ariba

ARIBA

Making the net work for B2B

Contents

Contents VI. SWOT Analysis I. Background II. Major Business Items & Services III. Core Competence IV. Major Competitors

VII. Strategic Position

VIII. Competitor’s Posture

IX. Revenue Model

X. Building Value through Networks

& Benchmarking XI. Future Core Competence V. Performance Performance & Profile Profile

I. Background (1) 

A leading provider of Internet-based B2B EC solutions



Ariba.com Network: 

A single global B2B EC network



Enable buyers and suppliers to automate business transactions on the Internet



Operating Resource Management System (ORMS application) enables organizations to automate the procurement cycle



Lowering the costs associated with operating resources and other  materials



Founded in September 1996, CA



Development stage (1996.8. ~ 1997.3) 

Conducting research and developing initial products

I. Background (2) 

Began selling products, services in the U.S., Europe, Canada, Australia and Asisa (1997.3)



386 Employees (1999.9) --> Over 1,100 Employees world wide (2000.4)



Acquisition: 

1999.11, Trading Dynamics, a leading provider of B2B Internet trading applications, $ 500M



1999.12, TRADEX Technologies, a leading provider of solutions for  Net Markets, $ 2 B

I. Background (3)



CEO: 

Krach, Keith J.(42), Chairman of the Board, Chief Executive Officer 



A co-founder of ARIBA



From March 1996 to September 1996, an Entrepreneur in Residence at Benchmark Capital



From October 1988 to August 1995, Chief Operating Officer of  Rasna Corporation, a mechanical computer-aided design automation software company



Held various positions with General Motors, including General Manager and Vice President of GMF Robotics

I. Background (4) 

Financial Data: (in $thousands)

1997

1998

1999

760

8,363

45,372

Gross profit

(180)

6,825

36,559

Net loss

(4,679)

(10,953)

(29,300)

Net loss  / share

(3.66)

(0.95)

(0.84)

No. of shares

1,279

11,524

35,032

Revenue

2000 1st quarter   92,500

(10,300)

II. Major Business Items & Services (1) 

Ariba Service Architecture:

PRODUCT ORDER

SUPPLIERS

ARIBA NETWORK APPROVER Accounting

ARIBA SOLUTIONS Other  ERP

END USER

II. Major Business Items & Services (2) 

Ariba B2B Commerce Platform: offers a single system for managing

all buying, selling and marketplace commerce processes 

Ariba B2B Commerce Platform offers a single system for managing all buying, selling and marketplace commerce processes 

Ariba B2B Commerce Applications include a core set of master components: B2B Procurement, B2B Marketplace, B2B Dynamic Trade and B2B Collaborative Commerce 

Ariba B2B Commerce Services include a broad set of  network-based solutions that enable customers to accelerate their deployment while increasing the breadth and scope of their solution

II. Major Business Items & Services (3) 

Application Business: Ariba B2B commerce applications,

Ariba B2B commerce services Applications Applications • Master components: B2B Procurement, B2B Marketplace, B2B Dynamic Trade

and B2B Collaborative Commerce • Interchangeable components : Catalog & Content, Reporting & Analysis, Supplier Enablement and Messaging & Integration

Servic Servic es es • Network-based,open model(interoperability) • Transaction routing service, supplier & content service, sourcing & liquidation service, payment & financial service, logistics & fulfillment service, information & analysis service

II. Major Business Items & Services (4) 

Intermediary Business: Buyer Network / Supplier Network

Buyer Buyer Network Network • easy for buying organizations to conduct eCommerce with their supplier community

• buyers can find new suppliers and source products, add or change their supplier  eCommerce relationships, and automate the acquisition and management of operating resources from requisition to payment–easily and efficiently

Supplier Supplier Network Network • Allows suppliers to more efficiently do business with existing clients by reducing

transaction costs and facilitating the exchange of content and transactions over the Internet • suppliers are able to leverage a single registration with the Ariba Network service to conduct business with any buying organization using the Ariba ORMS™ application worldwide

II. Major Business Items & Services (5) 

Ariba Solutions: ORMS, ORMX, IBX ORMS

• Enables business buyers to get the goods and services • Provides content access, routing and approvals, and ERP integration

ORMX

• Version of the ORMS for use in an ASP environment

IBX

Industry Solutions Ariba.com Network 

• Internet Business Exchange service • A hosted Internet service that enables corporations and Net market makers to quickly build electronic marketplaces

• Ariba Consumer Product Solutions, Ariba Energy Solutions, etc.

• Delivers supplier directory services, seamless access to supplier content, transactions routing b/w buyers & suppliers, and value-added services • Electronic payment, logistics integration, and dynamic pricing

III. Core Competence 

Core Competence: Technology-based, Reference sites, Strategic

alliance, First mover advantage ARIBA

• Higher Market awareness • Building barriers to entry

First Mover Advantage

Customers

With leading Co. Strategic Alliances

Various Reference site

•

Secured a number of 

members of Site

•

Strategic alliances with

leading companies •

Cutting-edge technology and

market rich

B2B EC 에 대한 핵심 기술력 및 솔루션 보 유

IV. Major Competitors & Benchmarking (1)



Traditional ERP Co.: i2 Technology, SAP, Oracle, PeopleSoft, Baan

1. Web-enabled e-commerce applications – aggressive release 2. ERP The Communications The Commerce led to the internet and its Open Network the type of present new opportunities 

Web-based Commerce Enablers

1. Ariba, CommerceOne, Intelisys: Including all industry category and Browser-based, XML-enabled, Purchasing automation software 2. AltraEnergy, Bidcom: Industry Specific Commerce Solutions provided 3. Harbinger, SterlingCommerce: EDI Network Solutions Developed 4. SmartAge, BigStep: Web pages for small businesses Back-ends Developments

IV. Major Competitors & Benchmarking (2)



Horizontal Marketplace:

1. VerticalNet (Aggregated communities model): 402 Vertical Marketpalce is a collection of, Vertical Community 나 Industry Depending on separate service provided 2. TradeOut.com (More integrated marketplace model): Provides a wide range of services for the industrial sector, to arrange an auction, according to product category service category 3. Ariba.com Network, MarketSite.net, eCommerce Potal



Vertical Marketplace: Chemdex, e-STEEL, PlasticNet, PaperExchange

IV. Major Competitors & Benchmarking (3) 

Major Competitors Performance Comparation 1999 Revenue

45M

33M

571M 

Net Income (Loss)

(29M)

(63M)

23M

EPS

(0.42)

(0.74)

(0.14)

PSR ( Price-selling Ratio)

124.11

98.68

29.31

Stock Price (Present/IPO)

76 / 23

55 / 21

117 / 20

(52-week Range)

15-183

4-165

13-223

Market Capitalization

14.6B

8.65B

18.42B

Net Income in Ariba and CommerceOne Software i2 application



Stock Price The i2 in compared low, CommerceOne than appears highly 

Market Value(M/C) and CommerceOne than higher, i2 is low.

V. Performance & Profile (1) 

Financial Summary (in $millions) Income Statement Sales Cost Gross profit  Net income Gross margin % EPS

Last 12 mos. 92.6 -157.4 89.8 -0.96

Sep 1999 45.4 7.4 38.0 -29.3 83.7 -0.42

Sep 1998 4 0.9 7.5 -10.9 89.3 -0.48

Balance Sheet Total asset Long-term debt Market cap.

13,263

170.0 0.8 6,566

19.2 0.6 -



Rapid increase in new customers and increased sales due to need arises solution 

According to business expansion sales commission & amortization Due to increase net loss 

For the 3 months ended in 03/31/2000, revenues were $40M

VI. SWOT Analysis Strength

Weakness

- First mover advantage

-

-Held a variety of solutions

Global Network Service - a

Little too late for departure

and technology

- The cumulative deficits

- Various reference site

- Rapid growth according to the

-Partnership with leading

coordination problem

Co

Opportunity -

ARIBA

Threat

Internet market maturity

- BIZ Paradigm shift (B2B,ERP,SCM,CRM)

-

Competition (like

companies)

- Expansion of Marketplace

- New competitors emerged

- Different revenue model

(SI, IT Companies, etc.)

structure

- Marketplace Competition

- Strategic alliances with

- Various industries/

leading companies in diverse

corporate culture apply

vertical industries of services

- Limitations of long term

and functions of market

revenue structure

VII. Strategic Position 

B2B Marketplace- Phase leading strategy

M  a r  k   e t   e f  f  i    c i    e n  c  y  &  s  c  a l    e

 a t h  p  r y  a  n  t i o   u  l  e v o  e  l a c  p  t  e  r k   a  m  m • Building value  o . c  a   b through networks A r i • Globalization

• Transaction Management • Information analysis/ accumulation

• Complementary commerce services • Strategic alliances with other marketplaces

• Infrastructure • Building Credibility 2000

2001

2002

VIII. Competitor’s Posture CommerceOne

ARIBA

 

Real Estate

Financial Svc.

Business Svc.

Energy

• BC 카드 를 소유한

Telecom Svc.

국내외 고객

• BC 카드 가맹점

 o f   M  a r  k   e t 

Industrial

Equip. Food Autos

Business Svc.

Energy

Chemicals Metals Paper Products

Healthcare Construction

Construction Small Biz.

Electronics

Financial Svc.

 Telecom Svc.

Healthcare Transportation

 S  i   z   e

Real Estate

Transportation

 S  i   z   e

 o f   M  a r  k   e t 

Apparel Life Science

Degree of Market Inefficiency

Small Biz. Electronics

Industrial

Equip. Food Autos

Chemicals Metals Paper Products Apparel Life Science

Degree of Market Inefficiency

Size of Market : Market Degree of Market Inefficiency : Supply Chain – on the degree of  unreasonableness

Source : www.fatex.com

IX. Revenue Model 

Revenue Model: 5 Revenue generating business model Transaction Fees: Buying & Selling

Contents Subscription

Short term • Software licensing • Support Services

A    c    c    e   s    s    f     e   e   L    s    e   i     n   r    k    v    i     c    e  

• Consulting/Training    n   o    s     i   e    t     l   c    a    a    s    s    n    a    r    t

Mid Term • Transaction fees

ARIBA C      o     m     m     is           s     i o          n    

A       u      c      t       io             n     

(Auction, bid,

O R M  S 

exchange) • Advertising Revenue

L ic  e    ns    i ng    f e  e 

Software Licensing

Long Term • Full service Marketplaces (Value added services

Advertising Fees

AuctionDriven Commission

/ Data analysis service)

X. Building Value through Networks 

B2B Grand Finale : eMarketplace interconnetion www.novopoint.com : Ariba - Cargill affiliate, Food & Beverage marketplace

Entry point

Seeds eMarketplace (1),( 7)

Fertilizer  eMarketplace (2)

Food eMarketplace (6)

Buyers

Financing eMarketplace (5)

Insurance eMarketplace (4)

Logistics eMarketplace (3)

(1) Select seeds for soybean crop (2) Identify potential fertilizer choices from fertilizer eMarketplace (3) Receive freight quotes from logistics eMarketplace (4) Provides quotes for potential insurance from insurance eMarketplace (5) Financial institutions bid to provide credit to cover the seeds, fertilizer, and shipping at financial eMarketplaces (6) Identify potential buyers of soybean crop and build pre-contract (7) Selections are made and the transaction is completed at the seeds eMarketplace

XI. Future Core Competence 

Critical Success Factors Domain Expertis e Strategi c Partners

• Market players, business process, & key inefficiencies holds a key to

knowledge • Critical Mass & Credibility essential for • Technology & Service Partnerships

Reliabilit y & • 24 hours Security available Robust,

• User Friendly

ARIBA

• Neutral Organizations

• Trusted level of security guarantees

Interface

Liquidity

• Construction of industries located in Visibility

scalable, open platform provide

Ease of  Use

• Trading Community prerequisites

Credibilit y