Ariba Unveils Enterprise Sourcing Solution

New application integrates with e-procurement platform, supplier network

Sunnyvale, CA  September 24, 2001  Ariba, the software company best known for its e-marketplace software, stepped up its presence in the online sourcing space today with the announcement of a new enterprise-class application to automate the sourcing process.

Ariba Enterprise Sourcing, an upgrade to the company's existing sourcing solution, will let professional buyers manage the sourcing process, from defining spending requirements to qualifying and selecting suppliers of direct materials, operating resources and services.

Quinn Sloan, product marketing manager for the sourcing application, said that the software addresses a need that Ariba saw at its customers to capture all professional buyer activity relating to supplier management and sourcing across an enterprise. "For us, the 'e' in e-sourcing means 'enterprise sourcing,'" Sloan said.

Accordingly, Ariba said the sourcing application allows a company to leverage knowledge and expertise available across the organization by creating a central repository for sourcing-related information and a hub for sourcing activity. In addition, companies have the opportunity to exercise a greater degree of control over sourcing across divisions of the company. For example, the Ariba application enables professional buyers to create best-practice sourcing process maps centrally and manage distributed sourcing processes in a delegated fashion.

Tim Minahan, vice president for supply chain research at technology consultancy Aberdeen Group, said this type of software could reduce costs associated with sourcing. "Our research finds that companies that have automated the sourcing process have been able to reduce sourcing cycles, improve procurement decisions and negotiate significant unit cost savings," Minahan said.

For its part, Ariba claims that companies that have been using its e-sourcing application can see purchase cost savings averaging 13 percent and at least a 30 percent reduction in sourcing cycle times.

The new application integrates with the solution provider's e-procurement software, Ariba Buyer, and the Commerce Services Network (CSN), the provider's network of suppliers. Such integration could be advantageous for a company already using the procurement solution, such as Honeywell Federal Manufacturing & Technologies.

Honeywell adopted Ariba's sourcing platform in November 2000 after a 20-day deployment. The company has since reported that it eliminated two to four weeks in the sourcing cycle by using the automated RFQ process, and that it realized more than $3 million in savings over the first nine months of usage.

Susie Ross, Honeywell's purchasing manager for e-business and purchasing system oversight, said, "Requisitioners can write requisitions in Ariba Buyer, using information and drawings from design software; generate the RFP into Ariba Enterprise Sourcing to handle its distribution and management of the bidding process; and, once the bidding and awarding process is done, send the purchase order directly to the supplier over Ariba CSN  all in one streamlined process."

Ariba's sourcing application includes features that allow buyers to define their purchasing requirements by filling out requests for information (RFI), proposal (RFP) or quote (RFQ); to manage supplier relationships and interactions with suppliers by capturing data about suppliers; and negotiate and interact with suppliers online, including through multistage sourcing events such as online auctions. In addition, the application allows buyers to establish sourcing contracts to ensure enterprise compliance, again through integration with Ariba Buyer.

Ariba says that Enterprise Sourcing will work with multiple internal enterprise resource planning (ERP) systems. The application can be deployed through Ariba's hosted offering or behind a firewall for greater customization. The system also handles multiple languages and currencies.

The solution provider has partnered with consulting companies such as Accenture, Andersen, Deloitte Consulting, KPMG Consulting and PricewaterhouseCoopers to offer spend analysis, commodity and supplier strategy, RFx preparation and pilot event support.

Ariba began piloting the sourcing software in late 2000 with customers such as Bristol-Myers Squibb and Honeywell. Enterprise Sourcing is available on a software license model either separately or bundled with Ariba Buyer. The cost depends on the configuration that a particular customer selects, Sloan said.

Ariba's renewed focus on sourcing marks something of a shift for the company, which made its name in the e-procurement market. For example, while online buying solutions have typically been designed for use by employees throughout an organization, the sourcing application is targeted at professional buyers within companies. And while the goal of e-procurement is to automate transactions, enforce compliance and curb maverick spending, sourcing solutions are intended to automate sourcing processes, allow for interaction with suppliers, and capture and control an organization's spend.

In the crowded e-sourcing space, Ariba faces competition both from specialized e-sourcing providers such as eBreviate, B2eMarkets, Ozro and Webango, as well as from its traditional rival, Commerce One, which offers an online auction facility. Nevertheless, Aberdeen's Minahan said that the breadth of the Ariba solution could make the new application "a serious contender in this market."