Ariba Follows the On-Demand Trend

The spend-management software vendor moves to a hosted model, bringing enterprise-level consulting services to SMBs.

Ariba Inc., which made its name in the spend-management software development area that covers sourcing, contract management, supplier management and procurement, is going hosted.

The company will announce Tuesday a three-pronged approach to its new on-demand strategy: a redesign of its on-premises software and services offering geared to smaller companies, subscription-based pricing, and three levels of on-demand software (Basic, Professional and Enterprise).

While Ariba, of Sunnyvale, Calif., is not the first of its competitors to offer on-demand software—Procuri Inc., Ketera Technologies Inc. and Emptoris Inc. all have hosted versions—it is taking a different tack with its approach.

According to Bob Calderoni, CEO of Ariba, the company is expanding its reach beyond its traditional enterprise customers—which, combined, have run billions of dollars in spend through the Ariba Buyer supplier network—to now include smaller and midsize companies, through its on-demand offering.

/zimages/1/28571.gifRead more here about Aribas interest in an on-demand procurement model.

"Our customers are some of the largest companies in the world," Calderoni said in a statement. "While we continue to expand the value we deliver to our long-term enterprise customers, we are now putting powerful spend management results within the reach of every company, regardless of size, so they can better compete in todays global market."

While that much is true, its also a fact that software companies from Microsoft Corp. to SAP AG and Oracle Corp.—the worlds biggest business applications providers—are also embracing the on-demand model.

With runaway success from the likes of, which has amassed nearly 17,000 customers and 308,000 subscribers in five years of business, the on-demand model is one enterprise companies feel they can no longer ignore.

Ariba, for its part, started down the on-demand path inadvertently. It began partitioning its software about four years ago when users said they wanted access to individual components in the Ariba Buyer module.

/zimages/1/28571.gifClick here to read about how Ariba Adapter opens the companys Global Supplier Network to users of other vendors procurement software.

Over the past year and a half, with a more focused intent, Ariba continued the partitioning work across its 13 modules, according to Rick Collison, director of spend management marketing at Ariba.

"So weve separated out configuration issues, user issues and data," Collison said. "The partitioning work was the bulk that was done," for Aribas on-demand software.

In fact, Aribas on-demand and on-premises, or traditional, software are one and the same (some companies offer separate applications for hosted and on-premises customers). While on-demand users will see frequent upgrades, Aribas traditional users will see 12- to 18-month upgrade schedules.

With the acquisition of FreeMarkets Inc. in January 2004, Ariba nearly doubled its services capabilities. As a result, the company began offering sourcing expertise around a number of different commodity areas. The sourcing consultants—people who live and breathe their area of expertise—are able to go to a company and determine the best sourcing options in a given area, according to Ariba.

Ariba is extending its on-demand strategy to the consulting side, providing to smaller companies expertise typically accessible only to deep-pocketed companies. Those sourcing experts are now available to answer questions over the phone or via e-mail—at a greatly reduced price.

The basic package, which includes six spend-management processes geared for small and midsize companies, is available now. The Professional package will be available next quarter, followed by the Enterprise edition around the third quarter of 2006.

/zimages/1/28571.gifCheck out eWEEK.coms for the latest news, reviews and analysis about productivity and business solutions.