Earlier this month, the company announced that it was abandoning plans to acquire Agile Software Corporation in the wake of significant losses expected for Q1 2001. Ariba's plans to buy Agile represented an aggressive push into the direct procurement space for a company that has seen most of its success to date as a platform for the purchase of indirect goods. Ariba also announced that it will cut 700 employees, or approximately one third of its ranks, in the wake of its financial postings. Hurwitz Group has been predicting an implosion of public e-Marketplaces since last summer. It's little surprise that companies from the Fortune 500 on down the line are turning to private e-Hubs as the forum of choice for their online transactions.
Private hubs limit proprietary buying data to a select group of trading partners.
Limiting business to a preestablished group makes it easier to determine ROI based on pre-existing metrics for business performance. In the confined environment of a private hub, it is also easier to source the right supplier and finalize trading deals in a desirable timeframe. Recent reports show that manufacturers of highly complex goods, including the automotive and IT industries, are most likely to persevere with supply chain automation plans in these lean fiscal times. Ariba already has an established customer base in many of the most progressive manufacturing markets. Collaboration with net market makers who are already successful in these areas, coupled with a more advanced direct procurement offering, should help Ariba penetrate deeper into vertical markets it has only skimmed to date with its horizontal solutions.