In what has become a common refrain, business-to-business (B2B) e-commerce solutions provider Ariba, Inc. (Nasdaq:ARBA) has announced a set of key partnerships — this time with American Express (NYSE:AXP) and Dell Computer Corp. (Nasdaq:DELL).
American Express and Ariba said they will work together to develop “new advanced electronic payment services,” including a “pay-on-ship” service that will issue payments automatically on shipments. Dell said it will use Ariba software as the core of a B2B marketplace that will provide small and medium-sized business customers with online access to a wide range of goods and services.
Ariba’s B2B software is centered around online procurement, especially purchasing of non-capital, non-raw material items that range from office supplies to temporary help. So far this year, the company has announced partnering arrangements with Ernst & Young, Hewlett Packard and IBM, among others.
Going it alone is not on Ariba’s agenda, according to Ariba CEO Keith Krach. Earlier this month, Krach said, “Anybody who thinks they can do it alone is naive.” He added that the key to success will be for organizations to take equity in online trading exchanges in which they participate, and for companies to be willing to partner liberally to achieve technology goals.
Dell Supplies Hardware
Under the terms of the agreement with Dell, the Round-Rock, Texas-based computer manufacturer says it will make an undisclosed equity investment in Ariba. In return, Ariba has said that Dell will become its leading hardware supplier.
To make it easier for its customers to use its new procurement service, Dell said it will pre-install Ariba software in its PowerEdge servers. Dell plans to open its B2B marketplace by the third quarter of this year. As part of the service, it said it will take advantage of the electronic payment services being developed by Ariba and American Express.
Dell also will use Ariba’s B2B application to purchase “close to $2 billion (US$)” in supplies each year. It added that it plans to improve volume discounts from its suppliers and reduce processing time by more than 60 percent.
The centerpiece of the American Express deal will be a “pay-on-ship” service, which the firms said will combine authorization, payment and settlement into a single automated online process, based on shipment notification. According to Ariba, pay-on-ship is important because having a single automated process for ordering and payment eliminates overhead operations like check writing and invoice reconciliation.
The Dell/Ariba deal comes on the heels of last week’s partnership between Ariba, IBM and i2 Technologies to create what the companies called an “end-to-end solution for business-to-business e-commerce and collaboration.” Under the terms of the agreement, the companies will create a B2B marketplace platform that will be sold through IBM sales channels.
IBM said its global sales force will be responsible for selling the solution, and its Global Services division will provide global operations, support services systems integration and hosting services for the alliance.
Ariba shares jumped on the news, rising 9 7/8 in morning trading to 307 7/8. Ariba shares have been on a steady rise since the company went public last June at $11.50.
On March 2nd, the company said it would split its stock2-for-1.
In related news, Ariba also announced a deal with Cargill to establish Novopoint.com, a B2B e-marketplace that uses Ariba technology for the food and beverage industry.
The firms said that Novopoint will allow buyers and sellers of food ingredients, packaging and related services “to connect with each other, conduct transactions and better manage their supply chains.”