if it is not adopted by end users and suppliers. With that in mind, Ariba is redesigning their system for adoption, rethinking the interactions between user, buyer, and seller, and all the touchpoints: from the account team relationship, to the product suite, deployment, value realization, productivity, collaboration between buyers and suppliers, and care teams.
Ariba showed simplified supplier enablement, available in Q2 this year. With a single button click, the system analyzed supplier and spend data to recommend which suppliers should have full enablement (also called ‘Regular enablement’) and which suppliers should be connected via ‘light enablement.’ Full enablement means the supplier is registered on the Ariba Network and may log in to the portal, receive POs and flip them into invoices, do file upload/download, and if they want to invest in integration, do full machine-to-machine (M2M) integration with their own backend systems. Light enablement enables low volume suppliers to transact business — receive POs, send confirmations and invoices — all via email, without even registering on the network.
The supplier enablement demo recommended the top several hundred suppliers (comprising 70% of spend) for full enablement and the remaining many thousands of suppliers (comprising 30% of spend) for light enablement. The user could move a slider bar to change the percent of spend for full enablement higher or lower. The system also suggested which suppliers should go for full integration and which ones you should integrate the catalog with. Once a plan is decided, then the system can be used to automatically send out emails to suppliers and tracks progress against the plan over time. This provides much more automation and visibility for an ongoing supplier enablement program than was available in the past.
The supplier onboarding experience was extremely simple. They demoed it on a mobile phone. The supplier received an email with a ‘sign up’ button, which took them to a page that had prefilled their name, company name, and email address. All they had to do was enter a password and they were registered. It took less than a minute. Once logged in, the system already had information about the other people and roles in their company, who they could add to the team by simply selecting them and clicking ‘send invite.’3
Supplier Pricing Changes
Ariba is also working on simplifying their supplier pricing. Light enablement is free. Ariba is also collapsing the number of tiers, and linking transaction fees more logically to value realized. More details will be released in the second half of this year. They said this new model is about driving adoption to the next level.
SAP Ariba is adding ‘in context’ collaboration. The example they showed was a supplier who had received an order for a conference table, but the buyer forgot to specify which type of material they wanted for the top. Using Ariba, the supplier was able to ask the buyer about that right there within the context of looking at the order. This created an email to the buyer with the supplier’s question in it and all of the order information automatically included right there as well, with the buyer able to open the order with a click and respond. This is the way enterprise social networking/collaboration should work — the back and forth human dialogs directly integrated with the transactions they are discussing.
Opening Up the Platform
SAP Ariba realizes they can’t build it all themselves. This includes content, such as industry-specific catalogs or a vertical-specific contract clause library, as well as all of the different functionality and technology needed. To help users and partners extend the Ariba platform, Ariba is opening it up in two ways: 1) solution extensibility such as Custom Forms and Extensions (primarily for use by Ariba’s customers) 2) Open partner ecosystem via Microservices architecture and Open APIs (primarily for use by Ariba’s partners).
Forms and Extensions
In the demo, they changed the ‘name’ field to ‘justification’ and made it required, but only if the check amount was greater than $1,000. They add an approver, easily selecting from a list. In another tab, they configured the notification settings, to generate an email with the information they wanted. It showed exactly how the email with the form in it would look on a desktop, tablet, or mobile device. This was an impressive demo. All this, including adding the rules logic and approval routings, was accomplished without any scripting, in a very simple UI that a competent office worker should be able to do.
Forms and Extensions allows Ariba business users (non-programmers) to configure and extend the functionality and processes for their own specific needs. Ariba showed a demo of a user designing a new form. They started by choosing from a list of existing templates, like ‘employee survey’, ‘check request’, etc. In the demo, they selected ‘Check Request’ which already had fields for ‘payment for’, ‘pay to’, ‘amount’, ‘pay by’, ‘address’ and so forth. The user easily changed the formatting, label text, and help text associated with each field. It was also very easy to choose or change the data source, binding a specific master data field to the form field. New fields could be added and existing ones moved via drag and drop.
Microservices and Open APIs
SAP Ariba is re-architecting their platform to a microservices approach, with open APIs for data, logic, and UI/UX. Data APIs allow master data, transactional data, catalog data, and other data to be moved into and out of the Ariba systems, including catalog data for Spot Buy. Logic APIs allow callouts to extend business processes and integrate external systems, for example to do specific global tax calculations. The UI/UX APIs allow integration of other cloud applications with the Ariba UI. The example they showed was the integration of Google Docs for editing Ariba contracts and other attachments. Ariba is investing in security as well, realizing that will be critical for trusted integration with other platforms and systems. They unveiled encryption of data at rest, with tenant-specific encryption keys.
In the past, SAP Ariba would do major releases about once a year. They are now changing to a faster paced, more incremental release cadence, about once a quarter. This really focuses their development teams on solving very specific problems, one at a time, in a short time. The released code is switched off by default. The customer needs to explicitly enable the new functionality when they are ready to use it. This prevents surprises and lets Ariba’s customers adopt new functionality at their own pace.
SAP Ariba said the key to innovation is finding the right problems to solve. To ensure this, they always seek out 3-5 customers as design partners to work together on defining and validating new functionality. They used this approach in building the Guided Buying home page, conducting in-depth phone interviews, observing use in the workplace, and listening to customers and the terminology they use, to make sure the language and screen elements are easy to understand. They created several iterative concepts, gathered feedback in workshops to see what users liked or didn’t like. This is a change of pace and approach for Ariba.
Current Innovation Areas: Direct Procurement, Supply Chain Finance, Risk Management, IoT
SAP Ariba is focusing on a few areas right now for further innovation:
- Supply Chain/Direct Materials Procurement — This is a big change for SAP Ariba, who has traditionally focused on indirect procurement. They said they will be very deliberate and focus on two or three specific industries at first. They also expect to leverage SAP’s existing industry expertise and functionality as warranted.
- Supply Chain Finance/Working Capital Management — SAP Ariba already has invested a lot in AribaPay, and Working Capital Management tools for post-invoice financing, both with Dynamic Discounting and Supply Chain Finance. They are striving to dramatically increase the amount of payments made via AribaPay, provide more financing options for lower tier suppliers, and expect to connect new financial and logistics networks.
- Risk Management — SAP Ariba wants to help their customers scale up supplier risk management to manage risk for the long tail of suppliers, not just the top tier suppliers. Ariba is working on automating supplier compliance processes. In addition, they are looking at increasing their risk monitoring capabilities, with semantic engines to parse news sources, government data, other public data, and the customers’ own data (such as which suppliers are sole sourced). Supplier Risk will be integrated across the suite, but as a module that is sold separately.
- Internet of Things — SAP Ariba showed a demo of an oil company with trucks on a map that generated a predictive failure alert for one of its parts. The system then sourced the part through Ariba and automatically created the requisition. This is still a vision for the future, but one can get a glimpse of the direction Ariba would like to go in.
A New SAP Ariba
I really got the feeling that we are seeing a new SAP Ariba. Alex Atzberger has injected fresh energy and we can see the influence of the Business Network Group as well. Ariba saw very healthy growth last year and I believe that will continue. Now, let’s see if they can meet those BHAG4 goals for 2020!
1 Ariba said they are using Angular for the UI/front end. — Return to article text above
2 The ratings right now are based on internal evaluations. Though an external network-wide rating could be possible, Ariba said their customers were telling them they were not ready for other people to rate their suppliers. — Return to article text above
3 Of course the amount of prefilled data that appears in the enablement process depends on the completeness and accuracy of the current supplier contact information that the buyer has. — Return to article text above
4 BHAG=Big Hairy Audacious Goal
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