7 Important Steps on Ariba’s Way to Leadership in the Cloud

SAP Ariba, one of the world’s major suppliers of software, information technology solutions, and cloud-based business-to-business networking, got its start around a café table when a group of entrepreneurs sketched out a design with crayons. Today, the company they established addresses the urgent need of 21st century businesses to increase efficiency, save time, and obtain the best possible value for every dollar spent. Ariba originated the concept of spend management and has devoted the last two decades to developing its ability to deliver products and services that drive that concept forward.

The story of Ariba’s growth since its founding in the mid-1990s is centered in its ongoing dedication to creating high-quality products and services that make customers’ lives easier.

1. High-level problem-solving.

Today, Ariba (as part of the German-based SAP family of companies), works to simplify business operations in a digital world. Ariba products enable clients to lower overhead costs, maximize profits, and minimize risk by achieving more efficient collaboration with vendors and business partners.

The Ariba Network is set up to provide a secure, cloud-based space in which trading partners can conduct a variety of transactions, as well as share new information and benchmarking practices. Ariba’s customers no longer have to struggle with the exchange of paper-based documentation when dealing with contracts, invoices, and payments. Compliance and competitiveness are enhanced as well.

2. Simple beginnings.

Ariba’s history began in a Silicon Valley café in 1996. A group of colleagues were talking out their frustrations over paper-based transactions that wasted time and resources in procurement and other business operations.

Using a set of crayons on the table, the entrepreneurs began to diagram their vision for using the new vehicle of the Internet to ease existing barriers to business communication and information transfer. Their system would integrate seamlessly with existing enterprise financial systems, eliminate the middleman, and connect buyers and sellers directly.

3. Shipping the first product.

These seven investors developed a prototype of their product soon after they incorporated in 1996. They garnered licensing agreements with major corporations that included Cisco Systems, Inc., and voicemail company Octel Communications Corp. They went on to ship their initial product, Ariba Buyer , to customers in 1997.

4. Developing a corporate infrastructure.

Ariba spent the following year recruiting a highly-skilled workforce and enhancing its existing product. In 1999, the company announced its initial public offering of 5 million shares at $23 per share as it stepped into the marketplace for enhanced B2B trading with its network of suppliers. In addition, it strengthened its network of partner alliances to provide logistical services, electronic payment solutions, and community-building software products for its community of buyers and sellers.

Ariba Marketplace and Ariba Dynamic Trade appeared in 2000. The company additionally offered Ariba Sourcing after it acquired ownership in an online supply source firm.

5. Surviving the tech crash and global meltdown.

The founders’ ideas attracted an array of venture capitalist funders and partners, and Ariba held to its course through the challenges surrounding the tech bubble collapse in the late 1990s and its aftermath. As Ariba built out its company, it added new business services and developed a highly successful network of suppliers. These have successfully transformed a procurement software startup into a wide-ranging community of B2B peers who are connected securely and efficiently in the cloud.

As the global economy began to recover from the recession of 2008–2009, Ariba focused on enhancing its collaborative space to serve as the destination of choice for B2B networking. Its fully digital environment makes it as intuitive and easy to use as major consumer-facing platforms Amazon.com and eBay.

6. A significant merger.

Ariba took another big step forward in 2004 with its merger with FreeMarkets, Inc., a provider of software to assist in global supply management. Ariba’s goal was to combine its own set of enterprise spend management software products with the auction-based supply chain management system developed by FreeMarkets. Ariba paid $493 million in the deal, which served as a watermark moment in the consolidation of the enterprise software industry.

7. Becoming part of a global team.

In 2012, German company SAP AG paid more than $4 billion to purchase the Sunnyvale, California-based Ariba, Inc., through its subsidiary, SAP America, Inc. When SAP AG bought Ariba, it added an additional company to a cloud-based portfolio that it hoped would prove an even more effective rival to Oracle Corp. SAP is among the world’s leading players in the field of enterprise applications software.

SAP’s purchase offer of $45 per stock share — with an enterprise value of more than $4 billion — represented an increase of 20 percent over Ariba’s most recent closing value at the time. The German company’s offer recognized the pivotal role Ariba played in the increasingly interconnected global business environment.

Working with the goal of maintaining the world’s most extensive network of collaborative trading partners, Ariba now welcomes hundreds of new businesses each day into its single-platform community of about 2 million companies. In the space of just 24 hours, these businesses collectively save more than $80 million in supply costs while exchanging tens of thousands of purchase orders across $2.5 billion in commercial transactions.