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Content management software company Mediafly Inc. began using SAP's Ariba software to help manage finances and broker deals after one of the USA's three major television networks made them do it.
"Literally, they said 'You will be on the Ariba Network if you want this contract,'" said Mediafly CFO John Evarts, who spoke last week at the SAP SME Summit in New York City. "We said okay."
SAP in May announced plans to push further into the market for cloud computing software by acquiring Ariba Inc. for about $4.3 billion. Ariba is the provider of the Ariba Network, a cloud-based marketplace that brings together buyers and suppliers. Ariba also provides cloud-based financial management software and other business-to-business tools.
Founded in 2006, Mediafly originally sold consumer software for downloading and listening to podcasts, but switched in 2010 to business-to-business software after realizing that their focus on consumer apps wasn't working. The company now sells cloud-based content management software that allows companies to push out content to mobile devices in near real-time. Those applications include interactive sales presentation software as well as "review and approve" workflow software built around the specific needs of the entertainment industry.
"Business to business is just where we should be from a dollars-and-revenue perspective," Evarts said. "The advertising dollars that we had anticipated on the consumer side didn't materialize."
Not long after the shift to working with large enterprises, one of the nation's three main television networks came calling, asking if Mediafly could help in pushing out mobile content to its viewers. The network -- which Evarts declined to identify -- made joining Ariba a central part of its business requirements, in large part due to the automated billing functionality built into the network.
"They recognize the benefit of reducing the number of touches that a small company would do to a small company," Evarts said. Having less interaction, not to mention less paper, saves Mediafly time and money as well, he said.
Moving to the network to accommodate one of the world's largest corporations was a no-brainer, especially as it puts them in a place to do business with other large companies, according to Evarts. "It's a question of being where are our customers are," he said.
Mediafly is not alone in using Ariba for automated billing. Nalco, a Naperville, Ill.-based manufacturer of soft water-treatment and emissions-control equipment, also uses the Ariba cloud-based trading-partner network for electronic invoicing and automated billing. Nalco boasts roughly 50,000 customer locations in more than 150 countries. Some other users of the Ariba Network include BHP Billiton Ltd. and Deutsche Bank AG, according to published reports.
Mediafly also uses the Ariba Network's dynamic discounting functionality, which allows vendors to pay earlier at reduced terms. The closer the needle gets to the actual contracted pay date, the lower the discount.
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The company is currently growing at a 30% growth rate, Evarts said, which requires continually hiring new developers and salespeople to help manage and sustain that growth. By offering incentives for customers who pay early, Mediafly is better positioned to grow on the customers' dime without having to borrow as much money.
"One of the challenges is [managing] that growth," Evarts said. "By being innovative, and leveraging the Ariba Network, through concepts like dynamic discount management, we are able to do things like put off taking venture capital, and [we can] hire people earlier because we have visibility into deployment of cash flow."
Currently, about 30% of the Mediafly's revenue is coming through the Ariba Network, a number Evart hopes to increase.
Search functionality lags behind the times
Despite all the advantages of being on the Ariba Network, there's one thing that Evart said he's looking forward to seeing changed.
As it stands now, companies looking for potential partners on the network must search using designated codes. Evarts thinks the codes are now antiquated, especially those dealing with technology. The closest thing to a category for devices like tablets or even laptops is the designation for PDAs, Evarts said.
According to an Ariba spokesperson, the company is in the midst of moving away from the codes and will instead give network members the ability to search using natural language.
That's good news for Evarts. "The searchability is something that I'm looking forward to," he said. "For me, that could be a great opportunity."