The Ariba CEO discussed its Agile acquistion and the opportunities for solution providers in an e-mail interview with CRN E-Commerce Eitor Amy Rogers.
CRN_ What does the Agile buy bring to Ariba that it did not have before?
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The second component is Agile's domain expertise and first-mover advantage in the next-generation approach to managing direct materials and the supply chain. Another key aspect is Agile and Ariba's complementary customer base and strong focus on industry leaders, which includes electronics, apparel and industrial-equipment manufacturers.
The fourth element where Agile and Ariba truly complement each other is in the two companies' business models. Both Ariba and Agile have created, maintained and executed very complementary high-growth, high-margin business models.
CRN_ How would the acquisition of Agile's technology affect Ariba's role in its Alliance with i2 and IBM? Is there no overlap between the Agile technology and the i2 technology?
KRACH_ We see [supply chain management] vendors like i2 as more complementary than competitive. In fact, Agile and i2 are in different market spaces and have never competed. SCM vendors like i2 have core competencies in building and installing optimization engines that can have very positive effects as part of an overall interactive value chain solution. But they don't have the network-based infrastructure and complete interenterprise-oriented commerce platform that can actually enable collaboration across key functions, such as manufacturing, sourcing, and procurement. To date, we have worked with i2 quite successfully in the area of content strictly for large industry exchanges. Now what we are focused on is delivering a new generation of solutions that are fundamentally different in their design and technology from traditional, behind-the-firewall, offline ERP and SCM systems. The bottom line is that we will work with i2 where it makes sense from a business standpoint and when it is best for the customer.
CRN_ Are channel partners ever involved in the actual sale of the software?
KRACH_ Definitely. Ariba's business model has from day one been a leveraged and balanced partner-focused model. With the fast pace of our industry, frictionless exchange of information and collaboration is essential, especially within the sales force and through our many channels. Our reseller, hosting and systems integration partners are an important part of our success in the field and work closely with customers from initial inquiry to deployment and ongoing support. Ariba feels that open and regular communication with our partners is imperative in fostering successful partnerships. Being able to collaboratively service the customer not only strengthens our bond with our partners, but it adds the critical element of end-to-end implementation and support for the customer. That's why we spend so much time with our customers and partners and why we measure customer satisfaction on a quarterly basis. We want to know what they're thinking and we want them to know how we function.
CRN_ From which segment does the bulk of Ariba's revenue come today--software or services?
KRACH_ There are three ways we report revenue: licenses, network services and other services.
Currently, a larger portion of our revenue comes from software licensing, but as more companies go live with their Ariba solution, begin to build liquidity into their marketplaces and start adding other commerce services such as electronic payments, sourcing and logistics capabilities, we expect to see an increase in our network services revenue, both from the use of the Ariba network and through our value-added commerce services. Finally, the services revenue comes from what are "traditional" consulting services we offer our customers.
CRN_ How much of Ariba's business is done through ASPs today?
KRACH_ Ariba has about 15 ASP partners, and interest in this area remains strong. The ASP model for B2B is increasingly popular as small to midsize companies, who hear about the opportunities and benefits of B2B, decide they want a piece of the B2B action. However, they often don't have the necessary financial, infrastructure and staff resources to buy, deploy and run the solution in-house. This is where a hosted solution becomes a very attractive choice for these companies. CoreHarbor, which solely offers Ariba solutions, is an example of an ASP partner that has been successful in targeting the [small- and midsize-enterprise] market. Another successful ASP partner is USi.
ASPs with experience in a specific vertical market are also in high demand. An example is our partner, Epylon, which hosts Ariba Buyer to the government sector.
