Monday, February 17, 2014

How should Ariba do to improve themselves.

Last Spring Enterprise software giant SAP from German is buying Ariba in a $4.3 billion move that will give it control of what is probably the world’s largest online-marketplace for goods and services. Ariba was founded 1996 on the idea of using the internet to enable companies to facilitate and improve the procurement process. Ariba is one of the first business to business internet companies in the world. Today businesses around the world use Ariba’s e-commerce and procurement services to buy and sell all sorts of products and services. 

The company introduced its initial product, Ariba Buyer, in June 1997, and began to operate the Ariba Supplier Network (ASN) in April 1999. Ariba has continued to provide enhancements to its products on an ongoing basis, whereby ASN has recently been named into the Ariba Network (a network for all trading partners, not only suppliers).

However currently there is the (costly) business commerce problem. The current productivity technology is inefficient that remain between companies to enable more effective collaboration among trading partners. During its recent customer and industry event, Ariba called out some damning facts, such as that within the Forbes Global 2000 elite group of companies, the average company has approximately 134,500 trading partners. Yet these companies still conduct roughly 80 percent of their transactions manually and fail to leverage anything but paper-based invoices for 85 percent of their account payable environment.

Moreover, companies lose obscene amounts of money (billions of dollars a year) in this trading context due to the “cost of lost sales due to ineffective collaboration.” Basex Research’s 2008 report cites that information overload costs the US economy a minimum of US$900 billion per year in lowered employee productivity and reduced innovation. Despite its heft, this is a fairly conservative number and reflects the loss of 25 percent of the knowledge worker’s day to the problem. The total could be as high as US$1 trillion. For its part, Ariba Bench-marking estimates that inefficient commerce collaboration is costing Global 2000 US$338 Billion.

As above research has shown, I think Ariba requires to face challenges to improve efficiency and reduce lost. While finance department is seeking the optimal cash flow solution, procurement department also need to find focus on maximizing spend visibility and control, and on finding the risks in the supply chain. Moreover Ariba should find how to simplify trading parent integration and business support as well. 


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