Written by Stefan Schmidt
Business networks are taking on an increasingly important role in our economy, and the numbers speak for themselves. In 2013, revenue on business networks topped USD$ 2 billion and is expected to increase by half again in three years. That’s strong growth.
Broadly speaking, there are three kinds of business networks: electronic data interchange (EDI), cross-industry, and vertical industry networks. At their core, all of them offer ways for buyers and suppliers to exchange documents much more efficiently than otherwise possible. But, inevitably, efficient document exchange between business partners is becoming commoditized. The result is that across models and within them as well, competition is heating up.
The value add
When competition heats up, the pressure is on to differentiate. Business networks are now attempting to do this by moving to more fully realized B2B business networks where additional services are offered to add value.
SAP Ariba falls into the cross-industry category and has been moving in this direction for years. Since 2011, the Ariba Network has been growing steadily, and today is the largest cross-industry business network out there with revenues of about USD$ 228 million in 2014 (representing about 36% of the market for this model).
I think that this growth has to do with the additional services and integrated partner offerings the Ariba Network offers in a number of areas. For instance, in addition to invoice and purchase order (PO) exchange, the Ariba Network also offers catalog management to present available products and services in a clear manner, Ariba Discovery to quickly find buyers and qualify suppliers, and AribaPay to allow buyers to securely pay suppliers via the Ariba Network – while eliminating the need to maintain supplier bank account information and reducing supplier payment inquiries.
Speed is of the essence
Insurance companies in particular are finding value in the Ariba Network. They’re also finding value in another B2B network – the SAP Financial Services Network. With SAP Financial Services Network, you can establish relationships with banks and start talking the same language in a fraction of the time it would otherwise take with lengthy implementation cycles. You can also use a business cockpit with the SAP Financial Services Network to digitize your overall financial supply chain process. This means that you can start transacting with more partners in less time and at far lower ramp-up costs – and once you’re up and running, you can manage your processes with greater visibility.
Our objective moving forward is to constantly increase the value of the Ariba Network and the SAP Financial Services Network in such ways so that insurance companies, corporates, and banks can work together in exciting new areas. But because business networks like the Ariba Network and the SAP Financial Services Network can make it so easy for insurance companies to establish relationships with partners and start transacting quickly, non-traditional insurance companies are starting to enter the business and capture market share. This makes getting onto these networks more pressing than ever for insurance companies. My recommendation is to move fast.