Ariba Debuts Sourcing Solutions

New Category Management, Analysis tools aim to let companies turn sourcing into enterprisewide process

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Sunnyvale, CA — March 24, 2003 — Solution provider Ariba this week rolled out a new category management application and the latest version of the spend analysis module for its sourcing solution, adding functionality intended to help companies turn strategic sourcing into an enterprise process.

Ariba sees customers for its sourcing solution moving beyond pilots or single-division deployments to implement strategic sourcing programs that span the enterprise, according to Emily Rakowski, sourcing product marketing manager for the solution provider. "We're finding that our customers are turning this into an enterprise process, rolling it out through all their divisions and operating companies," Rakowski said.

As a result, these companies are requiring tools that provide for broader collaboration across unit and functional divisions, as well as tools to disseminate best sourcing practices across their organizations, according to Rakowski.

Category Management, which Ariba debuted last November but made generally available today, enables enterprises to leverage best practice sourcing processes and category knowledge for increased consistency and savings results, the provider says.

Key functionality in this module includes the ability to create standard, category-specific sourcing processes, with the flexibility to add steps based on the unique needs of the customers business units or geographies. The solution also comes with best practice sourcing process templates, including tools for sourcing strategy development and total cost modeling.

In addition, the solution's collaborative project management tools include team and stakeholder management, document versioning, and review and approval workflow. "Our sourcing customers tell us that early stakeholder involvement and collaboration are key to sourcing success and the realization of savings," noted Michael Schmitt, executive vice president and chief marketing officer for the solution provider.

Other functionality includes the ability for customers to invite third parties, including suppliers and consultants, to participate in projects and programs while keeping project environment data secure; dedicated category knowledge workspaces for brainstorming on category sourcing strategies, and for sharing supply market information and supplier news; and daily activity management for sourcing teams, with real-time status available for all projects and tasks. Executive-level dashboards provide for program management with insight into resource deployment and process efficiency.

In addition to Category Management, Ariba also released version 2.1 of Analysis, another module in the provider's sourcing solution. This module is intended to help companies to collect and analyze complex procurement and sourcing data to support sourcing opportunity identification.

The new version adds 29 out-of-box reports for contract analysis and process analysis, bringing the total number of prepackaged reports to more than 80. These analyses are designed to help customers to plan sourcing activities based on contract performance and expirations, as well as to identify opportunities to improve their sourcing processes.

The solution includes a spend analysis tool that pulls in information from the Ariba buyer application and/or other enterprise systems, and then, using a solution from software company Softface, normalizes the data to give a more complete picture of spend within and across categories. The software can tell, for instance, that a particular computer model is a laptop, and that International Business Machines is the same as IBM for purposes of spend classification.

Customers using Ariba's sourcing solutions include Air Products and Chemicals, AstraZeneca, the District of Columbia, General Dynamics, Merrill Lynch and Saks.

To date, Ariba says that its solutions delivery team has helped customers with more than 2,000 sourcing projects in several hundred categories as diverse as temporary labor, printed circuit boards, plastic injection molding, corrugated packaging and print services. Ariba claims its sourcing solutions have delivered an average of 14 percent savings to its customers.

In an interview, Rakowski said while many companies are using e-sourcing tools to go after a few large categories, Ariba is seeing increasing numbers of enterprises looking to boost the amount of spend strategically e-sourced. "Our customers are looking for increased throughput," she said.

A few companies are even working to source virtually everything — down to $5,000 items — using their new e-sourcing solutions and processes as they try to drive greater savings to their bottom lines. Rakowski cited one Ariba customer, a major electronics firm, that had mandated driving at least 25 percent of its spend through the provider's sourcing tool but had managed to put at least 50 percent through the solution to date.