Thierry Loir - The Ariba Network : a two sided business model

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The Ariba NetworkA two-sided business model

Thierry Loir, Solution Executive, Procurement, SAP BeLux

© 2014 SAP AG or an SAP affiliate company. All rights reserved. 2Public

Source: McKinsey & Company, “The rise of the networked enterprise, Web 2.0 finds it’s payday.” Survey of 4,394 executives. December 2010

“ Networked enterprises are 50% more likely to have increased sales, higher profit margins, gain market share, and be a market leader. ”

41%improved

collaborationacrosssilos

55%better

informationsharing

24%increasedrevenue

77%increasedaccess to

knowledge

63%increasedmarketing

effectiveness 43%greatermarketshare

8%higher

margins

“Increasingly companies are embracing collaboration as part of their strategy to grow.”

The Rise of the Networked Economy


So it all starts with the Network…

1.4+ millionTrading Partners

72+ millionAnnual Invoices

$USD 170B In Sourcing volume

190+Countries

$USD 500B+In Transaction Volume

15 millionLeads Sent to Sellers

Buyer Participants

Global Enterprises

Mid-Market Companies

Functional Buyers

Seller Participants

Complex(e.g. temp labor, SOW, T&E)

Simple(e.g. catalog, Pcard, etc.)

Automated(Direct, MRO)

2x +


Saphire Orlando, June 2014


… on which apps operate…

Spend Viz

Srcg

Contract

PerfMgt

Proc

…

Profile

Leads

PO’s

IN’s

ScoreCards

Dyn. Dsc’g

…

Network

Intelligence


… integrated with backend systems

AnyeDoc

HTML

EDI

EmailPaperFAX

CSVcXML

© 2014 SAP AG or an SAP affiliate company. All rights reserved.

5 paraboles


“What Hath God Wrought?”

Created by the Telegraph: Newspaper Wire Services Wire Transfers Futures Trading Greenwich Mean Time Sears Roebuck and the Catalogue Railways

http://1.bp.blogspot.com/-kgg8XvG1bH8/Tcqb1MN1MVI/AAAAAAAAAG0/8RdrRzmKQcc/s1600/morse.jpg


Reaching Critical Mass (= when the value of joining is higher than the cost)


Reaching Critical Mass

Network Started Critical Mass Time Required Built by

Railways 1820’s 1890’s 70 years Tycoons, Barons

Electricity 1860’s 1930’s 70 years Local Govts, co-ops

Telephones 1870’s 1940’s 70 years GPO

Oil Pipelines 1880’s 1920’s 40 years Standard Oil

Credit cards 1950’s 1980’s 30 years Visa

UPC Barcode 1952 1975 23 years CPGs & Retailers

Internet 1982 2000 18 years US Government

Business Network 1999 2014 15 years Ariba

Source: Infrastructure History Series (Amy Friedlander) http://www.cnri.reston.va.us/series.html

http://www.cnri.reston.va.us/series.html


Guaranteed Delivery?


Anti-Virus Software for Finance

http://www.google.co.uk/url?sa=i&rct=j&q=&esrc=s&frm=1&source=images&cd=&cad=rja&docid=PkRdqoqVkkN6OM&tbnid=eFILizX0GqpdhM:&ved=0CAUQjRw&url=http://www.banksafeonline.org.uk/tools/antivirus-software&ei=S8ikUZK9DOK80gHerYDoCQ&bvm=bv.47008514,d.dmQ&psig=AFQjCNEhKgs3CKqfiy6u-N0sAQvv--g45Q&ust=1369840069825147


RESEARCH BUYING & SELLING COMMUNITY & CONTENT

COMMUNICATION& COLLABORATION

Personal Networks Make Our Lives Run Better…


Procurement without a

Network is

“Batteries not included”


VIDEO GAME MANUFACTURERS

SPICE MARKET

What are “Two-Sided Businesses?”

Customer Group 1 Customer Group 2

ReadersAdvertisers

Video Game Developers

Video Game Players

Spice Growers

People Who Cook

Group 1

Group 2

Attracts two parties who need each other

Promotes ongoing interactions between parties

Superior benefits are realized by both parties

Marketplaces Platforms Exchanges Malls Clubs

NEWSPAPERS


Fun Facts About Ariba Network

Ariba Network Buyers includes all types of companies

1 2 43Ariba Network supports a broad mix of spend

Ariba Network is global

Ariba Network supports a broad range of commerce

11,200

1,270

750


Ariba’s Two-Sided Model Has ACCELERATED Growth of the Network

2005 2008 20112006 2007 2009 2010 2012 201320041999 2001 2002 20032000

Registered Members

$$$ Transaction (USD in millions)

Supplier Membership Program (SMP) introduced

Seller fee: fixed fee per chargeable relationship

Buyer Membership Program introduced

Transaction based-subscription fees for buyers

Introduced seller SMP package subscriptions

Spend-based model for SMP sellersintroduced Ariba Discovery

Pricing introduced for lead responses

One-Sided Model

$0.02B

$43B$21B

$2B$0.6B

17777,246

15,918 44,0812,665

Ariba Network launches

Ariba Network free to sellers

Buyers need to pay TSS fees for Network access

Two-Sided Model

$59B

121,017

$163B

$135B

$112B$108B

$99B$101B

$74B

$450B

$500B+

759,159

153,924 179,872 200,305289,482

351,394427,868

1,090,052

1,400,000


Invest in Customer Success: Customer Programs & Services

BEST IN CLASS CUSTOMER SUPPORT CUSTOMER

SATISFACTION(OCT ’11 – NOV ’12): 8.94 / 10

Customer Satisfaction Survey Scores

Perfect 10:

58%Other

calls answered in 120 sec. or lessSERVICE LEVEL: 8.5/10

First Contact ResolutionMonthly Avg. since Oct ‘11

First Contact Resolution:

86%Other

ROBUST PLATFORM

99.5%+ performance reliability

20 languages

SAS 70 and Webtrust certification

e-invoice VAT/tax compliance in

39 countries


Invest in Customer Success: Customer Programs & Services

CUSTOMER ENGAGEMENT

Seller OnboardingCustomer Education

Online CollaborationIn-Person Events

CUSTOMER PROGRAMS

Supplier Enablement Programs

Seller Programs

Benchmarking Programs

New


Demonstrate Benefits to Both Buyers and Sellers

Bid

Sell

SellersBuyersTypical Value of Benefits Within Each Collaborative Business Process*

5-7%

4-15%

10-30%

4-7%

15%

0.25%

5%-10%

5-35%

7%-30%

15-35%+

15-45%

.20%

Process SavingsSavings on Basis of SpendIncreased Revenues

* Primary benefits listed. Additional benefits in many of the processes

© 2014 SAP AG or an SAP affiliate company. All rights reserved. 21Public21

Value Drives Seller Compliance to Your Automation Initiatives

Ariba sellers

Non-Ariba sellers

KEY FINDINGS*

• Sellers value top-line benefits over costs

0% 20% 40% 60%

Increased customer satisfactionIncreased visibility via collaborationIncreased revenues

Decreased costs

Improved product / service qualityAccelerated cash flows

Competitive response

Top Reasons Sellers Adopt*

• 55% recognize the value of process visibility

*SOURCE: Ariba survey of 582 sellers

Participants

50% 50%

22© 2014 SAP AG or an SAP affiliate company. All rights reserved. 22© 2013 Ariba, Inc . All rights reserved.

RoadmapStrategy InnovationsVision

Demand Sensing & Shaping

Demand Signal ManagementCustomer Activity Repository

Project Ganges

Collaborative Supply Chain

Ariba Business Network

ERPConstraint-Based

Manufacturing Planning

Supply Chain Execution PlatformTransportation Management

Warehouse ManagementEvent Management

Supply Chain Planning PlatformSales & Operations Planning, Inventory & Service Level Optimization

Predictive Demand Management, Supply PlanningResponse Management

Control Tower & Integrity

The Product Strategy is based on Data Model Harmonization and User Profiles

SAP Supply Chain Product Strategy

Demand Driven Supply Networks

Logistics & Order Fulfillment

Integrated Business Planning

Supply Chain Monitoring

22

Monitoring

Product Strategy

Planning

Networks

Logistics

New

New

© 2014 SAP AG or an SAP affiliate company. All rights reserved.

Thank you

Contact information:

Thierry LoirSolution Executive, Procurement – SAP [email protected]+32 486 136 468

Date post:	15-Jan-2015
Category:	Business
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