Ariba Updates Sourcing Line, Adds Category ManagementAriba Updates Sourcing Line, Adds Category Management

Ariba Inc., a major provider of software and services in the downtrodden electronic sourcing sector, Tuesday upgraded its flagship spend-management products, added a new application for managing sourcing categories, and broadened its collaborative marketing and implementation relationship with IBM's services arm.

Typical Ariba systems carry a total price tag of about $100,000 to $2 million, according to the company. That price alone could be barrier to quick uptake of the new software, given the tight IT spending climate. But even though Ariba has seen revenue decline in recent quarters, the declines have been significantly smaller than those of another major E-sourcing provider, Commerce One Inc.

The new Spend Management release consists of updated Enterprise Sourcing and Buyer applications.

Enterprise Sourcing 4 lets sourcing professionals for the first time create and manage multilevel groups of line items, or bills of materials, and upload a bill of materials directly into Microsoft Excel spreadsheets. The software's enhanced integration with Excel also lets buyers automatically create a request for proposal from Excel, assemble responses, and manage price lists in Excel.

Also with the new release, companies can evaluate suppliers on a total-cost basis and rank and analyze suppliers.

Buyer 8 introduces enhanced catalog-search capabilities so users can quickly find items from preferred suppliers.

The new Sourcing and Buyer applications are expected to be generally available by year's end.

The company also introduced software called Category Management, which aims to manage and automate the intricate and, at times, fractured processes related to sourcing. Category Management is intended to meet the diverse needs of finance, engineering, purchasing, and manufacturing disciplines.

Category Management lets companies model and map sourcing processes; create new projects by using pre-configured templates or modifying past projects; and capture, search, and retrieve all knowledge related to a given category of enterprise spend, whether it involves direct or indirect purchases. Category Management is expected to be available on a limited basis by year's end and generally available by the end of March 2003.

While large companies that view sourcing as a strategic business initiative have been trying to centralize and manage such processes on a manual basis, no one has yet put in place a fully automated way of achieving such category management, says Michael Schmitt, executive VP and chief marketing officer of Ariba. "This is virgin territory we're going into," he says.

Asked whether companies would be reluctant to invest in such systems, given the business transformation they will require and the continued reluctance to invest in big-ticket software products, Schmitt sounded an optimistic note. "We see increasing emphasis on asset management and operational efficiency," Schmitt says. "Enterprise spend management is squarely in those two categories."

While Schmitt acknowledges that category management will be a complex implementation, he says it'll be more difficult from the standpoint of organizational change than technology change.

Ariba will address that issue through an expanded partnership with IBM, which is offering five packages that include IBM services and Ariba Spend Management applications. They are:

• Spend Management Strategic Advantage to help companies analyze their readiness for enterprise spend-management initiatives.

• Spend Management Buying Advantage to help companies identify compliance with contracts.

• Spend Management Sourcing Advantage to help companies evaluate near-term sourcing opportunities.

• Spend Management Performance Advantage to deal with change-management issues.

• Spend Management Infrastructure Advantage to put in place an infrastructure to run spend-management software.