Ariba started out as a software house providing e-procurement software and implementation, but now, after some strategic

acquisitions and organic growth over the last few years, it provides end-to-end purchasing solutions combining software, consulting and outsourcing on a global basis. Ariba also has an innovative delivery model which they are continually improving to meet client needs. It is moving to more of an on-demand model, not just for software but consultancy as well.. Aribas experience of wor ing with clients in activities such as running auctions and providing managed services means that it has a wealth of expertise and nowledge to draw on, with !" per cent of the global #"" companies using its services.

$eview of Aribas strategy

%ompany management has consistently pounded out the following &five-pronged' strategy, which represents the companys roadmap to achieving long-term success as the ()( e-commerce networ and platform of choice* Capture buying power: Attract buyers to the e-commerce platform, achieved through the success of Ariba (uyer as the ideal solution for procurement. Attract and enable suppliers: Attract suppliers to the platform using buying power as the draw and by adding value for the suppliers. Build out the network: +xpand the networ , increasing the attraction to both buyers and suppliers, supported by the announcement during the quarter of ,etwor %onnect. Create a marketplace platform: -evelop a platform that includes multiple buyers and multiple sellers, including hori.ontals, verticals, geographies, dot coms, and corporate consortiums. Provide network and commerce services: +nable and provide services that are required by participants in the networ . /his will be further supported by the forthcoming %ommerce 0ervices Integrator program, also announced during the quarter.

1easuring against the strategy* 2ow is Ariba doing3

/a ing Aribas strategy one step at a time, we are more than a little impressed with managements record of execution, even in these early innings* Leadership in e-procurement. 4e thin the company clearly leads the mar et for buyside e-commerce, or e-procurement, software. Industry analysts will measure this mar et many different ways, but Ariba is most certainly the company to beat. Ariba pursued an initial strategy of focusing on very large buying organi.ations to help attract a lot of suppliers. ,ow it is marching down mar et, armed with its 5",""" registered suppliers and a cadre of hungry alliance partners targeting the mar et of potential companies with less than 6# billion in sales. rictionless supplier registration. Ariba has focused on a strategy that minimi.es friction for new suppliers interested in joining its networ . 0uppliers can register with full

&punch-out' functionality to their sites from the buyer application, or they can opt for simple fax or e-mail notification from buyers. /his strategy has enabled the company to build a networ of 5",""" suppliers, a number that the company expects to rise significantly over the coming months. In a virtuous circle, Aribas huge networ of suppliers in turn serves as a draw in attracting new buyer clients. /he 7niversal -escription -iscovery and Integration 87--I9 initiative launched by Ariba, 1icrosoft, and I(1, and supported by a broad representation of ey players in the ()( e-commerce mar et, should further facilitate the integration of new buyers and suppliers with the Ariba networ . :art of an open architecture project nown as project Aurora, 7--I represents another step in Aribas strategy to build liquidity through openness and integration. !penness means goodness for the network. /o further increase the power of Aribas networ , the company announced during the quarter the ,etwor %onnect program to enable non-Ariba applications to integrate with the Ariba %ommerce 0ervices ,etwor using a collection of technologies from I(1, /ibco, and web1ethods. /he connection of third-party procurement, mar etplace, and +$: technology li ely will increase the value of the networ and the value that is driven bac to both the buy side and the sell side, ma ing Ariba more attractive as the e-commerce platform of choice. "aking markets gets easier. /he company announced during the quarter the Ariba;ive 4eb-based nowledge repository and tool it for implementing mar etplaces< it is expected to be available in ,ovember of this year. /he tool will incorporate a series of methodologies, templates, best practices, and process management tools to allow implementation partners and customers to better manage the creation of new mar etplaces. /he product will also support nowledge sharing communities, and will serve as a communications channel for Ariba to eep its &ecosystem' informed of any upcoming enhancements or upgrades. Bring on the services. -uring the quarter, Ariba also announced the creation of the %ommerce 0ervices Integrator program, which is expected to be available in the first quarter of calendar )""#. /his program is designed to facilitate the integration of thirdparty commerce service providers with the Ariba networ . /his positions the company to begin building out the crown jewel of its five-pronged strategy. /he company indicated that (an of America already has identified approximately =! commerce services that it plans to provide on its own portal as well as on the networ . Ariba expects over time that there will be thousands of services available on its networ . In an effort to put some si.e to the commerce services mar et, company management presented the following estimates*

Ariba #eady $ets %he Pace for B&B eCommerce 'ntegration

/o date, over 5",""" selling organi.ations are accessible on the Ariba %0,8commerce service networ 9 /he Ariba $eady program indicates the level of technical integration of suppliers connected to the Ariba %0,, enabling buyers and mar et ma ers to quic ly identify and select appropriate organi.ations with whom to trade. Ariba $eady uses a well-defined process and consistent measurement standards to validate the level of integration. Ariba developed these processes and measurements in conjunction with Arthur Andersen, Aribas third party provider of testing and validation services. Ariba is dedicated to providing organi.ations with smooth and rapid business integration and seamless interoperability that maximi.es the ()( e%ommerce opportunity for all participants /his exciting new initiative will help buyers and mar et ma ers across the globe understand the strengths and qualifications of potential partners through consistent integration standards. %onsistency across integrations will accelerate Ariba %0, liquidity

A large and virtual mar et with suitable services can standardi.e the behavior of enterprise, provide convenience service, and help enterprise improve mar et share as well as reduce the cost.