ariba

(1)

Making the net work for B2B

Making

Making the net work for B2B

the net work for B2B

A R I B A

(2)

I. Background (1)



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)

(4)

I. Background (2)



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

(5)

I. Background (3)



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

(6)

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)

(7)

II. Major Business Items & Services (1)



Ariba Service Architecture:

_{Ariba Service Architecture:}

PRODUCT ORDER SUPPLIERS ARIBA NETWORK ARIBA SOLUTIONS Other ERP Accounting APPROVER END USER

(8)

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

Applications include a core set of master components: B2B Procurement, B2B Marketplace, B2B Dynamic Trade and B2B Collaborative 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

(9)

II. Major Business Items & Services (3)



Application Business:

_{Application Business:}

Ariba B2B commerce applications,

Ariba B2B commerce services

Applications

• M

aster 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

(10)

II. Major Business Items & Services (4)



Intermediary Business:

_{Intermediary Business:}

Buyer Network / Supplier Network

Buyer 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 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

(11)

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

ORMS

ORMX

IBX

Industry

Solutions

Industry

Solutions

• 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.com

Network

Ariba.com

Network

• 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

(12)

III. Core Competence

Customers

Various Reference site

With leading Co. Strategic Alliances

First Mover Advantage

• 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 B2B EC 에 대한 핵심 기술력 및 솔루션 보 유 ARIBA



Core Competence:

_{Core Competence:}

Technology-based, Reference sites, Strategic

alliance, First mover advantage

(13)

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 Enablers

_{Web-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

(14)

IV. Major Competitors & Benchmarking (2)



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

(15)

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) Market Capitalization 124.11 14.6B 8.65B 18.42B 98.68 29.31



Major Competitors Performance

_{Major Competitors Performance}

Comparation

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.

(16)

V. Performance & Profile (1)

Income Statement Cost Sales EPS Balance Sheet Gross profit Net income Gross margin % Long-term debt Market cap. Total asset Last 12 mos. -92.6 -0.96 --157.4 89.8 -13,263 -Sep 1999 7.4 45.4 -0.42 38.0 -29.3 83.7 0.8 6,566 170.0 Sep 1998 0.9 4 -0.48 7.5 -10.9 89.3 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)

(17)

ARIBA

Weakness Weakness Opportunity Opportunity Strength Strength Threat Threat

VI. 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

(18)

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

A r i

b a.

c o m

m a

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l a c

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v o l

u t i

o n a

r y p

a t h

2002 M a r k e t e f f i ci e n c y & s c a l e

(19)

VIII. Competitor’s Posture

• BC 카드 를 소유한 국내외 고객

• BC 카드 가맹점

ARIBA

ARIBA CommerceOneCommerceOne

S i z e o f M a r k e t

Degree of Market Inefficiency

S i z e o f M a r k e 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

(20)

IX. Revenue Model



Revenue Model:

_{Revenue Model:}

5 Revenue generating business model

Transaction Fees: Buying & Selling Contents Subscription Software Licensing s a l e s t r a n s a c t i o n O R M S L i c e n s i n _g f e e A u c t i o n C o _m m i s _s i _o n A c c e s s f _e e L i _n k s e r _v i _c e • Software licensing • Support Services • Consulting/Training Short term Short 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 Advertising Fees Auction-Driven Commission

(21)

X. 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) Fertilizer eMarketplace (2) Financing eMarketplace (5) Insurance eMarketplace (4) Logistics eMarketplace (3)

Buyers

Food eMarketplace (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

(22)

XI. Future Core Competence



Critical Success Factors

_{Critical Success Factors}

ARIBA

Liquidity

Credibilit

y

Reliabilit

y

&

Security

Ease of

Use

Strategi

c

Partners

Domain

Expertis

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