Published: 10 May 2024
Contributors: Molly Hayes, Amanda Downie
SAP Ariba is an intelligent cloud-based management software for sourcing and procurement. It allows companies to increase efficiency and control costs by optimizing the procure-to-pay (P2P) process.
SAP Ariba is the most advanced procurement suite offered by the German company SAP. SAP Ariba covers the source-to-pay process end-to-end, including strategic sourcing, supplier management, procurement, working capital optimization, invoice management and spend visibility. The SAP solution allows buyers and suppliers to do business on a single platform, organizing and unifying their supply chain strategy. Using the software and its suite of SAP Ariba procurement solutions an organization can:
- Reduce inefficiencies by visualizing workflows in detail.
- Manage supplier relationships with greater effectiveness.
- Use automation to simplify routine tasks such as invoicing or the accounts payable process.
- Unite supplier, sourcing, procurement and supply chain management processes
SAP Ariba is useful for medium or large organizations with complex purchasing and procurement systems. It can be used as a stand-alone platform, as part of the company’s core SAP S/4HANA software or in tandem with a custom array of other SAP enterprise resource planning (ERP) modules like SAP Fieldglass1 for services and external labor and SAP Concur2 for expense and travel management. The software is accompanied by a mobile app that extends these capabilities to mobile devices. Organizations can opt to adopt SAP Ariba as part of a broader digital transformation effort.
By monitoring information in real time, SAP Ariba can help businesses make better decisions and create well-defined roadmaps to increase profitability. The software can also be used to meet an organization’s sustainability criteria, allowing businesses to enforce supplier guidelines related to their environmental impact or ethical business practices. The SAP Ariba network, a global cloud-based platform connecting millions of businesses and suppliers, facilitates intelligent vendor discovery and encourages deeper supply chain collaboration. It also supports customized budgetary and compliance benchmarks.
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The cloud-based software was initially developed by the company Ariba in 1996 as a business-to-business (B2B) platform for internet-enabled procurement. In 2005, Ariba, among the first B2B platforms to introduce an IPO, was referred to as “a poster child of the business-to-business Internet boom.”3
The German multinational corporation SAP, which specializes in ERP software, acquired Ariba in 2012 for a total cost of USD 4.3 billion.4 Since 2015, SAP has offered select Ariba functions on mobile devices, and in recent years the company has invested heavily in technologies like machine learning and artificial intelligence (AI) to advance its software’s functions. According to SAP, as of 2022, Ariba facilitated more than USD 3.75 trillion in the exchange of goods and services between 5.4 million organizations every year.5
SAP Ariba consolidates an extensive array of supply chain solutions and business processes into a single set of cloud-based tools, helping organizations become more agile.
With tools for onboarding, evaluating and managing relationships across the supply chain, SAP Ariba can organize multiple workflows into a unified platform. Its advanced compliance monitoring capabilities help monitor and enforce internal policies and procedures related to spend, contracting and regulatory standards. And as with other cloud-based SAP products, SAP Ariba’s reliance on the powerful HANA database produces robust reporting and analytics tools, providing insights into key metrics like spending patterns and supplier performance.
SAP Ariba’s key features include:
- Automation
- Integration with ERP systems
- Procure-to-pay
- Supplier management
- The SAP Ariba network
SAP Ariba focuses on reducing the manual effort required to manage supply chains and initiate procurement processes. Using automation, the software can:
- Generate requisitions and purchase orders.
- Streamline the invoicing process.
- Synchronize catalogs with suppliers in real time to keep the latest product information up to date.
- Monitor procurement processes to ensure compliance with an organization’s budget or sustainability goals.
Though SAP Ariba can be used alone, it is built to integrate seamlessly with SAP ERP products to allow the sharing of data across a business’s entire operation. Using SAP Ariba with the SAP S/4HANA suite of business solutions, a company can immediately communicate information from its P2P system to departments such as finance or sales, increasing overall efficiency and mitigating potential disruptions.
SAP Ariba unifies the entire procure-to-pay process within a sole platform presenting a single user experience. Using the software, an organization can generate a request for proposal, source vendors, sign contracts, broadcast bids, complete the purchasing process, send or pay invoices and communicate with suppliers about disruptions or additional needs. By automating some of these processes, the software reduces the likelihood of financial discrepancies and creates a detailed data trail for both internal and external audits.
SAP Ariba reduces supplier risk by offering several solutions for supplier lifecycle and performance, including automated supplier onboarding and supplier performance management tools. Using SAP Ariba, suppliers can self-report data through the Ariba network, while buyers gain access to risk monitoring and brand reputation exposure reports. With these functions, businesses can encourage employees to buy from preferred suppliers and customize supplier settings across categories, departments or locations.
The SAP Ariba network is a global supplier network that includes over five million buyers and vendors. This collaborative network connects individuals, businesses and supply chain systems in a unified digital marketplace. The SAP business network facilitates transparency by bringing accurate, up-to-date information to various trading partners. On the network, buyers can discover and compare suppliers, complete purchase orders, upload and read pertinent documents and communicate fluctuations in supply and demand in real time.
SAP Ariba solutions focus on keeping the P2P process efficient, transparent and compliant for a wide range of business cases. Among the platform’s common uses are:
SAP Ariba solutions include an extensive set of processes, controls and workflows to avoid the principal-agent problem. Also known as the agency problem, this is a specific conflict of interest that can occur when a buying agent acts on behalf of a company and feels pressure to secure a deal.
Businesses use SAP Ariba for contract management and license agreement organization, unifying contract data in a centralized repository. With automated workflow functions, businesses can streamline the contract review processes.
Businesses use Ariba to electronically manage invoices and payments, automatically matching invoices to purchase orders and receipts to ensure accuracy and consistency. They can also track payments in real time, allowing for effective cash flow management and cost savings.
SAP Ariba facilitates a guided buying process, steering businesses toward preferred suppliers while ensuring their specific procurement criteria are met.
SAP Ariba facilitates advanced spend management, allowing businesses to analyze spending patterns and identifying cost-saving opportunities at every point in the P2P process. The platform supports budgeting and approval workflows to ensure that spending aligns with broader financial goals.
The cloud-based Ariba network represents a global system of millions of new suppliers, allowing businesses to quickly discover new vendors or take advantage of SAP’s intelligent buyer-supplier matchmaking process.6
SAP Ariba facilitates collaboration between buyers and vendors. This means organizations and individual trading partners can share forecasts and orders in real time, improving visibility and allowing for more data-informed supply chain planning.
With SAP procurement solutions, businesses can set specific criteria for vendors and sellers to ensure suppliers are aligned with their sustainability commitments and environmental, social and governance (ESG) goals.
IBM® helps clients emerge stronger with our customized SAP Ariba consulting services. Drive innovation and business value by digitally transforming your procurement operations.
IBM offers a complete portfolio of next-generation products and services to solve your supply chain management needs, improve you bottom line and help give a greater competitive advantage. Learn how we can achieve supply chain sustainability together.
IBM can help transform your procurement organization with enhanced processes to unlock exponential value. Our procurement consultants collaborate with clients to create intelligent workflows combining your team's expertise, technologies like AI and automation and internal and external data sources—all enabled on your hybrid cloud.
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Footnotes
1 What is Fieldglass? (link resides outside ibm.com), SAP
2 Concur (link resides outside ibm.com)
3 A Software Strategy Helps the Little Guy Buy Smarter (link resides outside ibm.com), New York Times, 14 November 2005
4 Ariba's Next Big Challenge: Managing Hypergrowth (link resides outside ibm.com), Forbes, 3 August 1999
5 SAP Closes Gap Between Sustainability and Profitability with Solutions for Africa (link resides outside ibm.com), SAP News, 9 June 2022
6 SAP Business Network Discovery (link resides outside ibm.com), SAP