Ariba Live 2010: Crowdsourcing, Rhythm Drums, And A Touch Of Good Old Fashioned ERP Badmouthing

Today started with breakfast in the supplier pavilion at Ariba Live and I have to say, this place is PACKED. Ariba reports over 1,000 attendees and there’s hardly an empty chair. In fact, they had to pull in extra chairs at the back of the room for the keynote sessions. I’m no economist but a filled to capacity software vendor event is a good signal to me that companies are now starting to revisit major application investments that have been on hold for the last two years.

Taking a walk to scope out the breakfast bounty I did notice that the services procurement vendors, Beeline and Fieldglass, both had booths set up front and center in the supplier pavilion. These are well spent marketing dollars as each vendor looks to position themselves to fill Ariba’s whitespace in what’s becoming a white hot software category. D&B was also a very visible sponsor, another smart move given Ariba customers’ insatiable appetite for supplier information and data enrichment services. The opening on the main stage had the typical flash, bang introduction with a live band and Blue Man Group styled actors creatively called the “Cloud Guys” moving to the “complex rhythm of commerce.” As I soon realized, this was not the last time we’d hear the term “cloud” at this event. The nice lady sitting next to me (who will remain anonymous to protect the innocent) leaned over and asked me, “I see cloud this and cloud that everywhere — what does it all mean?” Good question.

Bob Calderoni, CEO of Ariba, kicked things off by successfully driving home Ariba’s marketing theme as I understood it — that Ariba’s end goal is to make B2B commerce as intuitive and seamless as consumer e-commerce (i.e. Amazon) — including features like firsthand recommendations/ratings from peers, “blurring the line between an application and community.” Here, he took a few relatively innocuous stabs at the big ERP guys saying, “Why is this still so hard after companies have spent billions of dollars on ERP systems … that fall short on their ability to deliver because they don’t extend beyond the firewall.” As we all know, the devil is in the details. B2B commerce is much more complicated than consumer commerce, but I do agree there is always room for improvement. It’s hard to argue with the idea of listening to your customers and giving the tools to help you improve the overall experience. Kudos to Ariba for realizing that — hopefully not too late.

Calderoni went on to introduce the idea on the Ariba Commerce Cloud and, with a mile long string of buzzwords, explained how it would be used to integrate, streamline, automate, collaborate, and enable efficiency and flexibility. Now, I don’t expect the CEO to provide deep content on what this all means in the opening remarks, but I do think this is Ariba’s biggest challenge — to take this vision and translate it into actionable things that your customers can actually use — especially those still running a CD version of Buyer. I’ve got time to attend one breakout session before the panel on supplier risk I am participating in, so hopefully I’ll learn a little more on that. The session is on “The Hybrid Era: How Ariba Customers Benefit From The Cloud.”

Bob wrapped up with something that did really get my attention — a comment that Ariba plans to double down on its investments in areas like services procurement. This left me thinking something that has crossed my mind more than once over the last 6 months. Should Ariba acquire a services procurement solution like Fieldglass? I don’t think Ariba will catch up here building it themselves, so it could be the most logical move. The one challenge with an acquisition here is that many of the services procurement vendors are really on the fence about investing in R&D outside of temporary labor to cover project based services under a SOW. And, since this is really where the biggest future opportunity is, Ariba would want to acquire someone who is really a leader there. That’s a topic for another blog entirely but I will revisit this in the future.

Tim Minahan, Ariba’s CMO, spoke next and talked a little more about the online exchange and peer community. He drove the point home with an example showing Ariba’s online discussion board where one customer had asked about vendor master management data quality issues. Ariba’s product managers saw a large number of responses from other customers on the discussion board and, in turn, created user groups to expand on the topic. Eventually, this led to enhancements in the product. Tim called this “community driven innovation.” I like it.

Next on the stage was Jeff Howe, the author of Crowdsourcing: Why The Power Of The Crowd Is Driving The Future Of Business. He defined crowdsourcing loosely as when a company takes a job once performed by employees and outsources it in an open call to an undefined group online. For example, a shoe or t-shirt designer that has people submit their ideas directly online where people vote on them and eventually create the end product based primarily on customer feedback. Jeff talked about how “companies are now forced to approach us as potential partners to participate meaningfully in product design.” This was an interesting session but it did leave me scratching my head a little wondering what it meant to Ariba’s customers.

Here are a quick couple of ways I think it could:

1. Community based enhancement requests. Let the customers enter requests for new features and have the Ariba community make additional comments/suggestions around it, prioritize and rank functions for the next release. Run contests to reward the most innovative ideas and give people recognition.

2. Community based release notes, bug fixes and workarounds. Ariba, especially with the CD customers, has gotten a bit of a bad reputation for unstable product releases and a lack of transparency on how fixes are being prioritized. There are also customers complaining that existing functionality will actually disappear in new releases – making customers’ processes not workable. Similar to the way I suggest enhancement requests are communicated and worked on in the community, bug fixes and new release related discussions could take a similar tack. If someone has a workaround and can share it or sees an issue in early release documents it’s very useful to everyone.

3. Ariba iPhone-like apps. Allow 3rd parties to build applications and create configuration kits that run in Ariba on Demand. Give people a way to publish these tools and share them in the community.

4. Enable peer commentary and rankings on suppliers AND buyers. I know this opens up a can of worms but Ariba is in a good position to try this. They could set up consortiums around specific commodity and service categories and let the people do the rest. Jeff raised a good point in his presentation that can be applied here. He used the example of how iStockphoto started out. You could download stock photos for free if you uploaded some of your own. The applicable premise being that for consortiums on supplier performance to work, people have to give information as well as consume it in the community.

Now, I tend to be a little cynical when it comes to the business value of social networking when it comes to Sourcing and Vendor Management professionals that there is definitely a big advantage to participating. The vendor specific exchanges are a good place to look along with LinkedIn communities, various bloggers, and discussion boards.

This morning’s keynotes ended with the Cloud Guys directing the crowd to bang out a beat with Ariba-provided drumsticks and a little help from the band. At first, the result was pretty cacophonous but smoothed out into a decent rhythm by the end. The jury is still out on whether we’ll be able to say the same for Ariba’s updated cloud-based product strategy.