Introduction to Ariba

Aruba manages, monitors and analyzes purchasing activity

••• MPS

Ariba was founded in 1996 by Keith Krach, who created the idea of using the Internet to enable companies to facilitate and improve the procurement process. The typical procurement process was labor intensive and often costly for large corporations.

Krach developed the idea of purchasing staff buying items from vendors who provided their catalogs online. Ariba supplied the software to create and host the vendor catalogs as well as the enabling software to purchase the items. In 1999 the company was one of the first business-to-business Internet companies to go public.

At the time Ariba was challenged by a number of other players in the e-procurement area, such as Commerce One and Metiom.

Ariba offers a spend management solution for company’s purchasing requirements. Customers are offered a large number of supplier catalogs to purchase from. The number of vendors with catalogs on the Ariba Supplier Network is now over 160,000 with in excess of 80 million items. Two million purchase orders are sent to these vendors each month at a value of over $8 billion.

The Ariba software allows a company to automate, monitor, and control the complete purchasing life cycle from requisition to payment. Users can create requisitions that are approved according to pre-configured business rules that each company decides upon.

Purchase orders can be automatically generated and sent directly to suppliers, while order acknowledgements and ship notices are sent back to the original requestor.

The invoicing process is simple for the suppliers who can create an invoice directly from the requestors purchase order. The invoices are pre-matched with the purchase order line items and any receiving information, so that the requestor reconcile and pay without delay.

For those companies that use an Enterprise Resource Planning (ERP) solution, Ariba can be fully integrated. However, Ariba offers its product as an on-demand solution. The “Software as a Service” (SaaS) model has been available from Ariba since 1999 and they offer a fully hosted, pay-as-you-go solution for those companies who require a fast implementation with low upfront costs and a low cost of ownership.

Ultimately, your company needs to supply its customers with what those customers want and do that when the customer what it -- and accomplish that while spending as little money as possible.  And that's where Ariba may be able to benefit a company.  Ariba spend management software saves a company time, assets and resources by providing a company the ability to automate, track and control the entire purchasing process - from requisition to payment - automatically.  The ability to have this information at a company's fingertips is valuable for spend monitoring, trend spotting and metrics analysis.  

There are many other ERP, supply chain and inventory control software solutions available for a company to use (and to spend money on).  Most companies don't have unlimited resources to spend on software, so it's critical that a company analyze potential return on investment prior to committing to a software.  Software selection, implementation, launch and maintenance can not only be costly - but it can take months (or even longer) before you may realize that your investment may not be paying dividends.  

What is it that you expect out of the software that you're investigating?  Ariba's spend management software is designed to help you manage purchase requisitions, purchase orders, supplier and customer contracts, invoicing and payments.  While it can integrate with ERP and MRP systems, Ariba itself will not manage inventory levels or manufacturing routers or safety stocks.  Make sure you understand what Ariba can and can not do prior to making an investment.  

Getting your spend management under control is a critical aspect of optimizing your supply chain, which means you're reducing your costs, increasing your service levels and optimizing your revenue.  If spend management is what you need in order to get your supply chain optimized, then Ariba might be the right solution for you.

This article about Ariba's spend management solutions was updated by Gary Marion, Logistics and Supply Chain expert.