Ariba’s North American Conference Ariba LIVE 2011 was held last week in Nashville, TN at the Gaylord Opryland Resort [Sidebar: What a great place to hold an event! More on that very soon :-)]. Ariba’s history, its solution footprint, its client base, its marketing/event prowess, and its position as the largest “pure play” solution provider in the space combine to make the Ariba LIVE conference one of the must-attend events each year in the supply/spend management world. It is also one of the industry’s largest events with more than 1,600 attendees. And, while it is comparable (but, somewhat smaller) to ISM’s annual conference, the level (i.e. job role) of the attendees, in my direct experience, appears to be significantly higher at LIVE. We’ll start with a CPO Shop Talk review of two discussions that the Ardent Partners team had which were representative of two larger themes widely on display at the event: P2P as a holistic process and the Ariba Network.

To start, CPO Rising would like to welcome its first guest contributor – Vishal Patel, Research Director at Ardent Partners:

PPG Industries: Tackling the ‘Long Tail’ of Supplier Enablement

Ardent Partners met with PPG Industries to discuss how it has used Ariba’s Quick Enablement service to enable the long tail of its supply base, which in this case refers to the large number of low volume transaction, to utilize the Ariba Network to send electronic invoices. For PPG, the enablement process starts when the buying organization identifies a target supplier. The supplier is then initially engaged when the first PO is generated (it is sent to the supplier across the network). A welcome letter accompanies the first PO explaining the network and the benefits of using it to enable transactions and other communication. Suppliers are encouraged to login and complete the registration process. If the supplier declines to join the network, it can fulfill the PO and deliver an invoice by other means. In PPG’s case, Ariba’s service will manage the invoice receipt process and scan paper invoices and enter them into the system.

As more POs are sent to suppliers who fail to register, the letters attached to them become more encouraging (or demanding) that suppliers take the necessary steps to join the network, until a certain threshold where it becomes mandatory.

PPG believes that since the suppliers are being engaged at the time of a transaction, they are more likely to respond and take the steps to become enabled. Also, by phasing in the requirement, suppliers are given sufficient time to prepare. To date, PPG has successfully enabled over 90% of their suppliers; so most of PPG’s ‘long tail’ is using the Ariba Network to send electronic invoices. — Vishal Patel

P2P including ACH Payments

Many of you will recall that PPG was an early adopter of Spend Analysis, under the direction of Jim Polak, an industry leader who retired a few years ago. Our second discussion looks at a mid-market services company operating in the healthcare industry that is an early adopter of an Ariba Network capability that allows it to schedule and make ACH payments directly to suppliers. This fast-growth company crossed the billion dollar revenue mark before it began to think about procurement. The director that they hired to build and then run a procurement team had a vision and a plan to tackle the entire P2P process and as a result used Ariba to automate the entire P2P process. The function was in such disarray, that one quick meeting was all it took for this experienced leader to make and seal a business case to automate P2P (strictly defined here as eProcurement and ePayables) – the CFO did not hold the team’s feet to the fire with a required ROI or specific timeframe.

One interesting aspect for this team is how it leverages Ariba’s ePayables solutions to schedule and make ACH payments without utilizing a bank intermediary. We did not dive too deeply into the details, but at a high-level this could be a very compelling capability (even for high volume Ariba Network suppliers) given the low cost of ACH.

It is also worth noting that soon after going live, the team was able to identify a supplier consolidation opportunity (gloves) that paid for a large part of the project simply by moving the spend from six suppliers to two and using the existing contracts.

Next time, we hope to cover a few of our discussions with the Keynote presenters. After that we’d like to present some of the highlights from the Collaborative Sourcing session which I joined.

Tagged in: Case Study, CPO Shop Talk, ePayables, eProcurement, Networks, P2P, Suppliers