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Spend management software maker Ariba said Monday that its acquisition of FreeMarkets is nearly complete, with both companies shareholders voting to approve the deal. The merger, first announced last January, is expected to close Thursday.
With FreeMarkets Inc. flying under the Ariba Inc. banner, the two companies will focus exclusively on spend management, but with stronger offerings in both technology and services, according to Sundar Raghavan, vice president of solutions strategy at Ariba.
Raghavan outlined the companys integration plans for FreeMarkets late last week. The combined offerings will break down into six categories, all focused around managing spend: strategy, visibility, sourcing, procurement, supplier management and outsourcing “where it makes sense,” he said.
Strategy and strategic sourcing—new areas of focus for Ariba—are enabled by FreeMarkets technology and services capabilities. The company is also taking a new approach in how it offers spend visibility software and services.
Ariba previously provided strategic services, or best practices, on a one-off basis. Now, combined with FreeMarkets services arm, it will offer best-practices “blueprints” as templatized offerings.
“What we are able to do, regardless of which industry, is to offer specific strategies on spend, looking across categories,” Raghavan said in Sunnyvale, Calif. “We are able to [base] services on what the best practices ought to be and build that into applications as product templates.”
He said the FreeMarkets merger is driving Ariba to look at the visibility category in a whole new light. In the past, Ariba shipped its namesake Analysis product and offered services around that. With the addition of FreeMarkets, the company is now offering several choices for spend management functionality.
Customers can choose to implement spend management techniques on a turnkey basis whereby Ariba would take essentially “dirty” spend data, cleanse it and process it on a yearly, quarterly, monthly or weekly basis, Raghavan said. Once the process is established, Ariba also will ship that same functionality back to the customer if theyre looking for a little more self-sufficiency. Users also can opt to have the software installed in-house.
Raghavan said the shift in Aribas mindset around the visibility issue was prompted in part by the depth of service that FreeMarkets offers in that area. At the same time, Ariba acquired another company, Softface Inc., last March that enables data to be classified based on various factors. By coupling that functionality with FreeMarkets services, Ariba is able to offer a more comprehensive set of software and services.
FreeMarkets Enterprise Sourcing application has been combined with Ariba Sourcing and will be available as a service pack in the next two to three months. It will allow customers to continue operating on the FreeMarkets platform or migrate over to Ariba, Raghavan said. At the same time, some Ariba customers will acquire new technology from FreeMarkets, including dynamic auctioning and lot bidding.
In the area of procurement, FreeMarkets QuickSource product will continue to be supported for at least 18 to 24 months and will be offered as Ariba QuickSource. At the same time, the company is taking the best functionality from that product and building it into its own Ariba Sourcing product.
“QuickSource is not going away,” Raghavan said. “The underlying technology—the engine—might be shifted around, but it will be offered as Ariba QuickSource.”
While Ariba has offered some supplier management functionality, the FreeMarkets acquisition enables it to offer a much more rounded product that addresses content management, electronic connections with suppliers and collaboration, according to Raghavan.
When Ariba acquired FreeMarket, it also acquired some sourcing technology from the automotive consortium Covisint, which itself had been acquired by FreeMarkets. Ariba will continue to operate the Covisint sourcing platform under the Ariba Sourcing moniker.
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