17 November 2005 | SM reporters
Ariba is to undertake a radical shift in strategy that will see it target smaller businesses.
The spend management firm, which has historically sought clients among the top 500 global companies, has launched software that is "cheaper and easier to use".
The launch follows Ariba's financial results covering the 12 months to the end of September. The firm reported a net annual loss for 2005 of $349.6 million (£198 million) compared with a loss of $25.2 million a year earlier.
Analysts said Ariba was still working through the acquisition in 2004 of sourcing software firm FreeMarkets, but was wise to reposition itself to tap into a burgeoning market that would give it a steady revenue stream.
Forrester Research analyst Andrew Bartels told SM large firms normally buy the licence fee for the software upfront and pay half as much again over the next few years for maintenance. But in this case smaller firms will pay for shared software on a pay-as-you-go basis.
"As those companies grow and use more, so the revenue stream will grow," he added.
Ariba said the launch means firms will have access to spend management tools and support services online. Payment is determined by usage but will be "substantially cheaper" than current offerings because many SMEs will be able to share a dedicated secure server.
Paul Hampton, marketing director for northern Europe, told SM
: "We think now is the right time to take spend management into the mainstream."