SAP’s acquisition of Ariba which is primarily a cloud based procurement solution has created serious ripples in the procurement system package space. SAP which so far was promoting their on – premise solutions has now aggressively moved into the cloud based offerings with the acquisitions of SuccessFactors, Ariba, Fieldglass and Concur. Now this brings us to a serious thought on whether this would ultimately lead to an early demise for some of the on – premise solutions which were built by SAP. In this blog I would be primarily considering SAP SRM, the on –premise solution offering and comparing it directly with Ariba, the cloud based offering which SAP recently acquired.
The current buzzwords in the IT industry are basically Social, Mobile, Analytics and Cloud popularly abbreviated as SMAC and every company be it a product company or a service company are investing a lot of time and resources in these areas. The future is indeed in these areas looking at the way the companies are investing and the valuations a few boutique firms specializing in these areas are commanding. But does that mean the on – premise solutions which might require the companies to maintain costly hardware die a slow death. These are the certain things which I would like to explore in the remainder of this article.
Now since I concentrate primarily in SRM and Ariba space I would be taking these two procurement systems to highlight whether they can co-exist in the future or whether one will be completely sidelined. Let me quote that currently most of the huge corporations who have a fully functional SRM solution are trying to understand the benefits / advantages which Ariba might offer as compared to SRM and whether it is worthwhile to migrate to the cloud based solution. This is where the subject matter experts who have the experience of working on both the packages are being sought after to understand their points of view and help the businesses to migrate from one solution to the other.
Having worked on both SRM and Ariba solutions I have had the privilege of presenting my point of view to a few clients and some of the broad points which were discussed during the course of discussion are highlighted as below
Additionally the clients wanted to understand whether it is worthwhile to migrate from the SRM to Ariba. For this question it depends on certain
things which are listed below
- Depends on the type of industry. Incase they are extensively using SRM for direct procurement then since Ariba does not support it, it would lessen their chances for going ahead with the migration
- Additionally if the support is handled in-house then the IT team will have to undergo a separate training to understand Ariba and then support the business accordingly
- The business will have to prepare an extensivechange management program for their end users / key users as the way in which the transactional documents would be created might be a little different from the current SRM setup
So for all the above the business would have to invest time and money and decide whether it would be beneficial to move from the on – premise solution to cloud.
But then there are certain advantages as well for the businesses. The main advantage that any cloud solution provides over on – premise solution is the reduced costs involved in the maintenance of the hardware. Additionally with SAP acquiring Ariba it has now improved the connectivity between Ariba and ECC. Ariba can be integrated with ECC via PI or by making use of the SAP Business Suite Add-on. Additionally Ariba has the experience of transforming from on – premise to cloud (as Ariba itself has an on – premise offering). So SAP’s acquisition of Ariba brings with it the knowledge which Ariba might have with regards to this transformation and help SAP to tightly couple SRM and Ariba and provide the businesses with the best of both the worlds.
Does this mean that it is the end of the road for SRM? The answer to this question is currently very mixed. There could be a large portion of the SRM implementations being migrated to Ariba in the medium term but then there would still be a market for SRM. Also unlike currently where there is not much integration / collaboration between the two products, in the future they would be integrated more tightly to provide a best in class procurement solution. Some of the features such as catalog content management provided by SAP might be done away with and Ariba catalog management functionality might be integrated as it is perceived to be more intuitive and detailed.
Currently the cloud based offerings are still trying to find feet in the market which till now has been dominated by the on – premise solutions. But yes the writing is on the wall that cloud based solutions are the future and the dependence on the on – premise solutions will gradually decrease over the course of time
Disclaimer: The blog are basically the author’s personal views and feedback or any counter points to the above views are highly appreciated