Q: A lot of solution providers call themselves “end to end” providers, though few of them actually are. Do you feel confident that this is something Ariba can offer?
Absolutely. We’re already offering it today. Every day, billions of consumers around the world use sites like Facebook, Amazon, Uber, etc. to manage their personal lives because they make things so easy. When you shop on Amazon, you don’t worry about connecting to each individual merchant. When it comes time to pay, you don’t worry about integrating into each individual bank or credit card company. It’s all done for you within the network.
The same is true with the Ariba Network. Everything companies need to manage commerce – from sourcing and orders through invoice and payment – is there for them. They don’t need to worry about connecting to individual trading partners using multiple systems – with more than 1.8 million companies in 190 countries, chances are they’re already connected and in one place. And if they aren’t, they can be within minutes. Or they can tap into the community to find new partners.
They can shop for the goods and services needed to run their business and with a few clicks, place and manage orders. When it comes to payments, they can kill the paper cheques and transfer the funds electronically. Or they can review their receivables and decide whether they want to offer a discount in return for early payment.
They can view and manage their spend across all major categories – from indirect, direct and logistics to contingent labor and services, travel and capital expenditures – in a single location and find opportunities for savings. They can manage their entire workforce –temporary and full-time employees alike – from a single, integrated platform and empower them to do their jobs anywhere, anytime from any device.
So it truly is a comprehensive source-to-pay solution
Q: One of the main reasons organisations want this, is to increase visibility – what do you think the 3 main advantages of increased visibility are?
Think about it - we live in an “always on” culture in which everyone is digitally empowered. There are officially more mobile devices than people in the world. Far more than a billion of us participate in social networks. Over 15 billion web-enabled devices connect us to the people and information we need to share, shop and consume. Data is exploding - doubling about every 18 months.
To get and stay ahead of the competition in an environment like this, companies must not only be able to sense the present, but see the future and proactively shape it to their advantage. So visibility in real time – is critical. And companies that have it can create advantages in every function within the enterprise and across the value chain, really.
Procurement, for instance can be alerted to potential future risks in the sub-tier supply chain by triangulating a myriad of real-time supplier performance inputs (e.g., change in payment status, loss of a key customer, change in leadership, commodity price or supply fluctuations) crossed-referenced historical results when such patterns exist, for instance. These alerts can be supplemented with recommended responses or alternative suppliers based on community-generated ratings and buying patterns of other like-buyers on the business network.
Real-time insights into invoice approval status married with historical payment patterns can empower companies to dynamically manage payables and access early payment discounts. This same intelligence can empower banks to remove risks from receivables financing, allowing them to offer more competitive rates and new services to business network members.
Marketing can gather insights from social activity and business network transactions to identify prospects, and leverage geo-location services to develop optimal offers and engage and influence prospective customers at the point of purchase. Think coupons delivered to mobile devices of window shoppers as they look at the products on display.
And these are just a few examples.
Q: Of course another reason is to tie up the different elements of P2P, often enabling shared KPIs. Do you see collaboration as important? Why?
At the end of the day, companies in the 21st century simply can’t achieve their cost, revenue and cash flow goals on their own. They own less infrastructure, inventory and manufacturing equipment than ever. They either have outsourced everything from customer service to supply chain, or leveraged captive shared services with very high automation. And a growing portion of their workforce isn’t even on their full-time payroll. So they have to collaborate.
And that’s why so many are joining business networks like Ariba – because it gives them a single platform from which they can organise their resources and optimise collaboration not only within the enterprise, but across the supply chain to achieve new levels of innovation, efficiency, and agility.
Collaborating internally is equally important. And I think that we're beginning to see that many of the traditional lines drawn within the enterprise are becoming blurred or being erased. You can look at procurement as an example. Fueled by networks, the function has within many organisations taken the lead in integrating business processes and collaborating across functions in entirely new ways that drive value. CPOs, for instance, are engaging in helping to manage the financial supply chain, turning payables into a profit center because they have real-time visibility into whether an invoice is okay to pay and whether it has it been matched against purchase orders and contracts. Or extending days payable outstanding to improve the overall balance sheet while at the same time offering early payment discounts to suppliers because to mitigate both financial and supply risk. Such strategic collaboration is not only leading to greater efficiency and productivity, but better business decisions, and ultimately, bottom line results.
Q: Talking of collaboration, it’s been a while now since SAP’s acquisition of Ariba – are there still issues to be ironed out/opportunities to be realised?
Last year we moved Ariba Spend Visibility to SAP HANA, improving data collection, classification, and analytics speeds by 80X. It unlocked entirely new value for our customers, who are now running new scenarios for spend leverage and supply base rationalisation that they never thought possible. But there’s an even bigger opportunity to drive new insights by moving the network itself – and its 16+ years of transactional and relationship data – to HANA. HANA is the ultimate simplifier. Imagine having knowledge on spend category buying trends at your fingertips. Or performance ratings and capabilities of individual suppliers or workers and predictive risk analytics capabilities - all available to you because you’re a member of the network. It is our secret ingredient to make simple a reality, and we’re making it a priority.
We are also leveraging the deep expertise and process experience that SAP has in 26 industries. To expand our category coverage and make Ariba’s cloud applications and network offerings more relevant for all customers. We have, for instance, added direct materials and logistics documents and collaboration capabilities to the network around planning, scheduling, etc.
And we are tapping into the localised experience and feet on the ground that SAP has in 126 countries to localize our products and serve customers in more markets. We not only provide language and currency support, but address VAT and regulatory requirements by supporting e-invoicing regulations in countries like Mexico and Brazil.
We have also using SAP’s global datacentres to host Ariba solutions in new countries such as China and Brazil, to improve performance and meet data location preferences. And we’ve really only scratched the surface of what we can do together.
Q: This and a number of other acquisitions and new solution launches has made Ariba a true world player. I see you’ve recently made headway in the Middle East. Are there any areas you’re still looking to gain a foothold?
Globalisation is a key priority for us. Right now, we’re in 190 countries with local time zone, currency support and business rules . We transact in 72 currencies and support 20 languages. We are government regulation and tax policy compliant in 36 countries. We have 14 distributed global data centres in the US, Europe and Brazil, and new centres are planned for China and Russia.
And we continue to broaden our footprint. We recently signed cooperation agreements with Traxpay and BTMU to roll out our AribaPay solution in the Nordics, South Africa and Japan by end of year. And more global expansion planned for 2016.
Q: Does a company lose anything when it becomes global – or is it all win? What’s the main advantage of a global offering?
Business today is more connected and global than ever. Companies are no longer just doing business with partners not just across the street, but around the globe. But there is a lot happening in the world today that puts international trade flows at risk. For any multinational company that is bidding out work in a foreign country, transparency is always an issue, for instance. Companies need a trusted platform that can support free trade flows – a platform through which they can monitor and manage all of their resources, processes and spend in a single location and a completely transparent manner. And that’s what business networks like Ariba provide.
Q: And what are you doing to ensure data security? (Security concerns still being something which prevents some sectors from moving to the cloud)
One of the biggest myths that still exists about the cloud is that it isn’t secure. And as you point out, this prevents some companies from making the shift – and ultimately from reaping the benefits that the cloud model provides in terms of efficiencies, cost savings and innovation.
The reality is, leading cloud applications are developed with the same security mindset as on-premise software and are maintained with frequent updates to ensure that the latest security standards are always in place. At Ariba, for instance, we ascribe to international security standards, such as SAS-70 Type II, ISO 27001, SSAE, and PCI. We also employ measures to prevent attacks from the internet and attempted theft of customer data, including physical security.
Many companies have found that the cloud can provide an even more secure and up-to-date application and transaction environment than they could maintain on their own with limited budget and resources. Our cloud solutions, for example, are in use by some of the most security-conscious organizations in the world— including government, military, research and development, and financial institutions.
Q: You were previously SAP's Chief Procurement Officer, and some of your previous background sits around managing change in an organisation, how important do you think that is?
Companies today operate on more flexible models that require them to rapidly assemble resources on a project basis to address the biggest challenges of the moment and disassemble them just as quickly to make their business more agile and profitable. So change is constant. And managing it is critical. Today’s new business models demand higher levels of agility and knowledge frameworks. And companies need to figure out how to bundle and leverage the people they have in the organisation in the best way. If you create an environment where imaginative ideas are welcome and tested, you may discover untapped opportunities.
Q: Do all companies recognise that? What happens when it’s last on the list?
I think most companies recognise that change is inevitable. But change is also hard. And it can be disruptive – especially when you are introducing entirely new ways of doing things. But companies have to embrace it and adopt new business models and ways of operating or they run the risk of being disrupted themselves. You don’t need to look very far to see examples of this – Airbnb and Uber have completely redefined the way we book hotels and cabs and are upending the travel industry in the process. Apple and Netflix have done the same for music and videos and set the entertainment giants on their heels. And this is only going to accelerate.
Q: So what do you see as the trends, or future for Ariba/SAP?
I think you’re going to see a few interesting trends unfold in the year ahead:
Technology will change the game
Technology has driven a new wave of productivity by digitising key financial and business processes and enabling collaboration across the organisation and this trend will continue. Paper based purchase orders and invoices will become a thing of the past, replaced by end-to-end automated transactions. But more important, best-in-class organisations will fuel the next wave, leveraging business networks to extend these processes and systems beyond the four walls of the enterprise and create a virtual ‘extraprise’ of partners into a shared community executing improved, fully automated, and coordinated processes in a more informed way than in the past.
Innovation will accelerate
Driving supplier innovations is critical in today’s connected and global economy. Business networks will drive them by enabling new processes, insights and levels of collaboration among buyers and suppliers that lead to more cost-effective manufacturing, product enhancements, and even new services.
Business will run simpler
Driven by the demands of an increasingly connected and millennial workforce, companies will tap into business networks to create a simple, consumer-like experience where with just a few clicks, employees can connect to the people, processes and resources they need to do their jobs with just a few clicks.