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

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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

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24 Comments

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  1. David Barber

    Must be the death of SUS though? Ariba marketplace much better place for suppliers as so many are already signed up. Suppose hosting SUS removes transaction cost, but how many companies want to host something for suppliers when there is a better cloud solution out there?

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    1. Pramod Mallya Post author

      Hello David,

      Yes thanks for pointing out regarding the SUS. i think i missed this point in the article. With Ariba network already having so many suppliers it could be an end of SUS. So as mentioned i think the future would be combining the best in class of both and coming up with a comprehensive solution.

      SAP might provide both options to the customers (i.e., on-premise as well as cloud).

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  2. Catalin Vacar

    Brilliant summary of the SAP Roadmap for procurement. I was actually on the look for these information.

    My feeling though is that on premise solution will not be taken out so early as large companies are somewhat reluctant to cloud solutions for now.

    But it’s the future, no double about that.

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    1. Pramod Mallya Post author

      Hi Catalin,

      No doubt the future is cloud but it is more of the medium to long term view.As you said the companies are currently evaluating the cloud offerings and trying to figure out how the process can be mapped to the on premise solution.

      I myself have seen businesses trying to figure out how they can incorporate ariba network for their existing premise solution (i.e., SRM or ECC). So i think it is the end of the road of SUS.

      So we can wait and watch how it pans out over the next few years. Thanks a lot for liking the article.

      Regards

      Pramod

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  3. Sandeep Hota

    Hi Pramod,

    Thanks for sharing a good insight on the SAP roadmap for the next gen solutions in procurement space.

    Don’t you feel the Bidding and the Auctioning process in ARIBA strategic sourcing shall also impact the scalability of SRM RFx process vis-à-vis ARIBA, since ARIBA has a larger vendor base and with the increasing purchaser base the Strategic Sourcing shall also culminate eventually with more and more buyer switching to ARIBA?

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    1. Pramod Mallya Post author

      Hi Sandeep,

      Yes the above blog is just a brief about how Ariba might impact SRM instances in the future. There are multiple areas which might not have been mentioned wherein Ariba will impact SRM. Some of them being

      – SRM SUS

      – Sourcing

      – Catalogs

      to name a few.

      I think taking all these into account i need to edit this blog to incorporate the impact of these as well on SRM.

      Regards

      Pramod

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  4. saee sai

    Dear Pramod,

    nice u started this discussion, when you edit the blog, also consider the effect of         SAP S/4 HANA as it might change the complete ball game…

    S/4 HANA is SRM a separate box or with in S/4 package

    if customers like S/4 on-premise then SRM might have chance

    but if customers all like going into cloud options of S/4 HANA in that case, how SRM will will weight out

    thanks

    saee

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    1. Pramod Mallya Post author

      Hello Saee Sai,

      Thanks a lot for the feedback. I will surely take a note of your suggestions and try to incorporate some of them in my next blog.

      Regards

      Pramod

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  5. sreepadh reddy

    Hi Pramod,

    Thanks a lot for your article. it has good information.I am currently working on ARIBA project(1yr exp), i have ABAP hands-on as well. so could you please suggest me if i can move to ABAP or continue with ARIBA . Please suggest me which technology would be nice to choose for a better career.

    Thanks in Advance.

    Regards,

    Sreepadh Reddy.P

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    1. Pramod Mallya Post author

      Hi Sreepadh,

      I can comment just on the basis of being a fellow SAP practitioner. You are trying to compare between being a technical consultant or to be a functional consultant. If you are working as a technical consultant who is working in the integration between Ariba and SAP then that would also be a great option. If you are working in Ariba solution itself then cloud being a future technology you can take a call whether you really want to move from being a technical consultant. Ideally you can try to become a techno – functional consultant.

      Regards

      Pramod

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  6. Vilas Swamy

    Hi Pramod,

    Motivated by your disclaimer in this blog, I must say the write-up is good and helpful but it feels subtly biased to favor SRM. Some of the facts that you have put in the comparison table for Ariba have changed (to my learning) for example

    1. Current Ariba On-Demand version is 13s and arguably has one of the best user friendliness. There is no contol over the release but all new best practices/features are readily avaibale and no major back-ward compatibility has been observed right from 10s1 to 13s.

    2. Atleast from recent past SAP has introduced Active user count in Ariba licencing.

    3. Customizations have been limited in Ariba On_Demand (Cloud) solution but aligning business process to the available best practice(with or without work-arounds) has only proven to be a game changer for many organizations.

    4. Ariba Master data managemnet is not limited to CSV file upload and supports automations and web services, this gives an edge over the limit of data exchange only within Intranet.

    On the other hand, I agree with you that currently Ariba lags behind SRM on facilitating Direct Procurement and tight integration with other SAP products.

    Having said that, in my perspective there exists only a part overlap of functionality at ground level between SRM and Ariba so there cannot be a head-on comparison.

    Hence the future of SRM and Ariba really in that sense is independent of each other but more dependency of SRM on what happens with ECC in future.

    Regards

    Vilas

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  7. Ritesh Raithatha

    Hello Pramod,

    Great articulation between SRM and Ariba and its pros vs Cons.

    I would like to point out one small thing reagarding licensing, Ariba not only charge based on transaction but they also charge yearly licensing fees per module used so if client uses Ariba catalog solution there will be X dollar charge based on the catalog, If client uses self service procurement then there is Y dollar charge per user.

    Thank you

    Ritesh

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  8. dina abalhadj

    hello Pramod,

    Many thanks for this explanation. Very interesting article.

    I work in the automotive industry (for an automotive equipment manufacturer) . For purchasing/procurement management ( all kinds direct and indirect / projects) we are using SAP as a main ERP (master data – MRP – orders – stock movements – invoice verification) and we have some periphery tools/ applications, some are integrated  with SAP some are not, these tools are used  to manage some workflows and some tasks such, supplier creation requests,  suppliers rating, the purchase request…

    We are thinking now to set up a module / tool more robust well integrated with SAP and specially performant, lean  and reducing as much as possible the extra tools and applications.

    Our choice was more directed to SRM, but by reading your article, I understand  that Ariba is the future.

    could you please give your opinion on the most appropriate module for our business / needs. i need a larger and strategic vision.

    PS: anyone with an idea is welcome to participate to the discussion.

    Many thanks,

    Dina

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  9. Görkem Gamga-Fleisch

    Many thanks for all these information you shared in your article!

    My question is if something has changed recently with the development strategy of SAP for SRM solution..

    I really wonder what will happen with SRM in the future?

    Could you pls. share here if you have some updates

    Thanks!

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  10. Siddappa Adivepnar

    Hi Pramod,

    Thank you very much for sharing your view on Ariba and SRM.

    What about the Ariba integration with other systems like ECC and BI?

    Can new clients go for ARIBA without SRM in future?

    What will happen to SRM in that case?

    How difficult is learning Ariba technology if we know SRM?

    Best Regards,

    Siddappa

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  11. Manoj Kumar T

    Thanks for the nice article.. however somehow there is no clear road map from SAP regards to the procurement product line.. SRM VS SRM UI ADDON VS ARIBA VS S/4 LE.. does anyone know or have an idea what is delivered with S4 Logisitcs, so that business can invest in right products..

    I know few of my clients who invested in SRM, E-Sourcing, SRM UI addon and now considering ARIBA… and may change once the S/4 LE is released the direction can be different.. 

    It would be good if SAP gives a proper road map on this products which enables business to take right decisions..

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  12. Seth Grenald

    Thanks for the article. I haven’t been keeping up as much with new software developments as I should. I’m wondering about Frictionless vs. Ariba. I guess it’s a similar idea of hosting it ourselves, vs a SaaS.

    Also, if Ariba doesn’t support direct procurement, wouldn’t that create a problem relative to what SUS handles?

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