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Ariba Network grows; SAP PartnerEdge provides new path to cloud

SAP reports growth of its Ariba Network and users laud benefits; SAP PartnerEdge Cloud Choice profit option is a new program to help partners increase sales and profits.

The Ariba Network is growing rapidly, and this in turn is helping to fuel growth in some of the companies that...

participate in it.

SAP reports that nearly 1,300 new sellers per day joined the Ariba Network in the second quarter of 2016, and that more than 2 million companies are now connected and doing more than $2.5 billion in business every day.

The Ariba Network is a global online system that allows buyers and sellers in 190 countries to collaborate on a single platform. It includes functions like Ariba Discovery, which allows sellers to find pre-qualified sales prospects, potentially making sales cycles shorter and more efficient; and Ariba Spot Buy, that allows buyer to find and purchase non-sourced goods while maintaining procurement rules.

Being on the network provides credibility and connections to gain business from large companies that might otherwise be more difficult, said Jonathan Fiala, director of operations at Next Day Plus, a Chicago-based small business that sells imaging equipment and supplies.

Next Day Plus competes against giants like Staples and OfficeMax, but being on the Ariba Network allowed it direct access to others on the network, leading to a recent deal with a large waste management company. "It was hard for us as a smaller company to show our value, cost savings and efficiencies, that we can be quick and nimble and outdo the big brands," Fiala said. "We gained some traction with larger accounts by being on Ariba, but once we were invited to take place in [a request for proposals] auction process and we won, the flag flying started and we were legitimate on the network."

Next Day Plus is on the network as a seller and uses Ariba Discovery to find buyers that are looking for its products, Fiala said.

"Because we are enabled [on the network], they can see our profile, they can see the transactions that we're doing and how many dollars we're pushing," he explained. "The fact that they can see that right off the bat does the official meet and greet for us, and we can get down and dirty in business right away."

Atea ASA, an Oslo-based value-added reseller of IT products and services in the Nordic market, has seen a dramatic increase in business due to its participation in the Ariba Network, said Soren Bartels, Atea program director. The company has seen revenue grow from $700,000 in the second quarter of 2014 to $5.5 million in Q2 2015, which Bartels attributes to becoming active on the network.

"We've been on the Ariba Network for a few years, but it's actually been within the last two years that business has started to happen for real," Bartels said. "For us, the Ariba Network has been a customer-driven thing. It's in our business strategy to be on all the major platforms where our customers do their purchasing, and we see Ariba as one of the main platforms in the years to come."

Bartels said that being on the network as a seller has allowed Atea to improve the commercial relationship with its customers who were already on the network as well.

"In reality, we were on there but were not doing very much business," he said. "But then when some of our customers started to join, they saw us as a supplier and said let's activate that relationship."

The growth of the Ariba Network has been fueled by SAP's acquisition of Ariba in 2012, according to Jon Stevens, SAP Ariba global senior vice president of business networks.

"The SAP Ariba business has been growing roughly around 30% each year over the last three to four years, and it was a little south of that before it was acquired by SAP," Stevens said. "I think with the SAP acquisition, they were able to invest more in the innovation side, and we've been able to access one of the great sales channels out there."

Innovation and improving the procurement process for buyers and sellers are the main reasons why the Ariba network keeps growing, Stevens said.

"They join to sell, they join to market and to find new business," he said. "We've evolved beyond what people think of us as procurement to helping selling and marketing with Discovery and Spot Buy functions and now with our payment capabilities. For sellers in our network getting paid faster, getting paid more accurately, getting the remittance information is very important."

SAP PartnerEdge offers partners a new way to the cloud

SAP is expanding access to the cloud and wants to help its partners to lead the way.

The company recently introduced a new partner program called SAP PartnerEdge Cloud Choice, profit option, that's intended to enable partners to increase cloud sales and profits. The idea is to allow partners that have traditionally focused on implementing on-premises SAP systems, as well as new partners, to establish and run cloud business profitably, according to John Scola, SAP vice president of global cloud channels and transformation.

The SAP PartnerEdge program has different tracks for service partners, build partners, run partners and sell partners, Scola explained, and PartnerEdge Cloud Choice, profit option presents a new model for the sell partners who want to focus on the cloud.

"Within the cloud we've always had a reselling model for our partners, so if they want to make subscription licenses a part of their practice, they would then join us and do a resell motion with us," Scola said. However, he continued that partners wanted a choice for how they could handle licenses, so they created the Cloud Choice profit model in the PartnerEdge program.

Partner engagement is similar to a traditional on-premises reseller model, but Cloud Choice takes a few of the more complicated cloud aspects off of the partner's hands, Scola said.

"The partner manages the sales cycle, finds the leads, drives the presales aspect of it, such as demos and scoping, and then does the implementation and follow-up support, but SAP does the licensing directly with the customers," he said.

The new model allows partners to avoid the unpredictable revenue stream and complex licensing options that are often characteristic of cloud deployments, Scola explained. Traditional on-premises deals are built on upfront payments, but cloud implementations rely on annual subscription revenue that usually must be negotiated between the partner and client. With Cloud Choice, however, partners receive a flat percentage of the licensing deal negotiated by SAP.

"This means that unknown variable of what their margin's going to be on every single resale deal is taken out of the equation and they can just rely on a nice, steady percentage coming from SAP," Scola said. "We'll pay them based on the customer contract that's been signed, so they're back to a more predictable, steadier state of revenue."

SAP PartnerEdge Cloud Choice, profit option was made available to partners in all regions on Aug. 1, and enrollment is the same as with any usual sell partner. "You can apply online, and then you go through a full-on recruitment process with us where we put on an SAP recruiter to meet with the partner, work out a business plan with them, educate them, show them the value proposition and then go through our normal SAP PartnerEdge contracting process," Scola said.

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