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Ariba started out as a software house providing e-procurement software andimplementation, but now, after some strategic acquisitions and organic growth overthe 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 tomeet client needs. It is moving to more of an on-demand model, not just for software butconsultancy as well.. Aribas experience of woring with clients in activities such asrunning auctions and providing managed services means that it has a wealth ofexpertise and nowledge to draw on, with !" per cent of the global #"" companies usingits 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, achievedthrough the success of Ariba (uyer as the ideal solution for procurement.

Attract and enable suppliers:Attract suppliers to the platform using buyingpower 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 ofetwor %onnect.

Create a marketplace platform:evelop a platform that includes multiple

buyers and multiple sellers, including horiontals, verticals, geographies, dotcoms, 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 theforthcoming %ommerce 0ervices Integrator program, also announced during thequarter.

1easuring against the strategy* 2ow is Ariba doing3/aing Aribas strategy one step at a time, we are more than a little impressed withmanagements record of execution, even in these early innings*

Leadership in e-procurement.4e thin the company clearly leads the maret for buy-side e-commerce, or e-procurement, software. Industry analysts will measure this maretmany different ways, but Ariba is most certainly the company to beat. Ariba pursued aninitial strategy of focusing on very large buying organiations to help attract a lot ofsuppliers. ow it is marching down maret, armed with its 5",""" registered suppliersand a cadre of hungry alliance partners targeting the maret of potential companies withless than 6# billion in sales.

rictionless supplier registration.Ariba has focused on a strategy that minimiesfriction for new suppliers interested in joining its networ. 0uppliers can register with full

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&punch-out' functionality to their sites from the buyer application, or they can opt forsimple fax or e-mail notification from buyers. /his strategy has enabled the company tobuild a networ of 5",""" suppliers, a number that the company expects to risesignificantly over the coming months. In a virtuous circle, Aribas huge networ ofsuppliers in turn serves as a draw in attracting new buyer clients.

/he 7niversal escription iscovery and Integration 87I9 initiative launched byAriba, 1icrosoft, and I(1, and supported by a broad representation of ey players in the()( e-commerce maret, should further facilitate the integration of new buyers andsuppliers with the Ariba networ. :art of an open architecture project nown as projectAurora, 7I represents another step in Aribas strategy to build liquidity throughopenness and integration.

!penness means goodness for the network./o further increase the power of Aribasnetwor, the company announced during the quarter the etwor %onnect program toenable non-Ariba applications to integrate with the Ariba %ommerce 0ervices etwor

using a collection of technologies from I(1, /ibco, and web1ethods. /he connection ofthird-party procurement, maretplace, and +$: technology liely will increase the valueof the networ and the value that is driven bac to both the buy side and the sell side,maing Ariba more attractive as the e-commerce platform of choice.

"aking markets gets easier./he company announced during the quarter the Ariba;ive4eb-based nowledge repository and toolit for implementing maretplaces< it isexpected to be available in ovember of this year. /he tool will incorporate a series ofmethodologies, templates, best practices, and process management tools to allowimplementation partners and customers to better manage the creation of newmaretplaces. /he product will also support nowledge sharing communities, and willserve as a communications channel for Ariba to eep its &ecosystem' informed of anyupcoming 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 firstquarter of calendar )""#. /his program is designed to facilitate the integration of third-party commerce service providers with the Ariba networ. /his positions the company tobegin building out the crown jewel of its five-pronged strategy. /he company indicatedthat (an of America already has identified approximately =! commerce services that itplans to provide on its own portal as well as on the networ. Ariba expects over time thatthere will be thousands of services available on its networ.

In an effort to put some sie to the commerce services maret, company managementpresented the following estimates*

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

/o date, over 5",""" selling organiations are accessible on the Ariba %08commerceservice networ9

/he Ariba $eady program indicates the level of technical integration of suppliersconnected to the Ariba %0, enabling buyers and maret maers to quicly identify andselect appropriate organiations with whom to trade. Ariba $eady uses a well-definedprocess 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 organiations with smooth and rapid business integrationand seamless interoperability that maximies the ()( e%ommerce opportunity for allparticipants

/his exciting new initiative will help buyers and maret maers across the globeunderstand the strengths and qualifications of potential partners through consistentintegration standards. %onsistency across integrations will accelerate Ariba %0 liquidity

A large and virtual maret with suitable services can standardie the behavior ofenterprise, provide convenience service, and help enterprise improve maret share as wellas reduce the cost.

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