Catching up With Ariba Services Procurement (Part 1)

Earlier in the summer, I had the chance to catch up with the team responsible for the Ariba services procurement module. Now, this is a solution area that I've been somewhat lukewarm on in the past on Spend Matters. Like the eProcurement modules of ERP vendors, Ariba had its core strengths, but also sought to branch out into other areas. Services procurement was a logical extension of this expansion, just as SRM was for SAP and iProcurement was for Oracle. For the longest time, Ariba's services procurement product stacked up reasonably well in the market when compared with the capabilities of the ERP providers (even PeopleSoft and Oracle). But it did not match the workflow, reporting and analytics capability of say a Fieldglass or the management, configurability and power of an IQNavigator (but in Ariba's defense, nor did it have the same complicated and potentially user-confusing UI of an IQN). However, might things be changing with the Ariba services procurement product?

If customers are looking for a complete single solution for all forms of spend, throughout the entire procurement lifecycle, then Ariba has perhaps the best message and capability in the market. However, most companies are willing to weave together disparate solutions -- which was the original case that companies made to invest in Ariba Buyer in the first place over early ERP alternatives -- in hopes of bringing more spend under their control and managing it as effectively and efficiently as possible. But the case can still be made that when it comes to procurement, you should manage all of your spend in a single application (this is also the case SAP is making in regards to SRM 7.0 services procurement).

If you buy the one-stop shop approach to services spend, Ariba Services Procurement tells a good story in its ability to manage a range of services spend categories from temporary/contingent labor through to SOW-based consulting services (not to mention other complicated services categories including print and marketing spend). In addition, Ariba's generic services spend driver, which allows companies to configure and manage customized services categories (e.g., highly unique hardware or building maintenance requirements), can expand the services pie even more.

So far, Ariba's customers are using their Services Procurement module across a range of initiatives. Approximately 50% of services spend under management is focused on contingent labor with the remaining 50% divided between project-based sourcing, print, marketing research and categories which would fall under the customized driver areas (i.e., the infamous "other"). What I found most interesting about the application during a recent demonstration was not the contingent labor capabilities -- which would make it hard for Ariba to defeat a best-of-breed services spend competitor head-on -- but on their approach to the 50% of services spend they see outside of this area.

During the demonstration, we walked through creating and using the project-based custom driver for a customized category (e.g, market research or consulting). Throughout the walk-through, I found the ability to create certain fields, assign and manage project numbers, track research types (in the case of market research), methods and descriptions very straightforward. In fact, one of the major differentiators of this approach -- much like other best of breed services procurement providers that go beyond contingent labor -- is that any non-IT application administrator has the power to create these types of customized services requisitions and lifecycle management workflows without custom development on the back-end. Rather, it's all configured within the application. Now, Fieldglass and other best of breed providers might make similar claims as well, but Ariba certainly has some advantages here over its ERP competitors when it comes to services procurement.

Stay tuned for Part 2 of this series on Ariba Services Procurement when we examine the application in more detail and how companies are using it in the context of their overall Ariba environments.

- Jason Busch