Ailing Ariba expands alliances with IBM, others

On the heels of a weak second quarter and the appointment of a new chief executive officer (CEO), Ariba Inc. on Tuesday announced an expansion of its relationships with a number of high profile partners including IBM Corp. and BEA Inc.

The announcements were made at the company’s “Ariba Live” event in Las Vegas.

Mountain View, California-based Ariba said it will further its relationship with IBM by more closely integrating the two companies’ products. IBM will incorporate Ariba products in its WebSphere integration software, a suite of middleware designed to help companies develop and deploy electronic business applications, including e-commerce applications.

Big Blue also announced that starting in June it would begin shipping its Leveraged Procurement Services (LPS) suite on Ariba’s business-to-business (B-to-B) platform. This should create a union between IBM’s catalog and pricing software and Ariba’s purchase requisition and reporting applications, the companies said.

IBM and Ariba also said they are working to ensure interoperability between Ariba products and IBM’s WebSphere B-to-B Integrator (WBI), software for managing information and processes between large corporations.

In return, Ariba said it will make IBM’s WebSphere Application Server a primary platform for future major releases of Ariba’s Dynamic Trade, Sourcing and Buyer products.

Separately Tuesday, Ariba said it has reached an agreement to strengthen ties between its B-to-B software and BEA’s WebLogic server. While Ariba’s Dynamic Trade and Sourcing software is already built into the server, the companies said Ariba’s Buyer product also will be integrated in future releases.

PricewaterhouseCoopers (PwC), meanwhile, pledged to work with Ariba to deliver its B-to-B software to the companies’ joint customers worldwide. Specifically, the companies said they would offer a collaborative sourcing system that combines PwC services with Ariba Sourcing, an application for quote-enabled procurement.

In addition, PwC said it would bring 700 of its services staff up to speed on Ariba’s products, and showcase Ariba software in its technology demonstration centers.

In its second-quarter financial results last month, Ariba doubled revenue year-over-year to $90.7 million [m], but that figure fell below analysts’ expectations and spurred layoffs of 700 employees, or close to a third of Ariba’s staff. On Monday, the company reorganized its top executives, pushing Larry Mueller [cq] up to chief executive officer from his former position as president and chief operating officer.

One analyst who tracked the Ariba Live event was unimpressed by Tuesday’s announcements.

“What I heard today was just a repackaging of the same things they have been saying for the last year,” said Karen Peterson [cq], an analyst at Gartner Group Inc. “If I was anyone but IBM I would wonder whether my partnership with Ariba was strategically beneficial or not.”

Ariba officials weren’t immediately available to comment for this article.

Gartner’s Peterson said the company appears to have “retrenched” after its failed acquisition of Agile Software Inc., which was aborted last month. Ariba has said it plans to focus more on faster return on investment for customers, but that might be difficult to deliver now that the merger has been called off, she said.

With the Agile purchase, Ariba appeared to be trying to build up more value chain management products. Now it finds itself left with its suite of online trading applications, which take more time to produce investment returns, Peterson said.

Rivals such as Oracle Corp., meanwhile, are working hard to make it easier for companies to get their e-business software up and running quickly. While Ariba’s products may have more features and be more flexible, the company might find it tough to compete if customers choose easy of deployment over functionality, Peterson said.

Ariba, in Mountain View, Calif., can be reached via the Web at