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SAP Ariba growth may come through SAP Business Network

In an interview at Ariba Live, analyst Joshua Greenbaum discussed SAP Ariba's biggest challenges and opportunities in integrating with SAP technology and the SAP Business Network.

As the founder and principal analyst of Enterprise Applications Consulting, Joshua Greenbaum has kept a close eye on the enterprise applications landscape for more than 30 years. In this Q&A, conducted at the SAP Ariba Live 2016 conference in Las Vegas, Greenbaum takes the measure of SAP Ariba now and where it needs to go with the SAP Business Network.

What's your overall impression of SAP Ariba based on what you have seen here at Ariba Live?

Joshua Greenbaum: I think that the main story is the name of the company now, SAP Ariba, and I think that's really a transition that was an important one. Of course, being acquired doesn't have to be a bad thing and, in this case, one of the most important things that needed to happen was to build that synergy between the rest of SAP and Ariba for both parties.

How has SAP fostered that synergy?

Greenbaum: First, bringing Alex Atzberger [SAP Ariba president and former SAP executive] on board is a key part of that, and I think it's the biggest single component of what's going on here. From that flows a tremendous amount of potential for integrating the supply chain, integrating the Business Network, HANA, and someday S/4HANA, too. But being able to construct a bigger picture and then appeal to a wider audience is really essential. The second point is the new user experience and what that means both for existing users but also for the next generation of users that SAP Ariba really has to find. All line-of-business functionality evolves from the experts and specialists into the general employee and end-user population, and you've got to do that with the right user interface and I think they did a good job with that.

In the past year, SAP Ariba shifted its focus from primarily indirect procurement to including direct procurement as well. Will this help them find that next generation of users?

Greenbaum: Clearly the strategy starts with moving from the indirect side to direct procurement, and that's a whole new set of actors, a whole new set of stakeholders. So much of what we're doing in IT today is empowering individual users: the 'army of one.' And, whether its actual procurements, approvals, or invoices, you want that to be accessible and done quickly and easily. You want the exceptions to be handled by whoever needs to handle them and to be able to do exception handling or approvals on an iPhone with that mobile touch experience as opposed to logging on, so that's essential. You start looking at concepts like Business Network where now we can ask things like, 'Can we do better cash management?' or 'Can we do a better job with financials based on the analysis and information going through the network?' So, it behooves SAP and Ariba to bring those user experiences into the 21st century because every competitor will anyway.

If the user experience is a big part of the Ariba strategy, what did you think about the announcement of guided buying as a new part of the SAP Ariba platform?

Joshua GreenbaumJoshua Greenbaum

Greenbaum: Guided buying is part of the usability story because they're really acknowledging that putting intelligence into the process drives use cases, rather than relying on the user to have that knowledge and that process in their head. It's not a dumbing down at all; it's actually a dumbing up to the extent that you want standardized processes with intelligence built in. These are critical apps to the extent that they really impact the financial health and the function of the company. The concepts behind guided buying and other business process enablement changes are really about having as much consistent process as possible so that you know what you're doing and you know why you're doing it and that it gets done right.

Another major announcement was that SAP Ariba is opening up the platform to allow customers and partners to more easily develop extensions or customizations. What did you think about that?

Greenbaum: As I said on the main stage, platform is the new black. There are a lot of platforms out there, so it's a tricky thing to say that we're another platform. SAP already has a few platforms, so there's confusion potential that they'll need to address. But, fundamentally, when you look at the issue of the 'army of one,' or 'the company of one,' that individual and those companies need to live and operate in very specific geographical, industry-specific, or process-specific areas which SAP can't address in the last mile, half-mile, quarter-mile. So, that's a partner-enablement opportunity that makes a lot of sense, particularly when you look at the Business Network opportunity.

And there's no single network, but there will be multiple networks. They'll be very vertical -- so you may have automotive in western Europe versus automotive in North America -- so when you start getting granular like that, you're going to need partners. The good news is that partners of any kind are looking for opportunities, and the opportunity is to find us the addressable market. How many customers can I reach? Who's out there? So, it's a complicated story for any company to say we're now a platform company when we used to be an app company, but I think there's a huge opportunity there.

Do you think that SAP Ariba can take advantage of integrating with other SAP platforms like HANA?

Greenbaum: HANA is absolutely a no-brainer. First, HANA Cloud Platform is the platform of SAP. It relies on a pretty good database, so you want to run on that. The S/4HANA story is a little more complicated, but the next task on the table is to really describe and articulate the synergies and the commonalities. Ariba's going after supply chain and S/4HANA does supply chain, too, and you can't sell two products to the same buyer if they're not well integrated and well understood. I think that those kind of potential synergies have to happen, but I think that one area that makes a lot of sense is S/4 Finance, what was called Simple Finance. It really is a new way to do essentially real-time finance and to say, 'Can we look at modelling and predictive analytics to see what our business decisions will be on the finance side?' That dovetails very nicely with cash management and financial management that we're talking about in the Business Network where you can really look at what your cash spend is and strategize that at the Ariba side; that fits very nicely into the capabilities of S/4. S/4HANA is definitely a work in progress in every way, and that's something that I'll be watching very closely.

Where do you think that SAP is going with the SAP Business Network?

Greenbaum: I think that for Ariba, at this point, the biggest problem is to not change the conversation per se, but to find new stakeholders and a new kind of stakeholder to have a more complex conversation with. When you talk about things like the Business Network, that's not the vice president of procurement's bailiwick; that may be a CEO or CFO conversation. If you go into supply chain, now you've got the VP of supply chain involved, or the VP of logistics, or both. And that up-levelling of message has to have an up-levelling of field strategy; literally, how do you find the right people to have the conversation with and how do you convince them that you've got the best integrated story? The integration of SAP and Ariba is a strength that can be leveraged, that also has to be done right. If you try to go to the VP of procurement with the Business Network message, it's not going to work. If you've got the CFO in the room, now you can have a good conversation. And that, theoretically, should be much easier for Ariba to get, but they've got to get it; they have to make those conversations happen.

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