Welcome!

Big Data Journal Authors: Elizabeth White, Adrian Bridgwater, Liz McMillan, Kevin Benedict, Pat Romanski

Related Topics: Cloud Expo, Java, SOA & WOA, Linux, Security, Big Data Journal

Cloud Expo: Article

A New Way to Send and Receive Payments

How ACP simplifies and speeds its billing and payments using the new AribaPay cloud service

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.

Hofler

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.

Guenther

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.

We’re always looking at our business trying to get more efficient and drive cost out of our model.

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.

Ancillary benefits

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.

With AribaPay, the supplier can see where the actual payment is every step along the process

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.

Dynamic Discounting

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.

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.

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.

We have some value engineering models that can help customers, both buyers and suppliers, understand how AribaPay can help their business.

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:

More Stories By Dana Gardner

At Interarbor Solutions, we create the analysis and in-depth podcasts on enterprise software and cloud trends that help fuel the social media revolution. As a veteran IT analyst, Dana Gardner moderates discussions and interviews get to the meat of the hottest technology topics. We define and forecast the business productivity effects of enterprise infrastructure, SOA and cloud advances. Our social media vehicles become conversational platforms, powerfully distributed via the BriefingsDirect Network of online media partners like ZDNet and IT-Director.com. As founder and principal analyst at Interarbor Solutions, Dana Gardner created BriefingsDirect to give online readers and listeners in-depth and direct access to the brightest thought leaders on IT. Our twice-monthly BriefingsDirect Analyst Insights Edition podcasts examine the latest IT news with a panel of analysts and guests. Our sponsored discussions provide a unique, deep-dive focus on specific industry problems and the latest solutions. This podcast equivalent of an analyst briefing session -- made available as a podcast/transcript/blog to any interested viewer and search engine seeker -- breaks the mold on closed knowledge. These informational podcasts jump-start conversational evangelism, drive traffic to lead generation campaigns, and produce strong SEO returns. Interarbor Solutions provides fresh and creative thinking on IT, SOA, cloud and social media strategies based on the power of thoughtful content, made freely and easily available to proactive seekers of insights and information. As a result, marketers and branding professionals can communicate inexpensively with self-qualifiying readers/listeners in discreet market segments. BriefingsDirect podcasts hosted by Dana Gardner: Full turnkey planning, moderatiing, producing, hosting, and distribution via blogs and IT media partners of essential IT knowledge and understanding.

Latest Stories from Big Data Journal
Goodness there is a lot of talk about cloud computing. This ‘talk and chatter’ is part of the problem, i.e., we look at it, we prod it and we might even test it out – but do we get down to practical implementation, deployment and (if you happen to be a fan of the term) actual cloud ‘rollout’ today? Cloud offers the promise of a new era they say – and a new style of IT at that. But this again is the problem and we know that cloud can only deliver on the promises it makes if it is part of a well...
There’s Big Data, then there’s really Big Data from the Internet of Things. IoT is evolving to include many data possibilities like new types of event, log and network data. The volumes are enormous, generating tens of billions of logs per day, which raise data challenges. Early IoT deployments are relying heavily on both the cloud and managed service providers to navigate these challenges. In her session at 6th Big Data Expo®, Hannah Smalltree, Director at Treasure Data, to discuss how IoT, B...
Cisco on Wedesday announced its intent to acquire privately held Metacloud. Based in Pasadena, Calif., Metacloud deploys and operates private clouds for global organizations with a unique OpenStack-as-a-Service model that delivers and remotely operates production-ready private clouds in a customer's data center. Metacloud's OpenStack-based cloud platform will accelerate Cisco's strategy to build the world's largest global Intercloud, a network of clouds, together with key partners to address cu...
I write and study often on the subject of digital transformation - the digital transformation of industries, markets, products, business models, etc. In brief, digital transformation is about the impact that collected and analyzed data can have when used to enhance business processes and workflows. If Amazon knows your preferences for particular books and films based upon captured data, then they can apply analytics to predict related books and films that you may like. This improves sales. T...
Technology is enabling a new approach to collecting and using data. This approach, commonly referred to as the “Internet of Things” (IoT), enables businesses to use real-time data from all sorts of things including machines, devices and sensors to make better decisions, improve customer service, and lower the risk in the creation of new revenue opportunities. In his session at Internet of @ThingsExpo, Dave Wagstaff, Vice President and Chief Architect at BSQUARE Corporation, will discuss the real...
IoT is still a vague buzzword for many people. In his session at Internet of @ThingsExpo, Mike Kavis, Vice President & Principal Cloud Architect at Cloud Technology Partners, will discuss the business value of IoT that goes far beyond the general public's perception that IoT is all about wearables and home consumer services. The presentation will also discuss how IoT is perceived by investors and how venture capitalist access this space. Other topics to discuss are barriers to success, what is n...
When one expects instantaneous response from video generated on the internet, lots of invisible problems have to be overcome. In his session at 6th Big Data Expo®, Tom Paquin, EVP and Chief Technology Officer at OnLive, to discuss how to overcome these problems. A Silicon Valley veteran, Tom Paquin provides vision, expertise and leadership to the technology research and development effort at OnLive as EVP and Chief Technology Officer. With more than 20 years of management experience at lead...
BlueData aims to “democratize Big Data” with its launch of EPIC Enterprise, which it calls “the industry’s first Big Data software to enable enterprises to create a self-service cloud experience on premise.” This self-service private cloud allows enterprises to create 100-node Hadoop and Spark clusters in less than 10 minutes. The company is also offering a Community Edition via free download. We had a few questions for BlueData CEO Kumar Sreekanti about all this, and here's what he had to s...
Labor market analytics firm Wanted Analytics recently assessed the market for technology professionals and found that demand for people with proficient levels of Hadoop expertise had skyrocketed by around 33% since last year – it is true, Hadoop is hard technology to master and the labor market is not exactly flooded with an over-abundance of skilled practitioners. Hadoop has been called a foundational technology, rather than ‘just’ a database by some commentators – this almost pushes it towards...
The cloud provides an easy onramp to building and deploying Big Data solutions. Transitioning from initial deployment to large-scale, highly performant operations may not be as easy. In his session at 15th Cloud Expo, Harold Hannon, Sr. Software Architect at SoftLayer, will discuss the benefits, weaknesses, and performance characteristics of public and bare metal cloud deployments that can help you make the right decisions.