Business & Technology Nexus

Dave Stephens on technology and business trends

The High Road and The Low Road

with one comment

As the saying goes, there’s nothing wrong with being Perfect. :) Sandy Kemper, the venerable leader of Perfect Commerce, has drawn criticism from different quarters on his strategy of acquiring “damaged” VAN technology and customers. But the smart former banker knows his annuity businesses when he sees them. Could he pose a challenge to the Ariba Supplier Network in a few years time? Maybe so.

Ariba is in the midst of launching it’s new, lean SaaS initiative. Insiders say Ariba took a hard look at their ability to sell additional Procurement systems in the Fortune 500, and the pace of their installed base losses to SAP and Oracle and decided to “tack” down-market. Calderoni has explained to Wall Street that Ariba is going to be just like salesforce.com, et al – a smaller direct sales force, lower G&A, etc. and that the transition is going exceptionally well. And look at their 6-month stock chart; you can’t argue against its recent rise. But what is really going on?

Once the Freemarkets acquisition closed (David McCormick, did you really join the Bush administration?) Ariba faced an identity crisis. And to an outsider like me it still does. What does it want to be when it grows up? A products company or a services business. Was the business about having a category expert for buying high-tech components in China available for spot checking factory locations and being “in the pit” during reverse auctions? Or would Ariba continue to stick to its knitting and be the “grease” enabling easier e-commerce between corporate buyers and their far flung supply base? By going SaaS, Ariba may just finally figure out how to do both. Maybe it will finally fuse its huge sourcing practice with the rest of its business. Ariba has “opened” their VAN to non-Ariba buyers, a smart move intended to strengthen that business’s cash flow.

Meanwhile Sandy stands apart. Now the question is will he stick to his VAN business, or try and bulk up his on-demand, add-on products (and fly with the high flyers)?

Assuming Perfect stays conservative, many may choose to “bank on it.”

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Written by Dave Stephens

03/6/06 7:51 AM at 7:51 am

Posted in Opinion

One Response

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  1. Someone I respect assailed my view on Perfect Commerce’s VAN business today with the following memorable quote: “No one would pay Vonage 10 cents a minute”. I have no idea what it means, but I’m very interested in any customer reviews of how the service is going..

    Dave Stephens

    03/8/06 9:55 PM at 9:55 pm


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