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SAP's Barry Padgett on future of SAP Ariba Network

In this Q&A, new SAP Ariba President Barry Padgett discusses the future of procurement and the experience he will bring to Ariba from his roles with the SAP SMB Group and Concur.

In January, SAP Ariba saw a change in leadership as Alex Atzberger, who had held the role of president the past three years, took over the reins of SAP Hybris. Veteran SAP and Concur executive Barry Padgett was subsequently named as president of SAP Ariba.

Padgett most recently served as president of the SAP SMB & Network Group after coming into SAP in 2014 when it acquired Concur, where he had served in various executive capacities for almost 20 years. In this Q&A held in advance of SAP Ariba Live, taking place March 5 to March 7 in Las Vegas, Padgett discusses his new role with SAP Ariba and what his experience with the cloud and SMBs will mean for the future of procurement and SAP Ariba Network.

How will your experience with Concur inform the way you run SAP Ariba? What similarities or differences do the companies share?

Barry PadgettBarry Padgett

Barry Padgett: It's interesting because Concur and Ariba have a very similar story arc. They both are of the same vintage; both were originally on-premises companies who made the move to cloud when there weren't any cloud companies. There wasn't a Salesforce.com, a SuccessFactors, a Cornerstone or a Taleo at that time, and most of those companies started in SaaS. So, Concur and Ariba went through this roughly at the same time. They had some boom times but also some bust times as they made their transition, and investors were confused about how you move from license revenues to a subscription idea, and that your bookings and revenue are going to drop significantly year over year in comparison, but that you were building this long-term path to predictable revenues.

What are some of the most significant changes that you've seen in SAP Ariba?

Padgett: It's had an amazing couple of years with incredible growth in the SAP Ariba Network. This is a company with an excess of $1 billion in revenue that's growing at 30%. It's really amazing, and there are not a lot of companies out there of that size that are growing that fast, because it's really hard to do. As that revenue base gets bigger, it can be hard to keep or accelerate the growth rates.

We've heard a lot from SAP about how the companies that make up the SAP Business Network will all be seamlessly integrated. Are we closer to seeing that be a reality?

Padgett: That's a great question because we've been talking about it a lot, and this is the No. 1 question that comes up from our prospects. There's this concept that, if you buy things from a single vendor, there should be some benefit, at least more than just getting a single consolidated invoice at the end of the month. So, that's what you're seeing in the SAP Business Network Group and the Cloud Business Group. We all operate under a single edict to adhere to a set of principles around integration and collaboration and the nourishment of our data by our customers and by one another. By 'one another,' it means that, if you hire a contractor in Fieldglass -- and if you also run SuccessFactors and Ariba -- the contractor that you just hired in Fieldglass should kick off a new hire process within SuccessFactors so they get onboarded. And it should also kick off a procurement process in Ariba to get them a laptop and a phone or whatever else they need provided for them when they're on-site.

So, part of it is consumption and nourishment of our data internally amongst ourselves as a group, and then, secondly, it's more of this platform orientation -- the idea of being open so that the customer can join their existing heterogeneous applications with the SAP applications that they have bought. There are plenty of customers out there running Salesforce and Ariba, or Marketo and Ariba, or Workday and Ariba, so you're not just going to see the internal 'better together -- you should buy everything from SAP because look how wonderfully it works together,' but also this push to recognize and ensure that our customers see that we can work with whatever their landscape looks like and that we're not forcing them down a particular path because it looks good for us. You can expect to see stuff at Ariba Live on both of those fronts.

What can customers expect to see on the SAP Ariba Network and platform itself?

Customers are less interested in hearing about AI, ML, deep neural networks, pattern matching or blockchain, and they're more interested in hearing about … the business impact that they can get by using those tools.
Barry PadgettPresident, SAP Ariba

Padgett: The opportunity continues to be the application or the impact of the available assets that we now have at our disposal. Customers are less interested in hearing about AI, ML [machine learning], deep neural networks, pattern matching or blockchain, and they're more interested in hearing about what's the business application and what's the business impact that they can get by using those tools. So, it's almost comforting to think about the fact that you don't have to be a slave to the latest thing, and instead, your orientation should always be towards what's the maximum amount of impact that you can have through your services and applications for your customer by using whatever assets are available to you at the time. We probably won't talk about AI for the sake of AI, but we'll talk about how you do things like smart contract management. For example, if you have contracts that are beholden to limits on exchanges, you can make sure that you get alerts, or there's some action in the system that happens as the exchange rate changes on the global markets. You're going to hear more from us at Ariba Live on the practical business applications of these technologies.

Does this mean that people are getting more wary about the hype around these technologies?

Padgett: It's probably an evolution of the fact that people are fatigued hearing about it. I think people are tired of hearing about how amazing blockchain is going to be, and they just want to understand what impact it can have at their business. Maybe it's not talking about what five years from now looks like when the whole world is going onto blockchain-based authentication for new transactions, and instead, it's talking about how we make sure that we're actually onboarding suppliers that we know and trust.

At the same time, these technologies are changing the nature of procurement. How do you view the role of procurement today and in the future?

Padgett: Right now, there's a reorientation of the procurement process so that, instead of a process, it's becoming more of a strategic competitive differentiator for companies. It's a really interesting time to be in procurement because a lot of companies have spent time, money, energy and resources on some of the front-office innovations, like CRM, SFA [sales force automation], digital marketing and e-commerce. But the interesting thing about procurement is that it hasn't yet gone through that golden age of complete transformation into a hugely strategic part of the business. So, instead of a process that's very back office-centric, you're seeing these CPOs, CIOs and finance folks moving more into a chief collaboration officer role rather than chief procurement officer, and it's because they can finally use these services, like the SAP Ariba Network and the tools coming out of the competitive landscape, to drive value and strategic differentiation to the business.

So, procurement will become much more strategic in business?

Padgett: Yes, you're going to continue to see this evolution within companies where this company becomes a strategic part of how they go to market and how they run their businesses. This includes the economic benefit of being much more efficient and savvier around where the money goes and the transparency around that, but it's also this idea of procurement helping the company move towards its sustainability and responsibility goals. For a company that's trying to drive CSR [corporate social responsibility], you can do amazing things when you create transparency in the supply chain -- making sure [there are] ethical business practices in all your suppliers, driving out forced labor or child labor, being able to contribute to the communities where you live and work through your supplier base. That's part of this shift to becoming a really important part of the business, not just a process that scoops up all of the receipts at the end of someone buying something.

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