Let's assume this agency is now compelled to use the Ariba network with three of its middle market clients (even if all the complexity of the "buy" happens offline or is measured via specialty analytical tools).
But it's not necessarily one who will be too upset, especially if they take advantage of early payment opportunities through the network.įinally, let's turn to our third example, a marketing agency that previously billed its customer by sending invoices manually via email or snail mail (or directly from its accounting package via a virtual printer). Yet if it wasn't compelled to transact over the Ariba network, it could still bill via the same cXML standard using Tradeshift, OB10 or an alternative and pay from nothing to a buck or so per transaction.
If this supplier was previously billing offline, it likely would have accrued significant expense in producing manual invoices. If you do the math, this supplier is billing roughly $1.2 million through the Ariba network each year, which would result in transactional supplier fees of $1,380. Let's assume each customer has fifteen facilities, each which spends roughly $10,000 per year with it, billed in various drips and drabs (some potentially large invoices, some small).
Next, let's consider the case of an MRO supplier serving eight customers (most of whom they've worked with for decades) through the Ariba network. We see a vendor like this as a willing prisoner at worst – and a member of the general supplier population wanting to scale a wall to get in on the free meals, heat, shower and exercise facilities inside the Ariba version of Club Med at best. A supplier like this, which does a good job of finding new customers through Ariba for a typical order size, say between $150-$250, will pay less than a buck per transaction for each PO it receives and/or invoice it sends through the Ariba network. But to gauge whether or not these are willing prisoners, wanting to stay within the protected walls of a network, perhaps it makes sense to walk through a few hypothetical examples.įirst, let's consider the case of an "occasional" supplier of something made-to-order like business cards, stamps, or the like. Last Friday, we shared a competitor's perspective that "Ariba doesn't have customers, it has prisoners" – at least in the case of its suppliers.
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