British Airways saves £500 million with Ariba

British Airways saves £500 million with Ariba van Ariba Technologies Netherlands

Door: Ariba Technologies Netherlands  24-08-2007
Trefwoorden: Profit, Procurement, Contract Management

British Airways saves £500 million with Ariba

Airline leverages Ariba Spend Management solutions to drive world-class procurement results

SUNNYVALE, Calif. – August 21, 2007 – Ariba, Inc. (NASDAQ: ARBA), the leading spend management solutions provider, today announced that its technology has enabled British Airways (BA), Europe’s largest airline, to deliver significant cost savings over the past six years. An early adopter of spend management, BA has successfully implemented Ariba technologies and best practice processes to streamline its procurement function and gain the visibility into and control over its spend needed to deliver measurable and sustainable results.

"BA recognized before many companies that spend management is the fastest, most efficient way to reduce costs, improve profits and gain competitive advantage," said Mike Arenth, General Manager, EMEA, Ariba. "BA didn’t hesitate in starting on the journey to spend management and has quickly moved toward excellence."

Getting on the path

At the end of 1999, BA was spending more than £4 billion a year with suppliers. The company urgently needed to re-examine its procurement function to achieve an overall savings target of £1.4 billion by 2006. "Back in 2000, Procurement in BA was well established, but buying procedures were inconsistent, staffing levels were high and around a quarter of spend was with non-preferred suppliers" said Tim Richardson, General Manager of Procurement Operations, BA.

Manual strategic sourcing was introduced in 2001 which started the change process, and progress accelerated with the introduction of new technology in 2003 that enabled a systematic closed-loop approach to sourcing and procurement. BA selected Ariba as its partner on this task and began a full implementation of Ariba’s spend management solutions, including Ariba Buyer™, Ariba Analysis™ and Ariba Contract Compliance™.

Navigating Roadblocks

Use of Ariba was not immediately welcomed at BA. Maverick buying continued until procurement began contacting staff members who attempted to order goods without using the new system. "This was all part of a systematic compliance program that started sending a signal to people that this is how things would be done from now on," Richardson said. And it worked. By 2005 compliance to the ordering systems was virtually 100 percent.

Moving forward

Not happy with simply streamlining processes, BA again raised the bar. The company announced three 'golden rules' that would allow it to better manage its spend and transform procurement from a tactical process to a strategic one. First, all orders must be raised and registered through Ariba Buyer. Second, only preferred suppliers can be used. And third, for any purchase over £100,000 the full strategic sourcing process must be followed.

Whereas BA had used technology in the past to tackle areas of direct spend, it had never looked at using technology to improve indirect procurement, despite the fact that it accounted for up to £1billion in spend. Since implementing Ariba’s solutions, BA has changed and has seen impressive results beyond just savings:

Reduction in UK preferred supplier base from 14,000 to 2,500

80 percent of purchases now processed electronically

"Procurement is now less about processing orders and more about strategic sourcing and finding the best quality products at the best price. And Ariba Spend Management is the best solution in the market for helping us to achieve our goals," said Silla Maizey, Procurement Director, BA.

About Ariba, Inc.
Ariba, Inc. is the leading provider of Spend Management solutions to help companies realize rapid and sustainable bottom line results. Successful companies around the world in every industry use Ariba Spend Management software and services. Ariba can be contacted in the U.S. at 1.650.390.1000 or at


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Safe Harbor Statement under the Private Securities Litigation Reform Act 1995: Information and announcements in this release involve Ariba's expectations, beliefs, hopes, plans, intentions or strategies regarding the future and are forward-looking statements that involve risks and uncertainties. All forward-looking statements included in this release are based upon information available to Ariba as of the date of the release, and we assume no obligation to update any such forward-looking statements. These statements are not guarantees of future performance and actual results could differ materially from our current expectations. Factors that could cause or contribute to Ariba's operating and financial results to differ materially from its current expectations include, but are not limited to: delays in development or shipment of new versions of Ariba's products and services; lack of market acceptance of Ariba's existing or future products or services; inability to continue to develop competitive new products and services on a timely basis; introduction of new products or services by major competitors; the ability to attract and retain qualified employees; difficulties in assimilating acquired companies; long and unpredictable sales cycles and the deferrals of anticipated orders; declining economic conditions; inability to control costs; changes in the company's pricing or compensation policies; significant fluctuations in our stock price; the outcome of and costs associated with pending or potential future regulatory or legal proceedings; the impact of our acquisitions, including the disruption or loss of customer, business partner, supplier or employee relationships; and the level of costs and expenses incurred by Ariba as a result of such transactions. Factors and risks associated with its business, including a number of the factors and risks described above, are discussed in Ariba's Form 10-Q filed August 8, 2007.

Trefwoorden: Ariba, Contract Management, Cost Reduction, Cost Savings, E-procurement, Procurement, Profit, Spend Management

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