Ariba portal takes next step in e-commerce
By Mark Vigoroso -- Purchasing, 6/17/1999 2:00:00 AM
The next advance in business-to-business electronic commerce goes by several names: online trading community, e-commerce portal, transactive content intermediary. All of these describe an online marketplace managed by a third party, where buyers and suppliers can establish relationships and conduct business. The portal space is getting more and more crowded as technology vendors define and react to the developing trend. Many analysts believe that properly deployed trading communities offer the most economical and rewarding e-commerce solutions for buying organizations of all sizes.
Ariba Technologies has authored one of the latest communities, called the Ariba.com Network (www.ariba.com). Ariba has provided its buy-side application, Operating Resource Management System (orms), to customers including Hewlett-Packard, Chevron, and General Motors. But one of the problems with these buy-side systems is the need to connect each buyer with each individual supplier.
This "redundant connectivity" results in a lot of costly infrastructure duplication. Acting largely upon buyers' input, Ariba introduced the Ariba.com Network to address this very problem.
"Without Ariba.com, every buyer needed to hook up with every supplier," says Dave Rome, vice-president of marketing at Ariba. "With the portal, a supplier registers their content once, and then any buyer can access it from this one location."
To participate in the pilot version of Ariba's community, buying organizations must have orms deployed within their company. This requirement departs from some other commerce portals that offer hosted procurement applications to small- to mid-market buyers on a subscription basis in order to provide them with the same spending control, back-office integration, and supplier management capabilities afforded by buyer-hosted enterprise applications. Future plans for Ariba.com include offering a hosted purchasing application, but for now, participation is limited to large-scale buyers.
"The larger buyers will attract a critical mass of major suppliers to the Network," says Rome. "Once that mass is reached, we can begin to offer value-added services to buyers of all sizes."
Technology at work
Cypress Semiconductor in San Jose, Calif., plans to launch Ariba's orms by August of this year, and 200 to 500 requisitioners will use the Ariba.com Network to purchase MRO supplies, capital equipment, and services like temporary help. Cypress will encourage their suppliers to work with them through the Network on both ad hoc and contract purchases; contract pricing will be available to them through a "punch-out" catalog capability. Within the first year of operation, Cypress plans to be doing business with about 75 suppliers via Ariba.com.
"The Ariba.com Network is the last piece in our procurement jigsaw puzzle," says John Ramacciotti, vice president of procurement at Cypress. "We didn't want to have to go out and link to each supplier catalog. We can go to the Network and get a complete, turn-key solution."
Richard Toole, an associate partner at Andersen Consulting who specializes in procurement and sourcing in the "electronic supply chain," recently led the design and deployment team for Ariba's orms at a multibillion-dollar forest product and packaging company. He suggests that Ariba is addressing one of the major challenges in today's e-commerce systems--discordant supplier catalogs that lack standardization and sophistication.
"For the most part, suppliers' own electronic catalogs are not as transactionally robust or functional as buyers need them to be," says Toole. "The Ariba.com Network represents a step toward a solution."
Ariba houses and manages supplier catalog content and provides a litany of transaction and order-routing services to participating buyers and suppliers. Buyers receive order confirmations, transaction histories, and audit trails. Where leading suppliers already have advanced e-commerce systems available at their own Web sites, like Dell Computer (www.dell.com), the Ariba.com Network enables seamless interaction with those sites through the use of the increasingly prevalent Commerce Extensible Markup Language (cXML). Regardless of where supplier content is housed, the purchasing organization can govern their requisitioners' spending through orms.
Controlling and tracking spending is important to Cypress Semiconductor, but they view shortening cycle times as more of a motivating factor. "We will leverage Ariba.com to reduce turnaround times and react more nimbly to our requisitioners' needs," says Cypress' Ramacciotti. "End users will be empowered to prioritize and submit orders to suppliers, and our purchasers can get out of transaction management and into supply chain management. For the purchasing profession, this is the most significant benefit of Ariba's system."
Rounding out the community experience at Ariba.com are a series of nice-to-have features, in addition to the must-have communication and transaction-support capabilities. For instance, participants have access to industry news and events, interactive forums, supplier evaluation ratings, and informational libraries from Dun & Bradstreet and Hoovers.
Ariba sees Ariba.com as the first step of an evolutionary process. Their first priority is to connect multiple buyers with multiple sellers and enable seamless communication and transactions. Subsequent enhancements to the community will include vertical industry buying consortiums, auctions for surplus materials, and pre-negotiated supplier contracts.
"In the longer term, back-office integration will be so deep on the buy and supply side, that buyers will be able to check order status at every stage," says Rome. "But for now, we just want to make sure that the right documents are flowing seamlessly and securely."
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