ariba

AribabAribabaa

Making the net work for B2BMaking the net work for B2B

A R I B A

AribabAribabaa

ContentsContents

I. BackgroundI. Background

II. Major Business ItemsII. Major Business Items

& Services& Services

III. Core CompetenceIII. Core Competence

IV. Major Competitors IV. Major Competitors

& Benchmarking & Benchmarking

V. Performance & ProfileV. Performance & Profile

VI. SWOT AnalysisVI. SWOT Analysis

VII. Strategic PositionVII. Strategic Position

VIII. Competitor’s PostureVIII. Competitor’s Posture

IX. Revenue Model IX. Revenue Model

X. Building Value through NetworksX. Building Value through Networks

XI. Future Core Competence XI. Future Core Competence

ContentsContents

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I. Background (1)I. Background (1)

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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

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I. Background (2)I. Background (2)

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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

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I. Background (3)I. Background (3)

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CEO: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

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I. Background (4)I. Background (4)

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 / share

No. of shares

(3.66)

1,279 11,524 35,032

(0.95) (0.84)

(in $thousands)

Financial Data:Financial Data:

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II. Major Business Items & Services (1)II. Major Business Items & Services (1)

Ariba Service Architecture:Ariba Service Architecture:

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PRODUCT ORDER

SUPPLIERS

ARIBA NETWORK

ARIBA SOLUTIONS

Other ERP

Accounting

APPROVER

END USER

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II. Major Business Items & Services (2)II. Major Business Items & Services (2)

Ariba B2B Commerce Platform: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

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II. Major Business Items & Services (3)II. Major Business Items & Services (3)

Application Business: Application Business: Ariba B2B commerce applications, Ariba B2B commerce services

ApplicationsApplications

• 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

es

Servic

es• Network-based,open model(interoperability)

• Transaction routing service, supplier & content service, sourcing & liquidation

service, payment & financial service, logistics & fulfillment service, information

& analysis service

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II. Major Business Items & Services (4)II. Major Business Items & Services (4)

Intermediary Business: Intermediary Business: Buyer Network / Supplier Network

Buyer NetworkBuyer 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 NetworkSupplier 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

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II. Major Business Items & Services (5)II. Major Business Items & Services (5)

Ariba Solutions: Ariba Solutions: ORMS, ORMX, IBX

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

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

ORMSORMS

ORMXORMX

IBXIBX

IndustrySolutions

IndustrySolutions

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

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

Ariba.comNetwork

Ariba.comNetwork

• 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

• 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

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III. Core CompetenceIII. Core Competence

Customers

VariousReference site

With leading Co. Strategic Alliances

First MoverAdvantage

• Secured a number of

members of  Site

• Strategic alliances with

leading companies

• Cutting-edge technology and

market rich

• Higher Market

awareness •   Building barriers to

entry

기술력기반

B2B EC 에 대한 핵심 기술력 및 솔루션 보유

ARIBA

Core Competence: Core Competence: Technology-based, Reference sites, Strategic alliance, First mover advantage

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IV. Major Competitors & Benchmarking (1)IV. Major Competitors & Benchmarking (1)

Traditional ERP Co.: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 EnablersWeb-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

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IV. Major Competitors & Benchmarking (2) IV. Major Competitors & Benchmarking (2)

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

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IV. Major Competitors & Benchmarking (3) IV. Major Competitors & Benchmarking (3)

1999

Revenue 45M 33M 571M

Net Income(Loss)

(29M) (63M) 23M

EPS (0.42) (0.74) (0.14)

PSR( Price-selling Ratio)

MarketCapitalization

124.11

14.6B 8.65B 18.42B

98.68 29.31

Major CompetitorsMajor Competitors Performance Performance ComparationComparation

Stock Price(Present/IPO)

(52-week Range)

76 / 23 55 / 21 117 / 20

15-183 4-165 13-223

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.

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V. Performance & Profile (1)V. Performance & Profile (1)

Income Statement

CostSales

EPS

Balance Sheet

Gross profitNet income

Gross margin %

Long-term debtMarket cap.

Total asset

Last 12 mos.

-92.6

-0.96

--157.489.8

-13,263

-

Sep 1999

7.445.4

-0.42

38.0-29.383.7

0.86,566

170.0

Sep 1998

0.94

-0.48

7.5-10.989.3

0.6-

19.2

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

(in $millions)

Financial SummaryFinancial Summary

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ARIBA

WeaknessWeakness

OpportunityOpportunity

StrengthStrength

ThreatThreat

VI. SWOT AnalysisVI. SWOT Analysis

- Global Network Service - a

Little too late for departure

- The cumulative deficits

- Rapid growth according to the

coordination problem

- Competition (like

companies)

- New competitors emerged

(SI, IT Companies, etc.)

- Marketplace Competition

- Various industries/

corporate culture apply

- Limitations of long term

revenue structure

- 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

- First mover advantage

-Held a variety of solutions

and technology

- Various reference site

-Partnership with leading

Co

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VII. Strategic Position VII. Strategic Position

• Infrastructure• Building Credibility

• Transaction Management• Information analysis/accumulation

• Complementary commerce services• Strategic alliances with other marketplaces

• Building value through networks• Globalization

2000 2001

Ariba.com marketplace evolutionary path

2002

Mark

et e

fficie

ncy &

scale

B2B Marketplace- Phase leading strategyB2B Marketplace- Phase leading strategy

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VIII. Competitor’s Posture VIII. Competitor’s Posture

• BC 카드 를 소유한

국내외 고객

• BC 카드 가맹점

ARIBAARIBA CommerceOne CommerceOne

Size

of

Marke

t

Degree of Market Inefficiency

Size

of M

arke

t

Degree of Market Inefficiency

Real Estate Financial Svc.

Business Svc. Energy

Telecom Svc. Healthcare

Construction

Transportation

Small Biz.

Electronics Industrial

Equip.

Food Chemicals

Autos Metals

Paper Products

Apparel

Life Science

Real Estate Financial Svc.

Business Svc. Energy

Telecom Svc. Healthcare

Construction

Transportation

Small Biz.

Electronics Industrial

Equip.

Food Chemicals

Autos Metals

Paper Products

Apparel

Life Science

Source : www.fatex.com

Size of Market : Market

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

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IX. Revenue ModelIX. Revenue Model

Revenue Model: Revenue Model: 5 Revenue generating business model

Transaction Fees: Buying & Selling

Contents Subscription

Software Licensing

sale

s tr

ansa

ctio

n수수

료

ORMS

Licensing feeAuctio

n

Com

missio

n

Access feeLink

service

광고 스페이스 제

공

광고료

• Software licensing

• Support Services

• Consulting/Training

Short termShort term

• Transaction fees

(Auction, bid,

exchange)• Advertising Revenue

Mid Term

• Full service Marketplaces

(Value added services

/ Data analysis service)

Long Term

A R I B A

AdvertisingFees Auction-

Driven Commission

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X. Building Value through NetworksX. Building Value through Networks

B2B Grand Finale : B2B Grand Finale : eMarketplace interconnetion

www.novopoint.com : Ariba - Cargill affiliate, Food & Beverage marketplace

Seeds eMarketplace

(1),( 7)

FertilizereMarketplace

(2)

FinancingeMarketplace

(5)

InsuranceeMarketplace

(4)

LogisticseMarketplace

(3)

Buyers

FoodeMarketplace

(6)

Entry point

(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

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XI. Future Core Competence XI. Future Core Competence

Critical Success FactorsCritical Success Factors

ARIBA

Liquidity

Credibility

Reliability&

Security

Ease ofUse

Strategic

Partners

DomainExpertis

e

• Neutral Organizations

• Construction of industries

located in Visibility• 24 hours available Robust,

scalable, open platform

provide

• Trusted level of security

guarantees

• Critical Mass & Credibility essential for

• Technology & Service Partnerships

• Market players, business process,

& key inefficiencies holds a key to

knowledge

• User Friendly

Interface

• Trading Community

prerequisites