How Accurate Was SAP About Ariba Being for Direct Procurement?

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Executive Summary

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

Video Introduction: What SAP Said About Ariba Being for Direct Procurement

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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.” Steve Lucas stated that quote – No enterprise software company has a business network like Ariba. Oracle, IBM, and Microsoft do not have a network where a trillion dollars worth of trade happens annually. Or a billion dollars worth of trade, frankly. Who has a network like Ariba – unquote. Yes, and what is that network? Virtually entirely indirect procurement items. SAP proposed Ariba for direct procurement to customers. You will learn how accurate SAP was in their claims around Ariba for direct procurement.

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Notice of Lack of Financial Bias: We have no financial ties to SAP or any other entity mentioned in this article.

This is published by a research entity, not some lowbrow entity that is part of the SAP ecosystem.
Second, no one paid for this article to be written, and it is not pretending to inform you while being rigged to sell you software or consulting services. Unlike nearly every other article you will find from Google on this topic, it has had no input from any company's marketing or sales department. As you are reading this article, consider how rare this is. The vast majority of information on the Internet on SAP is provided by SAP, which is filled with false claims and sleazy consulting companies and SAP consultants who will tell any lie for personal benefit. Furthermore, SAP pays off all IT analysts -- who have the same concern for accuracy as SAP. Not one of these entities will disclose their pro-SAP financial bias to their readers.

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 started 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 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 supports 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.