Thierry Loir - The Ariba Network : a two sided business model
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The Ariba NetworkA two-sided business model
Thierry Loir, Solution Executive, Procurement, SAP BeLux
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 2Public
Source: McKinsey & Company, “The rise of the networked enterprise, Web 2.0 finds it’s payday.” Survey of 4,394 executives. December 2010
“ Networked enterprises are 50% more likely to have increased sales, higher profit margins, gain market share, and be a market leader. ”
41%improved
collaborationacrosssilos
55%better
informationsharing
24%increasedrevenue
77%increasedaccess to
knowledge
63%increasedmarketing
effectiveness 43%greatermarketshare
8%higher
margins
“Increasingly companies are embracing collaboration as part of their strategy to grow.”
The Rise of the Networked Economy
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 3Public
So it all starts with the Network…
1.4+ millionTrading Partners
72+ millionAnnual Invoices
$USD 170B In Sourcing volume
190+Countries
$USD 500B+In Transaction Volume
15 millionLeads Sent to Sellers
Buyer Participants
Global Enterprises
Mid-Market Companies
Functional Buyers
Seller Participants
Complex(e.g. temp labor, SOW, T&E)
Simple(e.g. catalog, Pcard, etc.)
Automated(Direct, MRO)
2x +
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Saphire Orlando, June 2014
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… on which apps operate…
Spend Viz
Srcg
Contract
PerfMgt
Proc
…
Profile
Leads
PO’s
IN’s
ScoreCards
Dyn. Dsc’g
…
Network
Intelligence
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 6Public
… integrated with backend systems
AnyeDoc
HTML
EDI
EmailPaperFAX
CSVcXML
© 2014 SAP AG or an SAP affiliate company. All rights reserved.
5 paraboles
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“What Hath God Wrought?”
Created by the Telegraph: Newspaper Wire Services Wire Transfers Futures Trading Greenwich Mean Time Sears Roebuck and the Catalogue Railways
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Reaching Critical Mass (= when the value of joining is higher than the cost)
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Reaching Critical Mass
Network Started Critical Mass Time Required Built by
Railways 1820’s 1890’s 70 years Tycoons, Barons
Electricity 1860’s 1930’s 70 years Local Govts, co-ops
Telephones 1870’s 1940’s 70 years GPO
Oil Pipelines 1880’s 1920’s 40 years Standard Oil
Credit cards 1950’s 1980’s 30 years Visa
UPC Barcode 1952 1975 23 years CPGs & Retailers
Internet 1982 2000 18 years US Government
Business Network 1999 2014 15 years Ariba
Source: Infrastructure History Series (Amy Friedlander) http://www.cnri.reston.va.us/series.html
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Guaranteed Delivery?
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Anti-Virus Software for Finance
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 13Public
RESEARCH BUYING & SELLING COMMUNITY & CONTENT
COMMUNICATION& COLLABORATION
Personal Networks Make Our Lives Run Better…
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 14Public
Procurement without a
Network is
“Batteries not included”
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 15Public
VIDEO GAME MANUFACTURERS
SPICE MARKET
What are “Two-Sided Businesses?”
Customer Group 1 Customer Group 2
ReadersAdvertisers
Video Game Developers
Video Game Players
Spice Growers
People Who Cook
Group 1
Group 2
Attracts two parties who need each other
Promotes ongoing interactions between parties
Superior benefits are realized by both parties
Marketplaces Platforms Exchanges Malls Clubs
NEWSPAPERS
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 16Public
Fun Facts About Ariba Network
Ariba Network Buyers includes all types of companies
1 2 43Ariba Network supports a broad mix of spend
Ariba Network is global
Ariba Network supports a broad range of commerce
11,200
1,270
750
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 17Public
Ariba’s Two-Sided Model Has ACCELERATED Growth of the Network
2005 2008 20112006 2007 2009 2010 2012 201320041999 2001 2002 20032000
Registered Members
$$$ Transaction (USD in millions)
Supplier Membership Program (SMP) introduced
Seller fee: fixed fee per chargeable relationship
Buyer Membership Program introduced
Transaction based-subscription fees for buyers
Introduced seller SMP package subscriptions
Spend-based model for SMP sellersintroduced Ariba Discovery
Pricing introduced for lead responses
One-Sided Model
$0.02B
$43B$21B
$2B$0.6B
17777,246
15,918 44,0812,665
Ariba Network launches
Ariba Network free to sellers
Buyers need to pay TSS fees for Network access
Two-Sided Model
$59B
121,017
$163B
$135B
$112B$108B
$99B$101B
$74B
$450B
$500B+
759,159
153,924 179,872 200,305289,482
351,394427,868
1,090,052
1,400,000
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 18Public
Invest in Customer Success: Customer Programs & Services
BEST IN CLASS CUSTOMER SUPPORT CUSTOMER
SATISFACTION(OCT ’11 – NOV ’12): 8.94 / 10
Customer Satisfaction Survey Scores
Perfect 10:
58%Other
calls answered in 120 sec. or lessSERVICE LEVEL: 8.5/10
First Contact ResolutionMonthly Avg. since Oct ‘11
First Contact Resolution:
86%Other
ROBUST PLATFORM
99.5%+ performance reliability
20 languages
SAS 70 and Webtrust certification
e-invoice VAT/tax compliance in
39 countries
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 19Public
Invest in Customer Success: Customer Programs & Services
CUSTOMER ENGAGEMENT
Seller OnboardingCustomer Education
Online CollaborationIn-Person Events
CUSTOMER PROGRAMS
Supplier Enablement Programs
Seller Programs
Benchmarking Programs
New
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Demonstrate Benefits to Both Buyers and Sellers
Bid
Sell
SellersBuyersTypical Value of Benefits Within Each Collaborative Business Process*
5-7%
4-15%
10-30%
4-7%
15%
0.25%
5%-10%
5-35%
7%-30%
15-35%+
15-45%
.20%
Process SavingsSavings on Basis of SpendIncreased Revenues
* Primary benefits listed. Additional benefits in many of the processes
© 2014 SAP AG or an SAP affiliate company. All rights reserved. 21Public21
Value Drives Seller Compliance to Your Automation Initiatives
Ariba sellers
Non-Ariba sellers
KEY FINDINGS*
• Sellers value top-line benefits over costs
0% 20% 40% 60%
Increased customer satisfactionIncreased visibility via collaborationIncreased revenues
Decreased costs
Improved product / service qualityAccelerated cash flows
Competitive response
Top Reasons Sellers Adopt*
• 55% recognize the value of process visibility
*SOURCE: Ariba survey of 582 sellers
Participants
50% 50%
22© 2014 SAP AG or an SAP affiliate company. All rights reserved. 22© 2013 Ariba, Inc . All rights reserved.
RoadmapStrategy InnovationsVision
Demand Sensing & Shaping
Demand Signal ManagementCustomer Activity Repository
Project Ganges
Collaborative Supply Chain
Ariba Business Network
ERPConstraint-Based
Manufacturing Planning
Supply Chain Execution PlatformTransportation Management
Warehouse ManagementEvent Management
Supply Chain Planning PlatformSales & Operations Planning, Inventory & Service Level Optimization
Predictive Demand Management, Supply PlanningResponse Management
Control Tower & Integrity
The Product Strategy is based on Data Model Harmonization and User Profiles
SAP Supply Chain Product Strategy
Demand Driven Supply Networks
Logistics & Order Fulfillment
Integrated Business Planning
Supply Chain Monitoring
22
Monitoring
Product Strategy
Planning
Networks
Logistics
New
New
© 2014 SAP AG or an SAP affiliate company. All rights reserved.
Thank you
Contact information:
Thierry LoirSolution Executive, Procurement – SAP [email protected]+32 486 136 468