Ariba's roadmap points to instant, integrated and data-rich business cloud services

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy. Sponsor: Ariba, an SAP company.

The next BriefingsDirect thought-leader interview focuses on the Ariba product roadmap for 2014 -- and beyond.

Ariba’s product and services roadmap is rapidly evolving, including gaining more analytics capabilities. BriefingsDirect had an opportunity to learn first-hand how at the recent 2014 Ariba LIVE Conference in Las Vegas.

To learn more about the recent news at Ariba LIVE -- and also what to expect from both Ariba and SAP Cloud in the coming months -- we sat down with Chris Haydon, Senior Vice President of Solutions Management for Procurement, Finance and Network at Ariba, an SAP company. The discussion is moderated by me, Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: What’s changed in the business-network market? What’s shifted since we spoke last a year ago?

Haydon: There’s a lot more interest. People are just starting to really understand what business networks really mean.

Haydon

In some of the conversations coming through, large corporate enterprise buyers are really looking for a single hole through the firewall, if you like. They’ve done some great work in optimizing their internal business processes, but they really understand that the next undiscovered country is in collaborating with their suppliers.

But it’s not just their suppliers. It’s payment providers, logistics providers, and a whole heap of supply-chain stakeholders. We’re seeing that larger conversation over not just a single business process, but a holistic business-process view.

I think the other really interesting thing isn’t a trend. It's probably a confirmation of what we already knew, particularly in the southern hemisphere. Mobile is on the increase and is now bypassing of the laptop, specifically in some emerging markets.

They’re the two macro trends that we are seeing that are manifesting themselves in our new business acquisitions. 

Mingling with others

Gardner: So “mobile first” is really important, as is the notion of a boundaryless organization. You don’t just exist as an island. If you’re going to be really adept and productive and develop some of the great insights you can through data, you need to allow your borders to mingle with others.

Haydon: That’s right. And it’s a network effect as well. People don’t want to do all the heavy lifting themselves. They’re really starting to understand that there is the network here. I can adapt, not adopt, so to speak, and really accelerate the business by leveraging the existing community.

Gardner: Have there been any technology shifts that we’ve had in the past year that have enabled some new and interesting things at the business networks and applications level?

Haydon: We’re in the early stages of redoing parts of our technology to take advantage of where the growing trend is going to come. We spoke about mobile, but it’s not just mobile. It's more about user experience and how we focus specific use cases on where an improved screen, an improved device, or both makes sense in the user context. That’s a really big change for us as well.

We’ve spent the last 12 months, and we will spend a good part of the next 12 months, rebuilding the platform to really be able to take advantage of these larger trends around real-time analytics, big data, and all that, but translating that into actual actionable use cases.

Gardner: What are the highlights for you at Ariba LIVE 2014?

We have some amazing customers, and the adoption of our customers is just superb for us.

Haydon: First, there’s another record turnout. We have some amazing customers, and the adoption of our customers is just superb for us. We want to drive more value into both the buyers and the sellers.

There are some pretty interesting announcements that we’re doing. We announced AribaPay last year, and we are happy to announce this year that that’s well on track. We’re going to be doing more on AribaPay, but this is really transforming the B2B payment space and leveraging that. We want to bring the payment process within the visibility and the view of the network. We think that’s pretty huge.

Second, you’re going to hear about us doing more innovation than ever before. We have some significant investment from SAP, which will translate itself into globalization -- moving into Russia, moving into China -- and into new business processes, like supply chain and payment, as well as leveraging the great infrastructure and platform that SAP has in mobile. You’ll see three to five mobile-centric use cases delivered in Ariba within the next 12 months.

Gardner: What about the Ariba-SAP synergy? How has that changed Ariba. It’s been a while now since the merger and acquisition. What can you tell me about the relationship and the character of the company?

Embracing the cloud

Haydon: SAP has really embraced the cloud. And it has worked so well in terms of a lot of the cloud DNA that Ariba brings to the table. SAP has truly embraced that.

And for us within Ariba, there are three or four dimensions. One is certainly global, and SAP is everywhere. A global sales force and, more importantly, global know-how is very important.

Number two is industries. Historically, Ariba was not very industry focused. Now, with SAP, with their vast industry expertise, it really will enable us to drive great solutions into specific industries globally.

And last, but not least, it’s getting access, from a product-management perspective, to lots of new things to play with and great platform tools. We have HANA, and we have released some products on HANA starting this weekend.

We’ve seen some really great synergies in the first 12 months and we expect more next year.

We’re going to continue to do that. We’re going to put the network on HANA, accelerate that investment in mobile, other aspects on reporting, and deep integration with the business suite. We’ve seen some really great synergies in the first 12 months and we expect more next year.

Gardner: Let’s look at this whole spectrum of data and analysis. Data scientists and business intelligence (BI) professionals have been creating reports and developing the fruits of a data infrastructure for years, but what we are starting to see now is the use of analytics and visualizing the analytics.

We’re giving it to folks down on the line of business, not just at the very tip of the organization, but throughout the organization. How has this need and demand for greater data and greater analysis capabilities translated into what you’re doing at Ariba and SAP?

Haydon: This is actually part of why people understand the business network and why the business network is starting to take off. If you think about what’s so great about SAP/Ariba and our great capability, we have this great business network, more than 600 billion in spend, and more than a million suppliers.

I’ll go into technology for a second. It's the promise of what an in-memory database can give us. Imagine when we can put all of those transactions in real-time that are flowing today, imagine when we double it over the next three years or something like that.

Power of HANA

And we put that in real time because of the power of HANA, real-time analytics, whether it's lead time or a moving price average. We won’t just dish it up in quarterly reports that an executive sees. What if a supplier is responding to an order confirmation and they can see that the average lead time has changed? They can take an action and do something about it to fill their customer’s needs.

What if you’re a procurement officer and you’re going to do a sourcing event? You can see that five extra suppliers come on or there is some problem with your core supplier because they are out of stock. If there’s a natural disaster hitting, what if you can see that real-time?

That’s the promise that big data and analytics delivers in something like the business network, which gives us a holistic view that is unparalleled, particularly when we are able to marry that with the master data that exists in the applications or in the enterprise resource planning (ERP) systems.

Gardner: What strikes me, Chris, about this era is that for so long, companies relied on their own data and their own analysis. There was really a wall around the activity with BI.

But now, with things like third-party networks, like the Ariba Network, they can start to get data that might be anonymized. Privacy issues have been worked out and people are allowing data to be shared. That’s where these real insights are coming. It’s the volume, velocity, and variability of the type of information.

None of this happens without the appropriate privacy, anonymization, aggregation, and all of that.

So what comes in terms of a business application benefit? Where are you driving these visualizations and this data? What can we expect in the next 12-18 months in terms of analytics meeting business applications?

Haydon: The first one, which we have already announced, is Supplier InfoNet, which is our HANA-based alerting and supplier information system, which can also feed in. We’re  releasing that and we’ll be building that integration into our solution set. That’s the first thing.

We’re kind of feeling our way here, and you brought up an excellent point. None of this happens without the appropriate privacy, anonymization, aggregation, and all of that. That’s the given that you have got to work out first.

But once you have that, we want to look at point areas to road test what it looks like. Maybe we just show to a supplier and say, “When you’re responding to an event, your lead time is x percent slower than all your other competitors.” There’s some peer pressure, and we’re not sharing anything else, but it actually helps the salesperson understand where they are.

It’s the same thing on the buy side. If you confirm that the moving average price of this commodity in the United States moved by 5 percent, you might want to consider having a sourcing event. Those are the type of point things.

Most meaningful

The holistic dashboarding and automated alerts will come. We just want to work out those flows and what’s most meaningful. That’s where we go back to the point about the user experience. How do we do that? Do we need to expose that in a mobile app with an alert, or is that just an icon that pops up on your screen, or both. That’s how we want to intersect the two.

Gardner: Let’s move into mobile. You mentioned "mobile first." That’s really an interesting concept, but it seems to me that it's more than just a screen definition. You really need to rethink processes when you start to go to that mobile tier and recognize that people are 24x7, regardless of location, intersecting and  interacting with business processes. So what should we expect from mobile innovation?

Haydon: I wouldn’t even couch it as “mobile first,” but “mobile as required.” First and foremost, what we are focusing on for our mobile strategy is, notwithstanding putting in place, just the core platform to enable it. When we’re looking to our features that we build in our products, we want to focus, which, as you were alluding to, is how does the end user need to consume this information?

If it does make sense that a mobile device is able to present that, then we’ll do it. We are not doing it for the sake of having a mobile solution, just to have it out there. We don’t need to do that.

We want to take a focused approach. We want to embed the mobile development paradigm within our current development product teams.

Obviously, some things bubble to the top, approval apps or flipping a purchase order or a new event, and we will do those. But we want to be quite systematic in what we’re going to do.

Also, from a product development sense, we want to take a focused approach. We want to embed the mobile development paradigm within our current development product teams.

What does that mean? It means we’re not going to have a mobile team out on the left, running and building 500-600 apps that they think they should build, and then our core feature team doing it. We’re going to have our engineers, our product managers, our quality assurance (QA) people thinking about mobile in parallel with the screen and how that enhances the customers or the user experience to deliver the business outcome.

While we might be somewhat slow compared to others, some competitors are saying they have 20 mobile apps. We think our way is going to deliver better business outcomes by taking the user experience construct and making that, whether that’s mobile, analytics, or screen, all in the same context.

Gardner: I like the idea that it's process first, regardless of the screen, but this seems to give you an opportunity to move and scale into new regions in some markets. In China, for example, the smartphone is the primary device and screen.

It also allows you to scale down smaller businesses. You can run a business on a smartphone. Why not have cloud business services to accomplish that? What about that global reach? What do you expect for the next 12-18 months in terms of expansion vis-à-vis any number of services, but mobile being part of that?

New data centers

Haydon: A couple of things. Number one, since we first spoke, we announced our first European data center, and that was commissioned in December. We already have a number of customers live already. We’re in the process of dealing with that. 

We have also announced data centers in China and Russia for our applications. So in terms of just global deployment, we’re investing in data centers which will deal with a lot of the data privacy and encryption table stakes to even get started.

And then, just being on the back of SAP is one of the really great synergies that we get, in that they have in-country local product managers who are born and bred and live in the jurisdiction to be our proxy customers, the voice of the customer actually in-country as we look to embed in there. 

Gardner: Into our next subject. What about governance, risk, and compliance (GRC) topics and issues. It seems that we can’t really divorce concerns about privacy and security and risk amelioration from business activities, especially as we consider that boundaryless organization. We want to expand into new markets and allow enterprises to do more business and supplier activities across these boundaries.

All decisions -- procurement, supply chain or others -- are made with a risk-management focus.

So how do we think about embedding GRC both as a process and as a technology in the Ariba roadmap?

Haydon: Ariba had a pretty good legacy of being at the forefront on a lot of that. Maybe we didn’t give ourselves credit, but for the longest time, we have had security, privacy, availability, and confidentiality processes and certifications. Some competitors have one, some competitors have two or three, but we had five.

We are also payment card industry (PCI) compliant. That’s a pretty high threshold. I know other companies have PCI compliance, but I mention those points because that’s part of our DNA. You have to start thinking about that, you have to understand enterprise problems and build your operations, your infrastructure, and your technology around that. We’re in a pretty good state.

Obviously, these GRC compliance processes are growing. Risk management is like a new mantra. It's the forefront of anything else.

I mentioned our data centers. One aspect of dealing with in-country data privacy, obviously, is having a data center in a jurisdiction. As I said, we commissioned our European data center. One in Germany is primary, and there is a failover elsewhere. That should deal with a lot of EU data-privacy concerns. Then, Russia, China, and so on.

The second piece that we do have, being as part of SAP, is that SAP has a very comprehensive GRC process themselves to make sure that they don’t do business with customers that are on particular restrictions or watch lists internationally. It's not just the US or the EU, as I understand. SAP reviews 13 or 14 data sources, not just one or two.

Trading partners

So we’re bringing those processes into the Ariba Network to make sure that we don’t do that, but we also notify our trading partners as well, and that’s part of the value-added service. You may well be doing transactions or trying to do an event with someone not appropriate from a risk perspective.

The last piece, a little bit related to this from the roadmap, is that, in the course of this year, we’re looking to build out on the Ariba Network support for US public sector. Once you start into the public sector for business process transactions, you get a whole heap of compliance issues on encryption, accessibility, and a couple of other dimensions. Those requirements will be built into the network and also to our applications over the next 12 and 24 months.

Gardner: Now, back to products and services. Often, at these Ariba events, and I’ve been at quite a few, we hear about services that people are familiar with, but there are layers of new functionality and features. Are there any that pop out in your mind from 2014 that we should go over and s reflect on as maybe changing the way people think about doing business vis-à-vis cloud and vis-à-vis the networked economy?

We said we’re going to do a lot of innovation. We’re going to deliver on that innovation.

Haydon: Yeah, there are a couple. One is something released in Quarter 4, at least for our SAP clients. We have native connectivity between the SAP Business Suite and the Ariba Network. You don’t need middleware. It's a downloaded extension pack.

It's pretty game-changing, when you can download something and an order can go out of the Business Suite straight to the network natively. Let’s just remind people of that. That’s pretty nice.

Number two, we have a lot of new features and products coming out, as we said. We said we’re going to do a lot of innovation. We’re going to deliver on that innovation. I’d like to quickly talk about four.

AribaPay, which we touched on, is changing the role of B2B payments on the payment side.

At the top end of the funnel, we are also launching Spot Quote. This is pretty interesting. Forty percent of procurement activity is on contract or on catalog. In some industries, it's greater. This Spot Quote process enables us to take these tactical three bids in a buy from a buyer programmatically and put that out into the business network to be bid upon, and we can also identify new suppliers.

What's exciting about that is lot of process efficiency for buyers, but also for a seller. Think about this. It's almost like the budgets are already largely being committed, and they have a close date. It almost drops to the bottom of the pipeline. That’s pretty nice. It might not be the biggest deal, but I’ll take it.

Supply chain

We’re also releasing our first version of the supply chain, focusing primarily on retail use-case scenarios, working very hard with SAP to have end-to-end connectivity, and we are very excited about that.

Last, but not least, services on the network as well, extending a whole new type of collaborative services for estimate-based services, are going live.

So we have more innovation. It's supporting both buyers and suppliers, and going globally, in terms of Russia and China, and we’ll be adding Brazil and Mexico invoicing as well. So there are a lot of exciting things on the business network for customers, not only in the USA, but globally.

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy. Sponsor: Ariba, an SAP company.

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Case study: How ACP simplifies and speeds its billing and payments using the new AribaPay cloud service

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy. Sponsor: Ariba, an SAP company.

This next BriefingsDirect case study explores how early-adopter Arlington Computer Products (ACP) improves their financial processes and operations using the new AribaPay cloud-based B2B payment service.

Agile business services are entering into a new era, an integrated and on-demand approach to ordering, billing, and settlement processes between buyers and seller. A prime example is Ariba's partnership with Discover, the financial services organization, to create AribaPay.

At the recent 2014 Ariba LIVE Conference in Las Vegas, BriefingsDirect had an opportunity to learn first-hand how the new approach works and benefits a first major user, ACP. To understand how AribaPay fulfills the last critical step in an end-to-end P2P process, we sat down with Arly Guenther, Chief Executive Officer at Arlington Computer Products in Buffalo Grove, Illinois, and Drew Hofler, Manage Cash Solution Marketing Director at Ariba, an SAP company. The discussion is moderated by me, Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: Why are companies seeking to do things differently when it comes to paying and getting more digital and electronic in how they’re settling out their accounts?

Hofler: Dana, fundamentally, B2B payment is broken, in the sense that it’s very different from consumer payments. With consumer payments, you have the item that is being bought, and the information around the payment happens at the same time, at the point of payment, with the settlement of funds.

Hofler

With a B2B payment, however, the goods that are delivered or the service that is performed is done so 45, 60, or 90 days ahead of when the payment is settled. This disconnect in time between the information around the payment and the actual settlement of the payment causes companies to have a very difficult time reconciling payments that they receive. There’s a lack of remittance information around the payment, particularly when there are multiple invoices involved to settle that payment.

You have organizations that would like to pay with electronic payment because it’s more secure, cheaper, and faster. But the people being paid, suppliers, are struggling with that, because it often doesn't contain the information that they need to settle those funds.

So suppliers would like to get paid faster and electronically, but they need that information along with it. There has never been a payment in the B2B world that tied together net-term payment with all of the information that's necessary to manage and reconcile that payment. That’s where AribaPay comes in to try to solve that problem.

Gardner: Just for our audience, AribaPay was unveiled last year at Ariba LIVE and it’s a partnership with Discover, the financial services organization. Tell us about the general availability rollout. What’s going on here this week at LIVE, and why is this is a big bash, a big coming out for AribaPay?

First live transactions

Hofler: Last year, we announced our partnership with Discover and began our development process and design phase of building out the product. This year, we’re happy to announce that we've had our first live transactions between Discover and Arlington Computer Products.

Guenther

So, the first live payments have gone through the system, and the product is ready to bring out and it will be fully available to the general public in the second quarter of this year.

Gardner: Let’s go to Arly. Tell us a bit about Arlington Computer Products, about what you do, the size of your organization, and why AribaPay was interesting to you.

Guenther: Arlington Computer Products has been in business for 30 years. We’re an IT solution provider, servicing a broad spectrum of large enterprise customers. Last year, we did about $130 million in revenue, and we’re providing best-in-class IT solutions for our customers. So when we see a best-in-class solution like AribaPay, we really want to embrace it and use it ourselves.

We’re always looking at our business trying to get more efficient and drive cost out of our model. Customer satisfaction is our top priority, but at the same time, we need to be price competitive. So we’re always looking for innovative solutions, trying to get more efficient and more productive as an organization.

The space that we've been in historically has been very manual for us, very high touch. With AribaPay, we’ve been able to re-architect our accounting system to use a cloud solution, as opposed to a manual process.

We’re always looking at our business trying to get more efficient and drive cost out of our model.

As far as Discover, we've done business with Discover for more than a decade. They’re an outstanding organization, using best-in-class technology to drive their business. If you combine that with Ariba, which is a top-notch software firm, you’re really combining two great organizations. So we were really comfortable going forward with the pilot.

Gardner: As Drew pointed out, there are numerous benefits that come with  moving to an electronic-settlement process and using an integrated approach across the partnership or ecosystem like Discover and Ariba. For you, Arly, what were the top problems or top issues that you wanted to resolve by going into this new model?

Guenther: It has been really a very manual process for us. We would generate an invoice. We had to put it in an envelope. We had postage expense and envelope expense. We’d mail the invoice out, sit and wait for a payment, a check, to come into a lock box. We’d wait for the check to clear so the funds are available.

If we followed up after 45 to 50 days, we occasionally might find that the customer didn't even receive the invoice. So we’d have to resend an invoice. It was a high-touch, manual process. Now it’s an automated process. So there are some big productivity savings for us.

Ancillary benefits

Gardner: Arly, while expanding this across more of your accounts, do you see any ancillary benefits in terms of process refinement, analysis, or productivity  insights? Is there going to be perhaps an additional payback when you scale this up?

Guenther: Absolutely. We were in the pilot. As I mentioned, we’ve done business with Discover for over a decade. They’re a fabulous customer of ours. We’ve used Ariba with Discover for a number of years, just not AribaPay. Now, we really want to take it and use it across the board in our accounting system for our customer base.

Gardner: Drew, tell us a bit more about AribaPay for those who are intrigued and want to learn more. What does it actually do? What are some of the details, and how would you go about bringing this into your organization?

Hofler: As I said, the fundamental problem with B2B payment is that disconnect between the information and settlement of funds. That’s what AribaPay corrects and bridges that gap. On the Ariba Network, our core strength is everything from sourcing all the way through to the invoice being approved and ready to pay. That’s all of the information that goes along with the payment. The invoice, the line items, the purchase order (PO) behind it, even the contract behind is all there and backing up that payment.

AribaPay then takes it the final step and, in that settlement process, connects a unique payment identifier with that and connects with the Discover network to leverage their core strength, which is secure trusted settlement of funds and the infrastructure to do that.

With AribaPay, the supplier can see where the actual payment is every step along the process

Then, Discover settles the fund in electronic manner, but that settlement of funds is now tied together with the information that came behind that payment. So a supplier receiving a payment through AribaPay can get an automatic feed into their back-end system or they can come on to the Ariba Network and see every line item that in the invoice that came behind that payment.

Hofler: More importantly, it will highlight if there’s a discrepancy between what they invoiced and what they were paid. Say they invoiced $100 and they were paid $90 because the buyer disputed an item or they thought the price should be lower, AribaPay will highlight that with the I-card and tell you exactly where that discrepancy is, so that suppliers no longer have to search through and find where the issue is.

Finally, AribaPay has a very cool feature, we call it track-and-trace for payment. It’s very much like when you order something online and you get a packaged shipped to you. You get a tracking number and you can see where that package is geographically as it comes to your house.

With AribaPay, the supplier can see where the actual payment is every step along the process, from the time the payment is approved, to the time that it gives its execution and the file is sent, to when Discover debits the buyers bank account, to when they credit the supplier’s bank account. All the way along the line, they can see every step.

That’s what it does. It bridges that gap of information, which gives suppliers the ability now to embrace electronic payments, get paid faster, and have visibility into it, because they now have all that information that they need.

Dynamic Discounting

Gardner: We’re really creating these data rich transactions, where the data follows a transaction and it allows for a much greater transparency. How does that line up with other services? I'm thinking perhaps the Dynamic Discounting at Ariba. Is there a synergy of any sort between some of these other services and what you can accomplish with AribaPay?

Hofler: There is a synergy. AribaPay is really that last step in the true P2P process. It is the second "P" in P2P, and it closes that loop and it does so in a way that gives the suppliers a certainty of payment.

With Dynamic Discounting, it's a great next step. Dynamic Discounting simply gives the supplier the ability to choose a different date for payment and offer a discount in order to accelerate that payment.

In a normal discounting platform, that choice of the supplier will be sent to the buyers back-end payment system, which will tell them that the supplier wants to be paid early. That’s the last visibility that the supplier sees and they just trust that the process will work and the buyer will then actually pay them at that time and for the amount that they are expecting.

It adds that extra layer of visibility and certainty to the choice that they have to get paid. That’s very synergistic with Dynamic Discounting.

With AribaPay, the discount choice can be tied directly to the execution of the payment. They can see with certainty that, yes, the buyer has accepted that; yes, the buyer has now executed on that. They can see when it's coming. It adds that extra layer of visibility and certainty to the choice that they have to get paid. That’s very synergistic with Dynamic Discounting.

Gardner: Arly, as you’re hearing Drew describe these services and capabilities, do you think it might alter the way that you relate to your accounts, to your customers? Is there a value-add with having this visibility, tracking, and data with the transactions that might allow you to increase your services? Is this something you can extend back into your market?

Guenther: Absolutely. From a process stand point, it's a game changer for us in terms of driving productivity and improving cash flow. Just like anything else, as you drive down your selling, general, and administrative expenses (SG and A) and your own expenses and you get more efficient, you pass those savings on to the customer. But we’re really a technology company, and so when we get a best-in-class solution like this, we really want to maximize the benefits.

Gardner: I know it's quite early in the game. We've just begun doing transactions but can you see any metrics of success, any measurement of how this would work? We are anticipating, as you mentioned, cost savings, but have we put any numbers to that yet, Arly, or is it too soon?

Guenther: We’re anticipating a six-figure savings just between handling expenses, postal expense, and supply expense, but the real wild card is cash flow. When you improve your cash flow, the opportunity cost on that cash can be pretty high. So from that standpoint alone, we know it's going to be in the six figures, but as we free up cash to do other things, that’s going to make a big difference for us.

Gardner: Drew, for those interested in learning more, how would they begin? What's a good way of starting a process where they could begin to understand and even execute on something like AribaPay?

Lots of information

Hofler: A great place to go to learn more about AribaPay is simply AribaPay.com. There is a lot of information out there, some data sheets and a form that they can fill out to learn more information and hear from us.

We have some value engineering models that can help customers, both buyers and suppliers, understand how AribaPay can help their business. That would be great for a start. One other point I neglected to make about AribaPay is that we've talked a lot about the benefits of suppliers, which is great.

It's a wonderful benefit for suppliers, but we shouldn’t understate the benefit there is to buyers of not having to manage bank-account information any more. One of the benefits of AribaPay in leveraging Discover is Discover’s infrastructure and network of merchant acquirers and the process of bringing suppliers on. They’re capturing our bank information managing it, bumping it up against all the asset control checks, all of the know your customer (KYC), and things that have to happen to verify that bank information and then keeping that bank information up to date.

No longer do buying organizations, as they do today, have to hold on to supplier bank account information, if they are going to pay electronically. That is a very big benefit, particularly in light of what we’ve see in the news lately about certain companies having had their data briefs and payment information, bank information stolen. So this eliminates that risk by offloading the management of that bank information into a trusted third-party like Discover whose business is managing that information.

We have some value engineering models that can help customers, both buyers and suppliers, understand how AribaPay can help their business.

Gardner: Drew, looking to the future of maybe 12 months from now, the next Ariba LIVE or conference of note, what can we expect? Are there some added services or more analysis and analytical benefits that you can draw? Where do you expect this to go next?

Hofler: Right now, AribaPay is going to be launched in the second quarter of this year to general availability. It’s just the beginning. It’s first being launched to the U.S. alone. The very next thing for us is expanding that into other jurisdictions. So I would look for that, first and foremost in the next year.

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy. Sponsor: Ariba, an SAP company.

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Business success increasingly hinges on supply chain innovation and procurement advantages

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy. Sponsor: Ariba, an SAP company.

The next BriefingsDirect thought-leader panel discussion focuses on the future of business and how companies can benefit from the new insight and analysis that transparent business networks and processes allow.

The power of data-driven business networks and the analytics derived from them are increasing, but how do enterprises best leverage that intelligence as they seek new services, products and efficiency? How do automation and intelligence enter the picture for better matching buyers and sellers?

BriefingsDirect had an opportunity to learn first-hand at the recent 2014 Ariba LIVE Conference in Las Vegas. To learn more about how business -- led by procurement -- is changing and evolving, and how to best exploit this new wave of innovation, we sat down with Rachel Spasser, Senior Vice President and Chief Marketing Officer at Ariba, an SAP company, and Andrew Bartolini, Chief Research Officer at Ardent Partners in Boston. The discussion is moderated by me, Dana Gardner, Principal Analyst at Interarbor Solutions.

Here are some excerpts:

Gardner: How is procurement maturing, and how do you see it expanding in terms of its strategic implications for any business?

Bartolini: Over the past 15 years, we really have experienced a procurement revolution, although at times it feels a little bit more evolutionary in nature.

In 2006, the average procurement organization, from our research, managed about 30 percent of their total spend. A mere seven-and-a-half years later, that number has doubled. So the average procurement organization is now influencing a majority of their total enterprise spend. The best in class, the leaders in the field, are now managing between 85-95 percent of total spend.

Bartolini

So procurement has risen in stature. There is now a chief procurement officer (CPO) or a single point of contact within a procurement operation at about 85 percent of organizations.

Procurement has stepped out of the back office and into the front ranks, and continues to gain in stature. As it gains in influence, it continues to guide organizations in making smart decisions within the organization and identifying the right business partners outside the organization.

Gardner: So procurement is really expanding, that it's growing up in a sense, not just a static business transaction, but something that is dynamic, living, and growing. Are more and more people getting involved with some of these newer technologies?

Spasser: If you think about the history of procurement, it really was a back-office function that was primarily focused on cost savings in a very tactical way for most companies. As we’ve seen that function evolve over the past 10 years, it has become much more strategic in nature, and it has an impact on much more than just cost savings for an enterprise.

Spasser

There have been a lot of technological advances that have given the procurement professionals the ability to move from manual processes and manual tasks to automating those and therefore focusing on higher-order opportunities to deliver value to the company.

More getting involved

More people are getting involved. For the first couple of years, there were a lot of people sitting on the sidelines, watching what was happening and trying to understand how that could impact their businesses.

Today, people are embracing networks and embracing the opportunities that networks bring, such as e-invoicing. Today, something like 70 percent of companies are using e-invoicing in some capacity. That's a huge improvement and growth over even just a few years ago.

Gardner: We’ve seen the role and impact of social and community, of community vetting of processes, and people looking to their peers for trust and feedback. We know that’s impacted a lot of things. Is this playing a role in procurement as well? Is there a social factor here?

Spasser: There are plenty of opportunities in a couple of areas. First of all, from a risk-management perspective, having more information -- information that's both qualitative and quantitative -- is only going to help procurement organizations make better decisions.

When you look at the social and business networks, the community intelligence, and the data and the insights that live within that network, all of a sudden you’re providing infinitely more information and making the procurement executives smarter, enabling them to make better business decisions, and changing the nature of their game.

Instead of having to respond reactively to changes within the macro environment or within their supply chain, you now have the ability to arm them with information that can make them proactive in their decision making, and proactive in their approach to finding new suppliers, managing existing suppliers, and that really does change the game.

Fertile time

Gardner: It strikes me that the transparency and the ability to qualify and quantify have given us some really new and interesting services such as Dynamic Discounting, like the ability to create AribaPay, and also learn about innovation in the field. We have heard about MSC, where they’re pushing their ability to deliver inventory right into their customer's environment. So, it’s a very fertile time for business procurement processes.

Any thoughts about where the next level of analysis or insight will come?

Spasser: Absolutely. Just going back to your comments on Dynamic Discounting and AribaPay, when you look at procurement, both Andrew and I have talked about it becoming a more strategic function.

When procurement starts impacting the cash flow and the working-capital management of companies through opportunities like Dynamic Discounting or AribaPay, all of a sudden, it enters a completely different realm in terms of its importance and in terms of the amount of respect and inclusion that it gets sitting at the executive table within companies.

If you arm people with information, they have the ability to make better business decisions.

When you talk about what’s next, there are lots of different directions in which procurement can go with the information that they’re given. We talked about risk management, but as companies are coming up with corporate-responsibility mandates, whether that’s sustainability or green or fair labor practices, they can be negatively impacted if they don't truly understand every tier within their supply chain.

And we see this with companies like the Gap or Lululemon in the consumer packaged goods (CPG) and retail space, where these companies have really suffered severe brand damage as a result of having issues within tiers 2, 3, 4 and beyond in their supply chain. That’s one example, but it's a powerful example of how, if you arm people with information, they have the ability to make better business decisions.

Whether that’s a business decision related to offering a discount or whether that’s a business decision about choosing to do business with a supplier or not, based on what you know about them or their second and third tier suppliers, all of this is really important and it's changing the nature of procurement.

Gardner: You brought up governance, risk, and compliance (GRC). I had a very interesting discussion here at Ariba LIVE about InfoNet, using that in association with the data from Ariba Network, and reducing that risk by being able to predict using advanced algorithms and very complex and powerful analytics platforms to see into the future and predict when risks are unacceptable.

Andrew, you’re saying that procurement taps this intelligence, and things like InfoNet have predictive abilities. What is the market telling you, and how far are we into this? Have we just scratched the surface of analytics or are we into the third inning?

Early in the game

Bartolini: With the maturation of the procurement function, we’re still in the early part of the ballgame. If you look at the leading procurement organizations today, the characteristics of these best-in-class organizations are process, discipline, an ability to execute, and driving efficiencies and effectiveness.

What's now prized within the larger enterprise and within procurement itself is the ability to be agile and to drive innovation. This has effectively pulled procurement further into the spotlight, as it really does serve as a process hub within the organization and it really does serve as the prime relationship point for third-party suppliers.

The good news in all of this is that the technology that was introduced also around the time that we started thinking about the procurement revolution has finally started to catch up to the actual user needs, from a usability standpoint, from an integration standpoint, from a time-to-value standpoint.

We’re seeing organizations now move from the initial adoption, where they are just trying to get activity through their systems, to becoming more effective in their usage of these systems and technology.

The skills that reside within the average procurement organization are not where they need to be to be thought of as world class or operational excellence.

When you look at the challenges that a CPO faces, a lot of that is driven by the talent that resides within the organization. Sometimes that's doing more with less. It’s very hard for CPOs to get a new job requisition, even in very large companies, it's a challenge to get that investment in procurement.

Also, the skills that reside within the average procurement organization are not where they need to be to be thought of as world class or operational excellence.

Enter technology and automation. When you look at the reams of data that sourcing and procurement activity generate, the skills of the average procurement organization to go in and analyze and find the right trends, whether that’s pricing trends or identifying key risks, is still not where it needs to be. So, it’s early stages there.

But with things like InfoNet and business networks you’re starting to see the co-location of transactional information, communication that supports those transactions, and then an ability to analyze and make decisions based upon that, all within one central location. That's a very powerful asset for procurement.

Gardner: And not only in one location, but in a cloud environment, where information from an entire industry can be brought together with the proper anonymization, security, and privacy in place -- but then the insights can be global or scaled down to individual organizations.

Opening up

Bartolini: This is an area where enterprises are finally opening up. I worked in this industry 15 years ago, and everything was very proprietary -- our requirements on certain products or items or how much we were spending.

The Internet has really opened it up. Information is at everyone's fingertips. Organizations are starting to understand that there is value that can be created by sharing information in an industry, and particularly with trading partners.

From our research, we’re seeing that organizations can invest in a business network today and get a payback within a year, just based simply on transactional efficiencies.

Where this gets more interesting is when you start to introduce other social aspects. When you start to introduce third-party specialists, who can offer services that add value to all of the participants in a network, it becomes a very interesting place to be. That’s why there's such interest and excitement around business networks.

Leveraging specific skills will be more important, whether that's through contingent workforce or through hiring to very specific skills.

Gardner: It strikes me too that procurement is expanding its importance to companies. When we think about some of the labor issues that many are forecasting with the workforce of the future, it’s going to be difficult to get a highly skilled full-time employee. Or you might want to have them for a shorter period of time. So procurement becomes a facet of hiring. It becomes a labor-acquisition process as well, and then, of course, it goes to more services than just products or merchandise alone.

Rachel, the question is how strategic do companies view this? Andrew says that we need to get more competency and sophistication in procurement. Do companies appreciate that this is really more and more a part of their core assets strategy and a core competency?

Spasser: Definitely. Even this morning, I was speaking with a number of CPOs who talked about human resources as a key factor in whether they’re going to be able to get to the next business level.

I would agree wholeheartedly with Andrew that the skill set is going to be different than it has been in the past. Leveraging specific skills will be more important, whether that's through contingent workforce or through hiring to very specific skill sets.

One of the interesting things that we’re seeing is that, in a lot of companies, the procurement function becomes a rotation within the executive ranks, as they’re bringing people up and training them to be in higher levels of management. We see many of our customers taking people who really don't have a traditional procurement background and cycling them through the procurement function.

In fact, SAP is doing that itself. Marcell Vollmer, who has been a great advocate of Ariba, is not a procurement guy by trade, but has really made a huge impact on SAP procurement because he brings a different skill set. He brings that analytic background, and he brings that general business and relationship management savvy.

Complex services

When you look at the types of spend that companies are trying to attack today, you’re looking at complex services and you’re looking at a contingent workforce. Those take on a life of their own, because they are very, very different than buying a physical good.

We live in a service economy, and as that continues to evolve, it’s going to become more and more important to procurement and to companies as a whole.

Gardner: Andrew, thinking a little bit toward the future, we’ve talked about procurement now having a heightened role and a larger profile because of the analytics that are being brought to bear: The wider purview across services, and the impact with human resources, rather than just goods and materials and facilities.

As we get to more of a digital economy, a networked economy, like we’ve seen in consumer behavior, what do you see for companies when it comes to this notion of a shared supply chain -- that we’re all interdependent parts of a supply chain, and that we need to be thinking about it differently? Where is the shift in thinking that needs to come, and where does your crystal ball show you we’ll be in five years?

The consumer today really expects better, newer, and more innovative products in a rapid fashion and at a cheaper cost.

Bartolini: The consumer today really expects better, newer, and more innovative products in a rapid fashion and at cheaper cost. That's the world of procurement.

If you’re a procurement professional and your supply base looks much like it did 10 years ago, there are problems on the horizon. If your supply chain and your supply base looks like it does today come 10 years from now, there’s going to be questions as to the viability of your company.

The speed of business is most visible in areas like consumer electronics. You see the leaders in smartphones in one cycle are out of business five years later. This is happening in other supply markets. It’s not as visible, and maybe it's not as fast, but it is happening!

Organizations understand that the window of opportunity to generate a premium on their products and services has collapsed, and they’re increasingly relying on their supply chains to support capitalizing on those opportunities. That really creates a shift from net-sum negotiations to win-win negotiations. That creates a shift from managing contracts and service-level agreements (SLAs), to managing business outcomes. That really changes the view of a supplier from an order taker to one that’s a key collaborator.

Gardner: Rachel, thinking about organizations wanting to do this better, maybe they listen to this podcast or read this and they think, “I see procurement as more of a core competency, having a greater impact on our company. If we need to move at the speed of business going forward, we need to get better at this.” How do you start? Any ideas about resources, methodologies, and workshops? How do you get a new procurement competency process going in your organization?

Spasser: One of the greatest ways to learn is to learn from your peers. Conferences like Ariba LIVE really provide that opportunity, because you get the best of the best, and they’re sharing their true stories. And it's not just success. They’re sharing their pitfalls too, and they are sharing how they navigated through those to achieve the business outcomes that they sought.

Talk to peers

There are lots of books to read and experts to talk to, but I think that the best way to learn is to talk to peers who have been through the same process and who have candid feedback and candid advice to share.

Gardner: Perhaps identifying leaders and influencers in your field and following them on blogs or Twitter or other community-based and social-based interactions?

Spasser: Absolutely. There are plenty of communities, whether they’re on LinkedIn or whether they’re proprietary, like Ariba Exchange, and these discussions are happening everyday. I would encourage people to seek those out, participate in them, go to events, and really learn from those who are leading the way, because if they are not going to be on the train quickly, they are going to find themselves left way behind at the station.

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy. Sponsor: Ariba, an SAP company.

You may also be interested in:

• Workforce of the Future -- and Why Preparing Means Rethinking Human Resources Now
• Ariba announces business network analysis enhancements, first transactions conducted under AribaPay
• Spot buying automated by Ariba gives start-up KooZoo a means to shop more efficiently
• Combining big data and cloud capabilities for ecommerce matches buyers and sellers like never before
• Here's Why Healthcare Businesses Must Efficiently Manage Their Suppliers, Purchases, and Processes
• The Open Group conference emphasizes healthcare as key sector for ecosystem-wide interactions improvement
• Research: Spot buying automation delivers greater B2B procurement efficiency
• Blue Marble Media Shows How Mid-Market Selling Gains new Life Via Ariba Discovery
• Ariba LIVE roadmap debrief: Cloud data analytics

HP ART documentation and readiness tools bring better user experiences to Nordic IT solutions provider EVRY

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy.

Nordic IT solutions provider EVRY has taken automation and agility to new heights in its training and documentation of IT products and services, and found that even small steps can make a valuable return on user adoption patterns.

By using HP's Adoption Readiness Tool (ART) to help its employees work better with IT management solutions and processes, EVRY, based in Oslo, has gained new advantages in the adoption and understanding of both new and existing technology.

BriefingsDirect had an opportunity to learn first-hand how EVRY mastered production of documentation and readiness tools when we interviewed Sigve Sandvik, Solution Adviser at EVRY, at the recent HP Discover 2013 Conference in Barcelona. The discussion is moderated by me, Dana Gardner, Principal Analyst at Interarbor Solutions. [Learn more about HP ART.]

Here are some excerpts:

Gardner: Tell us first a little about EVRY, what your organization is, how big they are, and what you do.

Sandvik: EVRY is Norway’s biggest IT solution provider. We’re the result of a merger between two of the former biggest companies in Norway. We’re approximately 10,000 employees, based in 50 locations, mostly in the Nordic region and the Baltic, and we also have some colleagues in India. 

Sandvik

Gardner: So you are both a big user of IT, as well as helping your customers  improve their businesses through better IT practices?

Sandvik: That’s true. My team, called the ITSM Tools Department, delivers tools to our employees globally, and also directly to our customers. But most of my customers are also my colleagues.

Gardner: What are some of the problems that you have had has as you have tried to get the most out of HP Service Manager?

Global tool

Sandvik: HP Service Manager is used widely in EVRY. It’s a global tool, and all employees can access the system. Since it is a global tool, there are lots of people out there who need to know how it works.

For example, if they are entitled to just to call the internal help desk, they can do that. But some may not be allowed to call the help desk. They need to register a ticket themselves. They need to have a place to find information. That’s the main issue when it comes to HP Service Manager, and what we need in terms of documentation and user guides.

Gardner: Tell us about your journey. What did you do and how did you discover HP's Adoption Readiness Tool, or ART? How did it work for you?

Sandvik: Actually, it was a coincidence that we discovered ART. My former manager was attending a conference, I am not sure which one, but it was an HP Conference. He discovered that there is a product out there that could actually help us make our documentation and user guides better.

Before, when we signed up with an external vendor, they helped us with recording the process, for example, and on making a new interaction. They helped us with that, and they also made the voice-over and printouts or the text from the voice. So it was basically a video you can play back.

The problem with that, of course, is that when we got the video, it was already out of date because we had already moved on with the next release of our system. So the product wasn’t optimal anymore. Besides, we had to pay the vendor a certain amount of money, and then if we wanted to change it, they billed us extra for it.

Gardner: Explain how you were able to make the time-to-value compressed. How you were able to create these documents, this training, these assets, but in a way that they weren’t obsolete by the time you were able to use them?

Sandvik: With the external vendor we had used before, the product was already made. We weren’t able to change it, but with HP ART we were in a position where we could, within an hour, make a small simulation and present it in a portable format -- for example as a PDF or Word document. We could also  present it on-screen, with voice, and in multiple languages as well. But the most important thing is that we were able to maintain the user guides and the documentation as we go. So we could just add new parts and edit parts of the documentation we already had.

Gardner: And have you been able to expand the products and services that you have been developing these assets for? How widely are you using ART? 

Available resources

Sandvik: Today we are using ART not as much as I would like to. In a perfect situation, I think EVRY would really benefit if we made even more user guides with HP ART.

We have made a lot of user documentation, which we send to our customers, vendors and external subcontractors. The responses we get from these are really good. Also, the response we get internally in our organization -- when they see that we have these products and these user guides -- is that they want more. We would really benefit if we could only find time to make more documentation.

Gardner:  For others who may have not been using this real-time and adaptive training capability yet, now that you have been doing it for a while, do you have any tips or suggestions for them? Do you have any words of wisdom for others who are considering this?

Sandvik: There are three things needed to make good simulations. You should concentrate on making small bits. Do not make the recordings too large. You should also think about how you want to present your documentation. Concentrate on one bit at a time, and then put that all together. For example, in an online course, with HP ART, you’re able to assemble several simulations together.

We have made a lot of user documentation that we send to our customers and also to our vendors and external subcontractors. The responses we get from these are really good.

In our online course, where you have the embedded menu, you can run the whole course, or the users can click on a specific item of interest. They don’t have to run through the entire course. They can just click on the specific item they want to learn a little bit more. So I would start by making small recordings first.

I also recommend spending time on fixing the template. When you buy the product, you will have the HP fonts and logo. We’ve spent some time adapting the tool so it has the EVRY logo, colors, and fonts in the template. It looks nice and is familiar to our employees.

Gardner:  Have you been able to measure how the users of the product or products gain from the use of ART? Is there a soft or hard metric?

Sandvik: No, we haven’t. Perhaps we should measure how we’ve improved our learning or our own internal use of the user guides. That is perhaps something we will have a look at.

With HP ART, for example, you can also make assessments of where your users have viewed simulations, and then on the next page you will be tested. So we could easily track which employees have taken the given course. We haven’t yet asked our employees if they really use the documentation more.

Listen to the podcast. Find it on iTunes. Read a full transcript or download a copy. Sponsor: HP.

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