ARIBA

Making the net work for B2B

Aribab
 Contents

Contents
VI. SWOT Analysis

I. Background
VII. Strategic Position

II. Major Business Items

VIII. Competitor’s Posture
& Services

IX. Revenue Model

III. Core Competence

X. Building Value through Networks

IV. Major Competitors
& Benchmarking
XI. Future Core Competence

V. Performance & Profile

Aribab
 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

Aribab
 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

Aribab
 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

Aribab
 I. Background (4)
 Financial Data:
(in $thousands)

1997 1998 1999 2000 1st quarter

Revenue 760 8,363 45,372 92,500

Gross profit (180) 6,825 36,559

Net loss (4,679) (10,953) (29,300) (10,300)

Net loss (3.66) (0.95) (0.84)

/ share

No. 1,279 11,524 35,032

of shares

Aribab
 II. Major Business Items & Services (1)

 Ariba Service Architecture:

PRODUCT
ORDER

SUPPLIERS

ARIBA
NETWORK
APPROVER
Accounting

ARIBA
SOLUTIONS
Other
ERP

END USER

Aribab
 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

Aribab
 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

Aribab
 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

Aribab
 II. Major Business Items & Services (5)

 Ariba Solutions: ORMS, ORMX, IBX

• Enables business buyers to get the goods and services

ORMS • Provides content access, routing and approvals, and ERP integration

ORMX • Version of the ORMS for use in an ASP environment

• Internet Business Exchange service

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

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

• Delivers supplier directory services, seamless access to supplier content,

Ariba.com
transactions routing b/w buyers & suppliers, and value-added services
Network • Electronic payment, logistics integration, and dynamic pricing

Aribab
 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.

Various
Strategic Alliances
Reference site

• Strategic alliances with

• Secured a number of
leading companies
members of  Site • Cutting-edge technology and
market rich

B2B EC 에 대한
핵심 기술력 및 솔루션 보
유

Aribab
 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
Aribab
 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

Aribab
 IV. Major Competitors & Benchmarking (3)

 Major Competitors Performance

Comparation
1999

Revenue 45M 33M 571M

 Net Income in
Net Income Ariba and CommerceOne
(29M) (63M) 23M
(Loss) Software i2 application

EPS (0.42) (0.74) (0.14)

 Stock Price The i2 in
PSR compared low,
124.11 98.68 29.31
( Price-selling Ratio) CommerceOne than
appears highly
Stock Price
76 / 23 55 / 21 117 / 20
(Present/IPO)
 Market Value(M/C) and
(52-week Range) 15-183 4-165 13-223
CommerceOne than
Market higher, i2 is low.
Capitalization 14.6B 8.65B 18.42B

Aribab
 V. Performance & Profile (1)
 Financial Summary
(in $millions)
Income Statement Last 12 mos. Sep 1999 Sep 1998
Sales 92.6 45.4 4
Cost - 7.4 0.9
Gross profit - 38.0 7.5
Net income -157.4 -29.3 -10.9  Rapid increase in
Gross margin % 89.8 83.7 89.3
new customers and
EPS -0.96 -0.42 -0.48
increased sales due
Balance Sheet
to need arises
Total asset - 170.0 19.2
solution
Long-term debt - 0.8 0.6
Market cap. 13,263 6,566 -
 According to
business expansion
sales commission &
amortization Due to
increase net loss

 For the 3 months

ended in 03/31/2000,
revenues were $40M

Aribab

Strength
- First mover advantage
-Held a variety of solutions
and technology
- Various reference site
-Partnership with leading
Co
Opportunity
ARIBA
- Internet market maturity
- BIZ Paradigm shift
(B2B,ERP,SCM,CRM)
- Expansion of Marketplace
- Different revenue model
structure
- Strategic alliances with
leading companies in diverse
vertical industries of services
and functions of market
VI. SWOT Analysis
Weakness
- Global Network Service - a
Little too late for departure
- The cumulative deficits
- Rapid growth according to the
coordination problem
Threat
- Competition (like
companies)
- New competitors emerged
(SI, IT Companies, etc.)
- Marketplace Competition
- Various industries/
corporate culture apply
- Limitations of long term
revenue structure
Aribab
 VII. Strategic Position
 B2B Marketplace- Phase leading strategy

path
n ary
o
ol u ti
e ev
c
et pla
ark
Market efficiency & scale

m
a. com • Building value
b
Ari through networks
• Globalization

• Complementary
commerce services
• Strategic alliances with
• Transaction Management other marketplaces
• Information analysis/
accumulation
• Infrastructure
• Building Credibility

2000 2001 2002

Aribab
 VIII. Competitor’s Posture
ARIBA CommerceOne

Real Estate Financial Svc.

Real Estate Financial Svc.
Business Svc. Energy
Business Svc. Energy
• BC 카드 를 소유한
Telecom Svc. Healthcare
Telecom Svc. Healthcare
국내외 고객
Construction
• BC 카드 가맹점 Construction
Transportation Transportation
Small Biz.

Size of Market
Small Biz.
Size of Market

Electronics Industrial
Electronics Industrial
Equip.
Equip.
Food Chemicals
Food Chemicals
Autos Metals Autos Metals

Paper Products Paper Products

Apparel
Apparel
Life Science
Life Science

Degree of Market Inefficiency Degree of Market Inefficiency

Size of Market : Market

Source : www.fatex.com
Degree of Market Inefficiency : Supply Chain – on the degree of
unreasonableness
Aribab
 IX. Revenue Model
 Revenue Model: 5 Revenue generating business model

Contents Transaction Fees:

Subscription Buying & Selling Short term
• Software licensing
• Support Services
Ac

• Consulting/Training
ce

n
ss

tio
ns es
f
ee

tra sal
ac
Lin ice
se
rv
k

Mid Term
• Transaction fees
ORM (Auction, bid,
S
ARIBA exchange)
• Advertising Revenue
Lice
nsin
g fee
Commission

Auction

Software
Licensing Long Term
• Full service Marketplaces
(Value added services
Advertising / Data analysis service)
Fees Auction-
Driven
Commission
Aribab
 X. Building Value through Networks
 B2B Grand Finale : eMarketplace interconnetion
www.novopoint.com
: Ariba - Cargill affiliate, Food & Beverage marketplace

Entry point Seeds Fertilizer Food

eMarketplace eMarketplace eMarketplace
(1),( 7) (2) (6)
Buyers

Logistics
Financing Insurance
eMarketplace
eMarketplace eMarketplace
(3)
(5) (4)

(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

Aribab
 XI. Future Core Competence
 Critical Success Factors

Domain
Expertis
e
• Market players, business process,
Strategi Ease of
c & key inefficiencies holds a key to
Use
Partners knowledge
• Critical Mass & Credibility essential for • User Friendly
• Technology & Service Partnerships
ARIBA Interface

Reliabilit
y • Neutral Organizations Liquidity
& • Construction of industries
• 24 hours Security
available Robust, located in Visibility • Trading Community
scalable, open platform prerequisites
provide Credibilit
• Trusted level of security y
guarantees
Aribab