Telecom pullout leaves Ariba clientless

By ADAM GIFFORD

Telecom is to phase out its Ariba electronic procurement system, leaving US software vendor Ariba with no New Zealand customer and little chance of finding one.

Esolutions, which hosts the software for Telecom and had the right to sell it on an ASP (application service provider) basis, says it will provide the application if requested, but will not be pushing it.

This year Ariba closed its New Zealand operations and laid off its two staff here, saying it would service this country from Australia.

Its other New Zealand site, the OneZone scientific equipment and stationery marketplace, was closed by owners Biolab when it became clear it would not meet its revenue targets in the present environment.

The only organisation now geared to sell and support Ariba in the local market is consulting firm Accenture, but its exclusion from the shortlist for the whole of the Government's electronic procurement pilot could make its job harder.

Accenture was offering the Epylon solution for Government procurement, which is built around the Ariba technology.

Considering the cost of translating supplier catalogues into Ariba's proprietary format, wining the contract would have gone a long way to getting the critical mass of suppliers needed for a wider adoption.

Telecom chief technical officer Murray Milner said the Ariba solution had not performed as expected.

"There were reliability issues, performance issues, parts of it were clumsy to use, and each transaction ended up costing twice what we expected."

He said it would probably be replaced with the e-procurement modules that now come as part of the SAP financial software Telecom uses to run its business. Those modules are based around technology SAP is building with Ariba's main US rival, Commerce One.

Esolutions head Sue McCarthy still believes Ariba is the best e-procurement solution on the market, but esolutions' business is now providing hosted infrastructure, rather than hosted applications.

"Ariba is great for what it is designed to do, but things have changed in New Zealand and globally," Ms McCarthy said.

"From a New Zealand perspective, there is a lack of confidence in e-procurement and slow supplier adoption.

"It's expensive to do. It's a big investment - the return on investment is there but you need the supplier adoption."

She said Ariba's decision to pull support back to Australia raised significant doubts.

"Without local support and focus, it's not wise to promote Ariba."

Ariba was also unwilling to negotiate other pricing and delivery models that esolutions believed might be more acceptable to the New Zealand market, such as "pay as you grow".

Ms McCarthy said esolutions was evaluating other e-procurement solutions to offer to customers.

Ariba Australia chief executive Allan Smith said that although he was disappointed that Ariba may be losing Telecom as a client, he did not agree that it was because of any problems with the software.

"The success of the implementation depended on further deployment - it needed a topline directive to roll out right across Telecom New Zealand. That didn't happen," Mr Smith said.

"The issues were not around clunkiness or acceptance, but about how much of Telecom's spend was put through it."