|By Dana Gardner||
|May 2, 2014 08:00 AM EDT||
This next BriefingsDirect case study explores how early-adopter Arlington Computer Products (ACP) improves their financial processes and operations using the new AribaPay cloud-based B2B payment service.
Agile business services are entering into a new era, an integrated and on-demand approach to ordering, billing, and settlement processes between buyers and seller. A prime example is Ariba's partnership with Discover, the financial services organization, to create AribaPay.
At the recent 2014 Ariba LIVE Conference in Las Vegas, BriefingsDirect had an opportunity to learn first-hand how the new approach works and benefits a first major user, ACP. To understand how AribaPay fulfills the last critical step in an end-to-end P2P process, we sat down with Arly Guenther, Chief Executive Officer at Arlington Computer Products in Buffalo Grove, Illinois, and Drew Hofler, Manage Cash Solution Marketing Director at Ariba, an SAP company. The discussion is moderated by me, Dana Gardner, Principal Analyst at Interarbor Solutions.
Here are some excerpts:
Gardner: Why are companies seeking to do things differently when it comes to paying and getting more digital and electronic in how they’re settling out their accounts?
Hofler: Dana, fundamentally, B2B payment is broken, in the sense that it’s very different from consumer payments. With consumer payments, you have the item that is being bought, and the information around the payment happens at the same time, at the point of payment, with the settlement of funds.
With a B2B payment, however, the goods that are delivered or the service that is performed is done so 45, 60, or 90 days ahead of when the payment is settled. This disconnect in time between the information around the payment and the actual settlement of the payment causes companies to have a very difficult time reconciling payments that they receive. There’s a lack of remittance information around the payment, particularly when there are multiple invoices involved to settle that payment.
You have organizations that would like to pay with electronic payment because it’s more secure, cheaper, and faster. But the people being paid, suppliers, are struggling with that, because it often doesn't contain the information that they need to settle those funds.
So suppliers would like to get paid faster and electronically, but they need that information along with it. There has never been a payment in the B2B world that tied together net-term payment with all of the information that's necessary to manage and reconcile that payment. That’s where AribaPay comes in to try to solve that problem.
Gardner: Just for our audience, AribaPay was unveiled last year at Ariba LIVE and it’s a partnership with Discover, the financial services organization. Tell us about the general availability rollout. What’s going on here this week at LIVE, and why is this is a big bash, a big coming out for AribaPay?
First live transactions
Hofler: Last year, we announced our partnership with Discover and began our development process and design phase of building out the product. This year, we’re happy to announce that we've had our first live transactions between Discover and Arlington Computer Products.
So, the first live payments have gone through the system, and the product is ready to bring out and it will be fully available to the general public in the second quarter of this year.
Gardner: Let’s go to Arly. Tell us a bit about Arlington Computer Products, about what you do, the size of your organization, and why AribaPay was interesting to you.
Guenther: Arlington Computer Products has been in business for 30 years. We’re an IT solution provider, servicing a broad spectrum of large enterprise customers. Last year, we did about $130 million in revenue, and we’re providing best-in-class IT solutions for our customers. So when we see a best-in-class solution like AribaPay, we really want to embrace it and use it ourselves.
We’re always looking at our business trying to get more efficient and drive cost out of our model. Customer satisfaction is our top priority, but at the same time, we need to be price competitive. So we’re always looking for innovative solutions, trying to get more efficient and more productive as an organization.
The space that we've been in historically has been very manual for us, very high touch. With AribaPay, we’ve been able to re-architect our accounting system to use a cloud solution, as opposed to a manual process.
As far as Discover, we've done business with Discover for more than a decade. They’re an outstanding organization, using best-in-class technology to drive their business. If you combine that with Ariba, which is a top-notch software firm, you’re really combining two great organizations. So we were really comfortable going forward with the pilot.
Gardner: As Drew pointed out, there are numerous benefits that come with moving to an electronic-settlement process and using an integrated approach across the partnership or ecosystem like Discover and Ariba. For you, Arly, what were the top problems or top issues that you wanted to resolve by going into this new model?
Guenther: It has been really a very manual process for us. We would generate an invoice. We had to put it in an envelope. We had postage expense and envelope expense. We’d mail the invoice out, sit and wait for a payment, a check, to come into a lock box. We’d wait for the check to clear so the funds are available.
If we followed up after 45 to 50 days, we occasionally might find that the customer didn't even receive the invoice. So we’d have to resend an invoice. It was a high-touch, manual process. Now it’s an automated process. So there are some big productivity savings for us.
Gardner: Arly, while expanding this across more of your accounts, do you see any ancillary benefits in terms of process refinement, analysis, or productivity insights? Is there going to be perhaps an additional payback when you scale this up?
Guenther: Absolutely. We were in the pilot. As I mentioned, we’ve done business with Discover for over a decade. They’re a fabulous customer of ours. We’ve used Ariba with Discover for a number of years, just not AribaPay. Now, we really want to take it and use it across the board in our accounting system for our customer base.
Gardner: Drew, tell us a bit more about AribaPay for those who are intrigued and want to learn more. What does it actually do? What are some of the details, and how would you go about bringing this into your organization?
Hofler: As I said, the fundamental problem with B2B payment is that disconnect between the information and settlement of funds. That’s what AribaPay corrects and bridges that gap. On the Ariba Network, our core strength is everything from sourcing all the way through to the invoice being approved and ready to pay. That’s all of the information that goes along with the payment. The invoice, the line items, the purchase order (PO) behind it, even the contract behind is all there and backing up that payment.
AribaPay then takes it the final step and, in that settlement process, connects a unique payment identifier with that and connects with the Discover network to leverage their core strength, which is secure trusted settlement of funds and the infrastructure to do that.
Then, Discover settles the fund in electronic manner, but that settlement of funds is now tied together with the information that came behind that payment. So a supplier receiving a payment through AribaPay can get an automatic feed into their back-end system or they can come on to the Ariba Network and see every line item that in the invoice that came behind that payment.
Hofler: More importantly, it will highlight if there’s a discrepancy between what they invoiced and what they were paid. Say they invoiced $100 and they were paid $90 because the buyer disputed an item or they thought the price should be lower, AribaPay will highlight that with the I-card and tell you exactly where that discrepancy is, so that suppliers no longer have to search through and find where the issue is.
Finally, AribaPay has a very cool feature, we call it track-and-trace for payment. It’s very much like when you order something online and you get a packaged shipped to you. You get a tracking number and you can see where that package is geographically as it comes to your house.
With AribaPay, the supplier can see where the actual payment is every step along the process, from the time the payment is approved, to the time that it gives its execution and the file is sent, to when Discover debits the buyers bank account, to when they credit the supplier’s bank account. All the way along the line, they can see every step.
That’s what it does. It bridges that gap of information, which gives suppliers the ability now to embrace electronic payments, get paid faster, and have visibility into it, because they now have all that information that they need.
Gardner: We’re really creating these data rich transactions, where the data follows a transaction and it allows for a much greater transparency. How does that line up with other services? I'm thinking perhaps the Dynamic Discounting at Ariba. Is there a synergy of any sort between some of these other services and what you can accomplish with AribaPay?
Hofler: There is a synergy. AribaPay is really that last step in the true P2P process. It is the second "P" in P2P, and it closes that loop and it does so in a way that gives the suppliers a certainty of payment.
With Dynamic Discounting, it's a great next step. Dynamic Discounting simply gives the supplier the ability to choose a different date for payment and offer a discount in order to accelerate that payment.
In a normal discounting platform, that choice of the supplier will be sent to the buyers back-end payment system, which will tell them that the supplier wants to be paid early. That’s the last visibility that the supplier sees and they just trust that the process will work and the buyer will then actually pay them at that time and for the amount that they are expecting.
With AribaPay, the discount choice can be tied directly to the execution of the payment. They can see with certainty that, yes, the buyer has accepted that; yes, the buyer has now executed on that. They can see when it's coming. It adds that extra layer of visibility and certainty to the choice that they have to get paid. That’s very synergistic with Dynamic Discounting.
Gardner: Arly, as you’re hearing Drew describe these services and capabilities, do you think it might alter the way that you relate to your accounts, to your customers? Is there a value-add with having this visibility, tracking, and data with the transactions that might allow you to increase your services? Is this something you can extend back into your market?
Guenther: Absolutely. From a process stand point, it's a game changer for us in terms of driving productivity and improving cash flow. Just like anything else, as you drive down your selling, general, and administrative expenses (SG and A) and your own expenses and you get more efficient, you pass those savings on to the customer. But we’re really a technology company, and so when we get a best-in-class solution like this, we really want to maximize the benefits.
Gardner: I know it's quite early in the game. We've just begun doing transactions but can you see any metrics of success, any measurement of how this would work? We are anticipating, as you mentioned, cost savings, but have we put any numbers to that yet, Arly, or is it too soon?
Guenther: We’re anticipating a six-figure savings just between handling expenses, postal expense, and supply expense, but the real wild card is cash flow. When you improve your cash flow, the opportunity cost on that cash can be pretty high. So from that standpoint alone, we know it's going to be in the six figures, but as we free up cash to do other things, that’s going to make a big difference for us.
Gardner: Drew, for those interested in learning more, how would they begin? What's a good way of starting a process where they could begin to understand and even execute on something like AribaPay?
Lots of information
Hofler: A great place to go to learn more about AribaPay is simply AribaPay.com. There is a lot of information out there, some data sheets and a form that they can fill out to learn more information and hear from us.
We have some value engineering models that can help customers, both buyers and suppliers, understand how AribaPay can help their business. That would be great for a start. One other point I neglected to make about AribaPay is that we've talked a lot about the benefits of suppliers, which is great.
It's a wonderful benefit for suppliers, but we shouldn’t understate the benefit there is to buyers of not having to manage bank-account information any more. One of the benefits of AribaPay in leveraging Discover is Discover’s infrastructure and network of merchant acquirers and the process of bringing suppliers on. They’re capturing our bank information managing it, bumping it up against all the asset control checks, all of the know your customer (KYC), and things that have to happen to verify that bank information and then keeping that bank information up to date.
No longer do buying organizations, as they do today, have to hold on to supplier bank account information, if they are going to pay electronically. That is a very big benefit, particularly in light of what we’ve see in the news lately about certain companies having had their data briefs and payment information, bank information stolen. So this eliminates that risk by offloading the management of that bank information into a trusted third-party like Discover whose business is managing that information.
Gardner: Drew, looking to the future of maybe 12 months from now, the next Ariba LIVE or conference of note, what can we expect? Are there some added services or more analysis and analytical benefits that you can draw? Where do you expect this to go next?
Hofler: Right now, AribaPay is going to be launched in the second quarter of this year to general availability. It’s just the beginning. It’s first being launched to the U.S. alone. The very next thing for us is expanding that into other jurisdictions. So I would look for that, first and foremost in the next year.
You may also be interested in:
- Business success increasingly hinges on supply chain innovation and procurement advantages
- Workforce of the Future -- and Why Preparing Means Rethinking Human Resources Now
- Ariba announces business network analysis enhancements, first transactions conducted under AribaPay
- Spot buying automated by Ariba gives start-up KooZoo a means to shop more efficiently
- Combining big data and cloud capabilities for ecommerce matches buyers and sellers like never before
- Here's Why Healthcare Businesses Must Efficiently Manage Their Suppliers, Purchases, and Processes
- The Open Group conference emphasizes healthcare as key sector for ecosystem-wide interactions improvement
- Research: Spot buying automation delivers greater B2B procurement efficiency
- Blue Marble Media Shows How Mid-Market Selling Gains new Life Via Ariba Discovery
- Ariba LIVE roadmap debrief: Cloud data analytics
The Internet of Things is clearly many things: data collection and analytics, wearables, Smart Grids and Smart Cities, the Industrial Internet, and more. Cool platforms like Arduino, Raspberry Pi, Intel's Galileo and Edison, and a diverse world of sensors are making the IoT a great toy box for developers in all these areas. In this Power Panel at @ThingsExpo, moderated by Conference Chair Roger Strukhoff, panelists discussed what things are the most important, which will have the most profound...
Nov. 26, 2015 01:30 AM EST Reads: 421
In today's enterprise, digital transformation represents organizational change even more so than technology change, as customer preferences and behavior drive end-to-end transformation across lines of business as well as IT. To capitalize on the ubiquitous disruption driving this transformation, companies must be able to innovate at an increasingly rapid pace. Traditional approaches for driving innovation are now woefully inadequate for keeping up with the breadth of disruption and change facin...
Nov. 26, 2015 01:00 AM EST Reads: 428
Growth hacking is common for startups to make unheard-of progress in building their business. Career Hacks can help Geek Girls and those who support them (yes, that's you too, Dad!) to excel in this typically male-dominated world. Get ready to learn the facts: Is there a bias against women in the tech / developer communities? Why are women 50% of the workforce, but hold only 24% of the STEM or IT positions? Some beginnings of what to do about it! In her Day 2 Keynote at 17th Cloud Expo, San...
Nov. 26, 2015 12:00 AM EST Reads: 520
Discussions of cloud computing have evolved in recent years from a focus on specific types of cloud, to a world of hybrid cloud, and to a world dominated by the APIs that make today's multi-cloud environments and hybrid clouds possible. In this Power Panel at 17th Cloud Expo, moderated by Conference Chair Roger Strukhoff, panelists addressed the importance of customers being able to use the specific technologies they need, through environments and ecosystems that expose their APIs to make true ...
Nov. 26, 2015 12:00 AM EST Reads: 479
Apps and devices shouldn't stop working when there's limited or no network connectivity. Learn how to bring data stored in a cloud database to the edge of the network (and back again) whenever an Internet connection is available. In his session at 17th Cloud Expo, Ben Perlmutter, a Sales Engineer with IBM Cloudant, demonstrated techniques for replicating cloud databases with devices in order to build offline-first mobile or Internet of Things (IoT) apps that can provide a better, faster user e...
Nov. 25, 2015 08:30 PM EST Reads: 365
In recent years, at least 40% of companies using cloud applications have experienced data loss. One of the best prevention against cloud data loss is backing up your cloud data. In his General Session at 17th Cloud Expo, Sam McIntyre, Partner Enablement Specialist at eFolder, presented how organizations can use eFolder Cloudfinder to automate backups of cloud application data. He also demonstrated how easy it is to search and restore cloud application data using Cloudfinder.
Nov. 25, 2015 03:45 PM EST
With major technology companies and startups seriously embracing IoT strategies, now is the perfect time to attend @ThingsExpo 2016 in New York and Silicon Valley. Learn what is going on, contribute to the discussions, and ensure that your enterprise is as "IoT-Ready" as it can be! Internet of @ThingsExpo, taking place Nov 3-5, 2015, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with 17th Cloud Expo and will feature technical sessions from a rock star conference faculty ...
Nov. 25, 2015 02:45 PM EST Reads: 493
Internet of @ThingsExpo, taking place June 7-9, 2016 at Javits Center, New York City and Nov 1-3, 2016, at the Santa Clara Convention Center in Santa Clara, CA, is co-located with the 18th International @CloudExpo and will feature technical sessions from a rock star conference faculty and the leading industry players in the world and ThingsExpo New York Call for Papers is now open.
Nov. 25, 2015 02:30 PM EST Reads: 506
Cloud computing delivers on-demand resources that provide businesses with flexibility and cost-savings. The challenge in moving workloads to the cloud has been the cost and complexity of ensuring the initial and ongoing security and regulatory (PCI, HIPAA, FFIEC) compliance across private and public clouds. Manual security compliance is slow, prone to human error, and represents over 50% of the cost of managing cloud applications. Determining how to automate cloud security compliance is critical...
Nov. 25, 2015 02:00 PM EST Reads: 353
As organizations shift towards IT-as-a-service models, the need for managing & protecting data residing across physical, virtual, and now cloud environments grows with it. CommVault can ensure protection & E-Discovery of your data - whether in a private cloud, a Service Provider delivered public cloud, or a hybrid cloud environment – across the heterogeneous enterprise.
Nov. 25, 2015 01:45 PM EST
In his keynote at @ThingsExpo, Chris Matthieu, Director of IoT Engineering at Citrix and co-founder and CTO of Octoblu, focused on building an IoT platform and company. He provided a behind-the-scenes look at Octoblu’s platform, business, and pivots along the way (including the Citrix acquisition of Octoblu).
Nov. 25, 2015 01:30 PM EST Reads: 466
Today air travel is a minefield of delays, hassles and customer disappointment. Airlines struggle to revitalize the experience. GE and M2Mi will demonstrate practical examples of how IoT solutions are helping airlines bring back personalization, reduce trip time and improve reliability. In their session at @ThingsExpo, Shyam Varan Nath, Principal Architect with GE, and Dr. Sarah Cooper, M2Mi’s VP Business Development and Engineering, explored the IoT cloud-based platform technologies driving t...
Nov. 25, 2015 12:00 PM EST Reads: 364
There are over 120 breakout sessions in all, with Keynotes, General Sessions, and Power Panels adding to three days of incredibly rich presentations and content. Join @ThingsExpo conference chair Roger Strukhoff (@IoT2040), June 7-9, 2016 in New York City, for three days of intense 'Internet of Things' discussion and focus, including Big Data's indespensable role in IoT, Smart Grids and Industrial Internet of Things, Wearables and Consumer IoT, as well as (new) IoT's use in Vertical Markets.
Nov. 25, 2015 12:00 PM EST Reads: 517
The Internet of Things (IoT) is growing rapidly by extending current technologies, products and networks. By 2020, Cisco estimates there will be 50 billion connected devices. Gartner has forecast revenues of over $300 billion, just to IoT suppliers. Now is the time to figure out how you’ll make money – not just create innovative products. With hundreds of new products and companies jumping into the IoT fray every month, there’s no shortage of innovation. Despite this, McKinsey/VisionMobile data...
Nov. 25, 2015 10:00 AM EST Reads: 430
As organizations realize the scope of the Internet of Things, gaining key insights from Big Data, through the use of advanced analytics, becomes crucial. However, IoT also creates the need for petabyte scale storage of data from millions of devices. A new type of Storage is required which seamlessly integrates robust data analytics with massive scale. These storage systems will act as “smart systems” provide in-place analytics that speed discovery and enable businesses to quickly derive meaningf...
Nov. 25, 2015 08:15 AM EST Reads: 353
In his General Session at 17th Cloud Expo, Bruce Swann, Senior Product Marketing Manager for Adobe Campaign, explored the key ingredients of cross-channel marketing in a digital world. Learn how the Adobe Marketing Cloud can help marketers embrace opportunities for personalized, relevant and real-time customer engagement across offline (direct mail, point of sale, call center) and digital (email, website, SMS, mobile apps, social networks, connected objects).
Nov. 25, 2015 07:30 AM EST Reads: 254
The Internet of Everything is re-shaping technology trends–moving away from “request/response” architecture to an “always-on” Streaming Web where data is in constant motion and secure, reliable communication is an absolute necessity. As more and more THINGS go online, the challenges that developers will need to address will only increase exponentially. In his session at @ThingsExpo, Todd Greene, Founder & CEO of PubNub, exploreed the current state of IoT connectivity and review key trends and t...
Nov. 25, 2015 05:45 AM EST Reads: 383
Too often with compelling new technologies market participants become overly enamored with that attractiveness of the technology and neglect underlying business drivers. This tendency, what some call the “newest shiny object syndrome” is understandable given that virtually all of us are heavily engaged in technology. But it is also mistaken. Without concrete business cases driving its deployment, IoT, like many other technologies before it, will fade into obscurity.
Nov. 25, 2015 02:00 AM EST Reads: 294
With all the incredible momentum behind the Internet of Things (IoT) industry, it is easy to forget that not a single CEO wakes up and wonders if “my IoT is broken.” What they wonder is if they are making the right decisions to do all they can to increase revenue, decrease costs, and improve customer experience – effectively the same challenges they have always had in growing their business. The exciting thing about the IoT industry is now these decisions can be better, faster, and smarter. Now ...
Nov. 25, 2015 12:00 AM EST Reads: 169
We are rapidly moving to a brave new world of interconnected smart homes, cars, offices and factories known as the Internet of Things (IoT). Sensors and monitoring devices will touch every part of our lives. Let's take a closer look at the Internet of Things. The Internet of Things is a worldwide network of objects and devices connected to the Internet. They are electronics, sensors, software and more. These objects connect to the Internet and can be controlled remotely via apps and programs. ...
Nov. 24, 2015 01:15 PM EST Reads: 483