From Business-to-Business Software Startup to SAP's Acquisition

From Business-to-Business Software Startup to SAP's Acquisition

DOI: 10.4018/978-1-5225-7362-3.ch078
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Through its cloud-based source-to-pay business network, SAP Ariba provides an integrated platform and interface to help companies manage their supply chain. In this chapter, the authors examine how Ariba, a small startup company formed during the internet boom of the '90s, was able to overcome hardships, survive market and industry downturns, and continue to thrive and survive in such a competitive industry. The authors also review major events, innovations, and decisions that helped the company to grow and succeed rather than to fail like its many competitors.
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E-commerce was in many ways revolutionized by Ariba Inc., a leading independent company in the sphere of B2B commerce network providers. Since the time of its founding, the company has been evolving constantly, in cooperation with leading companies in the industry, in order to deliver e-commerce platform products to its customers/clients. Its value chain model was successful in helping it to develop business relationships further than expected, the results of which made it a top 40 Fortune 500 company.

Ariba has overcome many obstacles, including lawsuits, changing customer requirements, and organizational restructuring, however still managed to remain a leader in its specific niche industry area. The firm has done so by delivering solutions and services that meet customers’ expectations, and have been able to cope with intense competition by keeping up with today’s technologies as well as developing solutions for tomorrow. Ariba was founded in Sunnyvale CA, in September 1996, by seven men, one of the most influential being Steven Krach. Krach’s early career accomplishments included being one of the youngest vice presidents of General Motors (Ariba, 2008). The challenges of procurement that he encountered there became the impetus for the development of Ariba. Through the use of the Internet and B2B e-commerce, Krach and his associates brainstormed and came up with the idea of automating the purchasing of commonly used supplies and services. While this may seem to be a rather simple concept, it turned out to be an insight and area that held huge demand and potential.

After three months of intensive research, which included meeting with 60 Fortune 500 companies, Ariba had a prototype developed and ready for their initial marketing campaign. Having signed software licensing deals with Cisco Systems, Advanced Micro Devices and Octel Communications, prior to software completion, the pieces were put into place for the launch of their product. While Krach and Ariba were innovative in their concepts and efforts, they were not the only pioneers in the area, Commerce One, Oracle, I2, and PeopleSoft, Inc. were competitors with similar, but not necessarily identical, offerings.

Key Terms in this Chapter

Supplier Network: A network of screened and qualified small-scale producers and committed medium-sized suppliers.

E-procurement: A system utilizing Internet technology to streamline the purchases of goods and products in order to reduce costs.

Supply Chain Management (SCM): The process of strategically managing flows of goods, services and knowledge, along with relationships within and among organizations, to realize greater economic value.

Acquisition: Acquiring control of a corporation, called a target, by a stock purchase or exchange, either hostile or friendly.

E-commerce (electronic commerce or EC): The buying and selling of goods and services over the Internet.

E-payments (online payments, Electronic Payments, Internet Payments, Web Payments, and e Payment): An electronic payment made via a web browser for goods and services using credit or debit cards or other related payment means.

Business to Business (B2B): The exchange of products, services, or information between businesses.

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