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SAP Ariba is one of the main hubs of the SAP Business Network, a collection of companies that SAP has acquired in the past few years in an effort to transform from an on-premises business applications company to a cloud services provider. The acquisitions of Ariba, SuccessFactors, Fieldglass and Concur were costly, about $15 billion, and there are questions as to whether SAP can integrate them all smoothly, but there seems to be little question that SAP Ariba is thriving. The Ariba Network connects more than 2 million companies who handle more than $1 trillion in commerce annually, according to the company, and they have introduced several innovations since becoming an SAP company in 2012.
Alex Atzberger became president of SAP Ariba in 2015, after 12 years as an executive at SAP. SearchSAP.com recently met with Atzberger at an executive meeting in Boston to mark the company's 20th year in business, where he discussed how the transition has gone for both companies and what lies ahead for the SAP Business Network.
SAP has had a fairly radical evolution of its business model in the past few years. How have the companies that make up the SAP Business Network changed or influenced that change?
Alex Atzberger: In 2010, we decided at SAP that the future was big data and mobile, and we made investments and external acquisitions to move the business into the cloud, big data and mobile. First, with the acquisition of Sybase, then with SuccessFactors, Ariba, Fieldglass and Concur. That's massively important in the SAP story because the acquisitions are not acquired because we think they should work in the business model of SAP, they're being acquired because SAP's business model needs to evolve to operate like the cloud companies that we acquired.
That's a very important point because other companies choose to make acquisitions and then put the acquisitions into the business and basically take away everything that made those businesses special. We said we need to embrace the difference and use it as a change agent for the rest of SAP. This is why we didn't just buy any company that we could have bought in procurement, HR and customer engagement. We always bought the top player and we always bought the market leader.
Why was Ariba an attractive target for SAP? Was it primarily the cloud model or the number of companies in the Ariba Network, or a bit of both?
Atzberger: Ariba was a special case because it was both the market leader and it had the Ariba Network. At the time of the Ariba acquisition, I talked to [SAP CEO] Bill McDermott about the future of the business and we said the future of the business is a company like Ariba in the ways that it operates. But we also need to recognize the company is much stronger because it's a part of SAP.
SAP's position in the tech market is very strong relative to a lot of other companies because we made the strategic choice to be software only. We always said that software is the one thing that makes us unique. And now, this year and next year, the tipping [point] is being reached between how much money we make in the cloud versus how much we make on-premises, and I think next year, globally, we will make more money in the cloud than on-premises.
You came into Ariba after 12 years as an executive at SAP. What was it like moving to Ariba?
Atzberger: When I took the job, I certainly saw that parts of Ariba were not taking advantage of what makes SAP great because people got distracted by the wrong things. Sometimes it's not about the internal processes; it's about the customer conversation. So when we go to an SAP customer, take Shell, for example, who are the fifth largest Fortune 100 company -- Shell would not necessarily go for any sort of company to do business with at that scale. You need to have a provider that you know is going to be around 10 years from now and is a long-term commitment. That's what SAP gives you immediately. So the global reach, the expertise, the customer relationships are huge, and we hadn't really tapped into that, so I built the bridges there.
At the same time, because these companies that we acquire have an entrepreneurial spirit, you can squash them by putting processes in that become shackles. The people feel like, now I need an approval for this and I can only use SAP for that, and that's not what it's about. We need to be best in class in terms of what we do for our customers in providing procurement solutions. Anything that hinders that, we need to remove and anything that advances, that we need to embrace.
How does SAP Ariba fit in with the other companies in the SAP Business Network and how are they all being integrated?
Atzberger: Steve Singh [SAP executive board member and former Concur CEO], who runs the SAP Business Network, has been very clear to each business, including us, that he wants us to be the best in class, he wants us to be integrated, he wants to embrace this open platform and he wants to improve the ease of doing business with us. If our customers have multiple solutions, there needs to be a benefit in terms of the time it takes to implement, in terms of how the applications talk to each other and in terms of how we contract and commercially work together as a group. So we are focused on those things, to ensure that the data integration is there, that a user is recognized between applications. But we are not trying to go in and say every application needs to look exactly the same. Because, if we started to work on some of those parts of integration immediately, some of the innovation that we would have in each area would start to slow down.
Because you are trying to force fit everything into the same look?
Atzberger: Yes, absolutely. And that takes effort and time, and that's not even well spent because a lot of the customers don't even see that as the issue. Now, of course, when a customer buys something from us and they buy multiple solutions, they want to know that a supplier in one system is a supplier in another system, they want to know that a user is being recognized and they want the pieces to work together. But do they feel that, if you do an expense entry or capture an invoice, that it needs to be done in the same user experience as a requisition or sourcing event? No, I think people are quite comfortable with that from the user experience they have been doing different activities as consumers, and this translates into the enterprise as well.
Where does innovation originate at Ariba and how does the integration of the SAP Business Network affect innovation?
Atzberger: Innovation in the network comes from multiple places. One, it comes directly from the customer, so when I meet with a customer and they tell me this works or doesn't work, I go back to my counterparts and say we have to be better than that and we have to address that challenge. The second element is that it's essential for customers to know that they are working with the world's largest enterprise software company, and we have a responsibility towards our customers to ensure that we deliver an SAP experience. This impacts the go to market, the support and our products, so it's SAP Ariba, it's not Ariba only or Fieldglass only, and we need to understand what it means for a customer if they interact with SAP.
We have some customers that have been SAP customers for decades and our job is to make their life easier in terms of driving business results. My conversations with CIOs are sometimes different than conversations with CPOs [chief procurement officers]. CPOs want the system to work and have the business outcomes. CIOs have many different stakeholders inside the company and they want to make sure that, if we introduce something new, that the things work together and that it's innovation without disruption for his IT stack, so it's important for us to understand their needs. We have a CTO circle within SAP who have very important conversations about where companies like Ariba need to embrace certain standards because it will make the world simpler and easier for our SAP customers, and that's a very important input. So innovation is both top-down and customer-driven.
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