Is Ariba Free At Last? Supplier Networks, Light Enablement and P2P Connectivity

Is the Ariba Supplier Network going “free”? Yes. And no.

SAP Ariba would find it difficult to fully shift a supplier-funded business model that makes a material contribution to SAP’s top line — and one that in, Ariba’s defense, engages and works with suppliers more directly than competing P2P providers. Yet Ariba is taking a step in the free direction with its recent release of Light Enablement, which offers a free connectivity solution to low-volume suppliers.

Still, don’t expect anything but “Light.” It is what it says it is.

Although the new Light Enablement capability is free for suppliers to interact and do business with buying organizations, it lacks nearly all of the features in relation to what is offered through standard enablement through the Ariba Network. But buying organizations do have the advantage (when they use it) of having all transactions and documents recorded in their system as if the supplier had been formally registered and on-boarded in the Ariba network.

Most important, a free model is an important step forward for Ariba and its customers, who are increasingly looking for new ways to enable smaller suppliers and the long “tail” of spend.

What is Ariba Light Enablement?

Ariba light enablement provides a means for procurement customers to use their Ariba P2P procurement environment without subjecting suppliers to fees — but at a cost. It provides a simple, messaging-based approach to discourage buyers and suppliers from engaging in workarounds to avoid network fees (which is a good thing).

Light Enablement is essentially an email-based solution (i.e., it sends an e-mail with a link to the hosted solution) that does not take advantage of most of the pre-validation, portal or other capabilities of the standard Ariba Network and P2P capabilities.

The email approach includes:

Pre-configured buttons for suppliers to confirm an order and “flip” it to an invoice
Requires suppliers to create a one-time password for each order and invoice (which is active for only 30 minutes)
An approach to let suppliers complete all the order and invoice processing requirements from the email

While we applaud that Light Enablement is free, and that it is tailor-made for small suppliers who receive infrequent orders, it is less suited to a moderate-volume supplier for whom the solution will create just enough hassle for the buying organization and supplier to drive them to want to use Ariba’s standard connectivity approaches.

Still, this is how Ariba designed it, as Light Enablement is for suppliers who transact less than 75 documents (POs and Invoices) per year with a buying organization in geographies where compliance requirements are limited.

How it Works

Here’s how Light Enablement works:

Interactive email-based messaging is the foundation of Light Enablement connectivity. Ariba requires all buyer and supplier collaboration, through an exchange of messages, to be done through an interactive tool in order to keep track electronically of all the conversations and activities
Suppliers validate their identity through a one-time password. This validation is required for each document the supplier submits to a customer. The one-time password is received by email once the supplier summit its name and email and clicks “NEXT” during the order confirmation or invoice creation. The password also creates an audit trail of activities
Connectivity is basic. For example, a supplier cannot submit detailed, additional or line-level specific documents through the interactive email, such as ship notifications or catalog data. (This level of connectivity requires that suppliers sign up for Ariba’s standard Network capabilities and agree to the pricing model.) However, Light Enablement does enable suppliers to add attachments to an invoice at the invoice header level
Buyers can configure their rules for invoice editing and define what suppliers can or cannot edit during the creation of the invoice with Light Enablement. For example, this may include restricting the ability to edit line-item descriptions and product quantities. In any case, if there is a question from a supplier or special requirement, they must contact the buying organization directly to clarify their question (by phone or traditional email). Normally any change will start a new process that includes sending a second interactive email (creating a new one-time password) to process the purchasing order or create the invoice
All exception handling is done by phone or traditional email directly with the buying organization; by design (no SAP pun intended), interactive email has limited collaboration functionality
A supplier cannot save a draft of an invoice, and if it takes the supplier more than 30 minutes to create the invoice, it will require a new one-time password creation
A supplier will receive a PDF/cXML copy of the invoice once it is submitted for legal requirements
Suppliers do not have the option to enter banking information on invoice l, and ideally, the buying organization will have a supplier’s payment details and options already recorded in their system. Suppliers must also reach out to buyers directly to inquire about invoice status via email or phone (not portal)
If the invoice is rejected, the system will provide an invoice rejection email notification and the supplier must contact the buyer for clarification
Suppliers will receive email notification when an invoice is received, payment is approved and notification that the invoice is paid

Ariba Light Enablement: Not Really a Network

The ultimate purpose of supplier on-boarding and enablement, either through a business network or portal, is to enhance the level of digital interactions a buying organizations has with its vendors across supplier management, sourcing, transactional procurement and accounts payable activities. From a P2P perspective, specifically, once suppliers are fully on-boarded and enabled, both the buying organization and its vendors can take full advantage of the portal’s or network’s features and capabilities to support their marketing, selling, e-procurement, e-invoicing and payment processes.

This is not Ariba Light Enablement.

Network enablement models can play an important role in maximizing the number of suppliers that are connected into a P2P environment. Yet the challenge for buying organizations is to get as close to 100% enablement as possible, which even with a network-based approach is an all but impossible undertaking. The challenge is not the strategic suppliers, which normally represent a low percentage of the total number of suppliers (although 80% of the total spend) and have strong IT capacity, but less strategic vendors, which normally have less IT maturity and lack IT and economic resources but still are important to buyers to enable online.

Ariba Light Enablement is a partial electronic enablement solution that from our vantage point, is generally better than offline alternatives (including scan/capture approaches) in speed, P2P integration and information capture buyers but lacks even basic portal capability for participating suppliers and will increase inbound emails and phone calls to AP organizations compared to using the Ariba Network. As such, it is not a true network offering from a supplier perspective, as it provides no economies of scale.

Yet, you can’t knock the fact it’s free.

The Last Word

So, the Ariba Network is not exactly “free at last.”

But at least there’s a free option for smaller suppliers to work with Ariba P2P customers and for Ariba P2P users to capture partial transactional information and audit trails without having to subject suppliers to network fees or resort to offline approaches. And that’s an important step forward.

We won’t demean the great Martin Luther King anymore with a full parody of his famous speech, but you get the point.

Just as a supplier, be prepared to open your email client. And don’t let your password time out!