How Accurate Was SAP About Ariba Being for Direct Procurement?

Executive Summary

  • SAP made exaggerated claims around Ariba for moving Ariba into its historic weakness, which is direct procurement.
  • Important things happened after the Ariba acquisition in terms of its influence on most core SAP projects.

What SAP Said About Ariba Being for Direct Procurement

SAP acquired Ariba in 2012, and it was touted as a major coup for SAP, as we covered in the article Problems with Diginomica, Steve Lucas on HANA, Oracle, IBM, AWS, Azure.

“There is no enterprise software company that has a business network like Ariba. Oracle, IBM, and Microsoft do not have a network where a trillion dollars worth of trade happens on an annual basis. Or a billion dollars worth of trade, frankly. Who has a network like Ariba?”

Yes, and what is that network? Virtually entirely indirect procurement items.

What is the Truth About Ariba and Direct Procurement?

SAP has frequently promoted the synergies with Ariba. Ariba is one of SAP’s favorite applications to discuss because it is undeniably cloud.

However, Ariba always has been very light on direct procurement, which is the procurement that goes into finished goods at a company.

We stated this in the article How SAP is Acquiring Itself Into the Cloud.

“To those who are only familiar with the procurement software market, Ariba may at first glance appear to make some sense. Ariba is very prominent in procurement software, but they are prominent in indirect procurement. Indirect procurement is the purchase of items that are consumed by the purchasing company (office supplies, furniture, etc..). What SAP needed, if they were going to expand into procurement software, was a direct procurement acquisition. That is the procurement of items that are used by a company to either make an item or which are resold.

This type of acquisition could have been integrated into their ERP system and would have connected back to the Materials Management module. Companies don’t need to run MRP and DRP on office supplies, forklifts, and furniture.”

What Happened After the Ariba Acquisition

Years after the Ariba acquisition, I have yet to see Ariba make any impact on any of my clients. Ariba is still selling its software, but the acquisition did not allow SAP to leverage the purchase for it to make much of an impact. The reason for this is simple.”

Ariba has promised great direct procurement functionality, but they still have very few direct procurement customers.

Conclusion and Calculation

SAP receives a 0% accuracy rating on Ariba being a direct procurement offering.

Link to the Parent Article

This is one of many research articles on a specific topic, that support a larger research calculation. For the overview of the research calculation for all of the SAP topics that were part of the study, see the following primary research A Study into SAP’s Accuracy.

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