An SAP Ariba Business Network-Based Matchmaker Application Helps SMBs Impacted by Natural Disasters Gain Rapid New Credit Options
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An SAP Ariba Business Network-
Based Matchmaker Application Helps
SMBs Impacted by Natural Disasters
Gain Rapid New Credit Options
Transcript of a discussion on how data-driven supplier ecosystems enable new kinds of
matchmaker finance relationships that work rapidly and at low risk for small- to medium-
sized businesses in need.
Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: SAP
Dana Gardner: Hi, this is Dana Gardner, Principal Analyst at Interarbor Solutions, and
you’re listening to BriefingsDirect. Our next digital business innovation panel discussion
explores how a matchmaker application assists small businesses impacted by natural
disasters in the United States.
By leveraging the data and trust inherent in established business networks, Apparent
Financing by SAP creates digital handshakes between lenders and businesses in urgent
need of working capital financing.
The solution’s participants -- all in the SAP Ariba Network -- are putting the innovative
model to good use by initially assisting businesses impacted directly or via supply chain
disruptions from natural disasters such as forest fires and hurricanes.
To learn how data-driven supplier ecosystems enable
new kinds of matchmaker finance relationships that work
rapidly and at low risk, we are joined by our panel, Vishal
Shah, Co-Founder and General Manager of Apparent
Financing by SAP. Welcome, Vishal.
Vishal Shah: Thank you, Dana.
Gardner: We are here too with Alan Cohen, Senior Vice
President and General Manager of Payments and
Financing at SAP Ariba. Welcome, Alan.
Alan Cohen: Thank you. Great to be here.
Gardner: And we lastly welcome Winslow Garnier, President of Garnier Group
Technology Solutions, LLC in San Diego, California.
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Winslow Garnier: Thank you, Dana. I appreciate it.
Gardner: Vishal, what’s unique about this point in time that allows organizations like
Apparent Financing to play matchmaker between lenders and businesses?
Small-business finance savoir faire
Shah: The historical problem that
limited small businesses from
accessing financial services with ease
was lack of trust and transparency. It’s
also popularly known as the
information asymmetry problem.
At this point in time there are three emerging trends and forces that are transforming the
small business finance industry.
The first one is the digitalization of small businesses, such as from digital bookkeeping
systems that are becoming more affordable and accessible -- even to the smallest of
The second force is the financial industry innovation. The financial crisis of 2008 actually
unlocked new opportunities and created a developed industry called FinTech. This
industry’s strong focus on delivering the frictionless customer experience is the key
And the third force is technological innovation. This includes cloud computing, mobility,
and application programming interfaces (APIs). They combine to make it economically
feasible to gain access to financial information about small businesses that is stored in
today’s digital bookkeeping systems and e-commerce platforms. It's the confluence of
these three forces that solve that information asymmetry problem, leading to both
reduction of risk and cost to serve small businesses.
Gardner: Alan Cohen, why is this new business climate for
small- to medium-sized businesses (SMBs) a perfect fit for
something like the SAP Ariba Network? Tell us how your
business model and business network are helping Apparent
Financing with its task.
Cohen: Think about it in two ways. First, think differently
about combining the physical and the financial supply
chains. Historically, the Ariba Network has been focused on
connecting buyers with their suppliers. Now we are taking
the next step in this evolution to better connect the physical
with the financial supply chain to provide choice and value to
suppliers about access to capital.Cohen
The historical problem that limited
small businesses from assessing
financial services with ease was lack
of trust and transparency.
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The second piece of it is in leveraging the data. There’s a ton of excitement in this world
for artificial intelligence (AI) and machine learning (ML), and I am a big proponent of all
of that. These are going to be awesome technologies that will help society and
businesses as they evolve. It’s super important to keep in mind that the strength of the
Ariba Network is not just its size -- $2.1 trillion in annual spend, 3.4 million buyers and
suppliers -- it’s in the data. The intelligence drawn from this transactional data will enable
lenders to make risk-adjusted lending decisions.
And that real data value goes beyond just traditional lending. It also helps lenders
assess risk differently. This will help transform how lending is done to small and
medium-sized businesses as time evolves.
Gardner: Some of these trends have been in the works for 20 or 30 years but are now
coming together in a way that can help real people benefit in real situations. Winslow,
please tell us about Garnier Group Technology Solutions and how you have been able
to benefit from this new confluence of financing, data, and business platforms.
Rapid recovery resources
Garnier: Garnier Group Technology Solutions provides
intrusion detection, installation services, security cameras,
and Wi-Fi installation primarily for corporations and
municipalities. We are a supplier and an installer with
consistent requirements for working capital to keep our
business functioning correctly.
A major challenge showed up for us in late 2017 when the
Southern California fires took place. We had already
ordered product for several installation sites. Because of
the fires, those sites actually burned down. The time
needed to recover from already having spent the capital,
plus the fact that the business was no longer coming our
way, created a real need for us.
We previously looked at working capital lines and other resources. The challenge,
though, is that it is fairly complex. Our company is really good at what we do, but we are
not good at finding financing and taking the time to interview multiple banks, multiple
lenders. The process to just find the right type of lender to work with us -- that in itself
could take four to six months.
In this case, we did not have the time or the manpower to do the due diligence
necessary to make that all happen for us. Also, on a day-to-day basis, in dealing with
large corporations, we can hope to get paid in 30 days, but in reality that doesn't happen.
But we still need to pay our suppliers to maintain our credit terms and get delivery when
required by making sure they get paid on the terms that we have agreed to.
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We were fortunate to then be introduced to Vishal [Shah at Apparent Financing]. From
that point on, he turned into a one-stop shop for us. He took what we had and worked
with it, under the SAP guidance. That helped us to have confidence that we were
working with a credible source, and that they would deliver on what we agreed to.
Gardner: We see that SMBs can be easily disrupted, they are vulnerable, and they have
lag times between when they can get paid and when they have to pay their own
suppliers. And they make up a huge part of the overall economy.
Vishal, this seems like a big market opportunity and addressable market. Yet traditional
finance organizations mostly ignore this segment. Why is that? Why has bringing finance
options to companies like Garnier Group been problematic in the past?
Bank shies, Network tries
Shah: Going back to early 2008 when the global financial crisis started, there was a lot
of supply in the market and small businesses did not have to struggle as much to get
access to capital.
Since then, banks have been faced with
increasing regulatory burdens, as well as the
fact that the cost to serve SMBs became
much larger. Therefore the mainstream
banks have shied away from lending to and
serving this market. That has been one of the
The second is that banks have not truly embraced the power of technology. They
haven’t focused on delivering customer-centric propositions. Most of the banks today are
very product-centric organizations, and very siloed in their approach to serving
The fundamental problems were, one, the structure of the banks and the way they were
incentivized to serve this market. And secondly, the turn of events that happened post
the financial crisis, which effectively resulted in the traditional lenders just backing out
from this market, significantly reducing the supply side of the equation.
Gardner: Alan, it’s a great opportunity to show how this model can work by coming to
the rescue of SMB organizations impacted by natural disasters. But it seems to me that
this is a bellwether for a future wave of business services because of the transparency,
data-driven intelligence, security, and mission-critical nature of SAP and SAP Ariba’s
Since , banks have been
faced with increasing regulatory
burdens, as well as the fact that
the cost to serve SMBs became
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Do you see this as I do, as an opening inning in a longer game? Should we be thinking
newly about how business networks and data-driven intelligence fosters entirely new
markets and new business models?
SMB access to financing evolves
Cohen: Absolutely. I see this as the early stages of an evolution. There are a few
reasons. One is ease. Winslow talked about it. It can be very hard for small businesses
to access different banks or lenders to get financing. They need an easier way to do it.
We have seen transformation in consumer banking, but that transformation has not
followed through into business banking. So I think one opportunity is in bringing ease to
the process transformation.
Another piece is trust. What I mean by that is the data from SAP and SAP Ariba is high-
quality data that lenders can trust. And being able to trust that information is a big part of
Finally, like with any network, being able to
connect businesses with lenders has to
evolve -- just as Ariba has connected buyers
with suppliers to transact. This is a natural
evolution of the SAP Ariba Network.
I am very excited. And while we are still early in a longer journey, this process will
fundamentally change how business banking is done.
Gardner: Winslow, you had an hour of need. Certainly by circumstances that were
beyond your control. You heard from Vishal. What happened next? How were they able
to match you up with financing, and what was the outcome?
Garnier: The really unique thing here is that we were able to submit a single application
to allow us to have offers by more than one lender. We decided on and agreed that it
made sense select Fundation as the lender of choice. All the lenders were competitive,
but Fundation had a couple of features that were specific to our business and worked
better for us.
I have to tell you, at first I was skeptical that we would get this done soon enough. At the
same time, we had confidence -- having worked through the SAP Ariba Network
previously. Once we submitted the application, we stopped looking for other resources
because we felt that this would work for us. Fortunately, it did end up that way.
Within 30 days we were talking with lenders. We received a term sheet to understand
what would be available for us. That gave us time internally to make decisions on what
would work best. We closed on the transaction and it's been a good working relationship
between us and Fundation ever since.
Being able to connect businesses
with lenders has to evolve – just
as Ariba has connected buyers
with suppliers to transact.
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Gardner: Is this going to be more than a one-shot deal, a new business operating model
for you all? Are you going to be able to take a revolving line of credit and thereby have a
more secure approach to business? This may even allow you to increase the risk you
are willing to take to find new clients. So is this a one-shot, band aid -- or is this
something that’s changed your business model?
Not just reparations, relationships
Garnier: Oh, absolutely. Having a revolving line of credit has become a staple for us
because it’s a way to maximize our cash flow within our business. We can add additional
clients now and take on new jobs that we may have still taken on, but we would have
had to push them out later in time.
We are able to deliver our services faster at this point in time. And so it is the absolute
right solution for what we needed and what we will continue to use over time.
Gardner: Vishal, it's clear that organizations like Garnier Group are benefiting from this
new model. It's clear that SAP and SAP Ariba have the platform, the data, and the
integrity and trust to deliver on it.
But another big component here is to make sure that the financing organizations are
comfortable, eager, and are gaining the right information to make their lending decisions.
Tell us about that side of the equation. How do organizations like Fundation and others
view this, and how do you keep them eager to find new credit opportunities?
Shah: If you think of Fundation, they
are not a typical bank. They are willing
to look at any e-commerce platform and
any technology service providers as
new distribution channels through
which they can access new markets
and a new customer base.
Beyond that, they are using these channels as a way to market their own products and
solutions. They have much bigger reasons to look at these ecosystems that we have
developed over the years.
In my view, traditional banks and lending institutions look at businesses like Garnier
Group using what I call the rearview mirror. What I mean by that is lenders mostly base
their lending decisions or credit decisions by obtaining information from credit bureaus,
which they believe is an indicator of past performance. And that good indicator of their
past performance is also taken as an indicator of good future performance, which, yes,
does work in some cases -- but not in all.
By working with us, lenders like Fundation can not only look at traditional data sources
like credit bureaus, they are able to also assess the financial health and the risk of
Fundation is not a typical bank. They
are willing to look at any e-commerce
platform and any technology service
providers as new distribution channels
through which they can access new
markets and a new customer base.
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lending to a business through alternative data sources like the one Alan mentioned,
which is the SAP Ariba supply chain data. This provides them an increased degree of
confidence before they make prudent lending decisions.
The data in itself doesn't create the value. When processed in an appropriate manner --
and when we learn from the insights the data provides – then our lending partner gains a
precise view of both the historical business performance and a realistic view of the future
position and future cash flow positions of a small business. That is an incredibly powerful
proposition for our lending partners to comfortably and confidently lend to businesses
such as Garnier Group.
Gardner: This appears to be a win, win, win. So far, everybody seems to be benefiting.
Yet this could not have happened until the innovation of the model was recognized, and
then executed on.
So how did this come about, Alan? How did such payments and financing innovation get
started? SAP.iO Venture Studio got involved with Apparent Financing. How did SAP,
SAP Ariba, and Apparent Financing come together to allow this sort of innovation to take
place -- and not just remain in theory?
Data serves to simplify commerce
Cohen: Like anything, it begins with the marketplace and looking at a problem. At the
end of the day, financing is very inefficient and expensive for both suppliers and lenders.
From a supplier perspective, we saw this as an overly complex process. And it’s not
always the most competitive because people don’t have the time. From a lender
perspective, originating loans and mitigating risk are very important. Yet this process
hasn’t gone through a transformation.
We looked at it all and said, “Gosh, how can we better leverage the Ariba Network and
the data involved in it to help solve this problem?”
SAP.iO is a venture part of SAP that incubates new businesses. About a year-and-a-half
ago, we began bringing this to market to challenge how things had been done and to
open up new opportunities. It’s a very innovative approach to challenge the status quo,
to get businesses and lenders to think and look at this differently and seize opportunities.
And if you think about what the SAP Ariba
Network is, we run commerce. And we want
the lenders to fund commerce. We are
simply helping to bring these two together,
leveraging some incredible data insights
along with the security and trust of the SAP
and SAP Ariba brands.
We run commerce. We want
lenders to fund commerce. We are
simply helping to bring these two
together, leveraging some
incredible data insights.
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Gardner: Of course, it’s important to have the underlying infrastructure in place to
provide such data availability, trust, integrity, and support of the mission-critical nature.
But in more and more cases nowadays, the user experience and simplicity elements are
Winslow, when it came to how you interacted with the process, did you find it simple?
Did you find it direct? How important was that for you as an SMB to be able to take
advantage of this?
Garnier: We found it very straightforward. It didn’t require us going outside of the data
we have internally. We didn’t have to bring in our outside accounting firm or a legal firm
to begin the process. We were able to interface by e-mail and simple phone calls. It was
so simple. I’m still surprised that, based on our previous experiences, we were able to
get this to happen as quickly as it did.
Gardner: Vishal, how do you account for the ability to make this simple and direct for
both sides of the equation? Is there something about the investments SAP has made
over the years in technology and the importance of the user experience?
How do you attribute getting from what could be a very complex process to something
that’s boiled down to its essential simplicity?
Transparent transactions build trust
Shah: A lot of people misunderstand the user experience and co-relate that to
developing a very nice front end, creating an online experience, and making it seamless
and easy to use. I think that is only a part of the truth, and part of the story.
What goes on behind that nice-looking user interface is really eliminating what I call the
friction points in a customer’s journey. And a lot of those friction points are actually
introduced because of manual processes behind those nice-looking screens.
Secondly, there are a lot of exceptions -- business exceptions -- when you’re trying to
facilitate a complex transaction like a financial credit transaction.
You must overcome these challenges. You
must ensure that customers and borrowers
have a seamless customer experience. We
provide a transparent process, accessible
to them so they know every single point in
time: Where they are with their credit process, are they approved, are they disapproved,
are they waiting on certain decisions, or are they negotiating the deal with the partner?
That is one element, we bring in an increased level of transparency and openness to the
process. Traditionally these services have been opaque. Historically, businesses submit
You must ensure that customers
and borrowers have a seamless
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applications to banks and literally wait for weeks to get a decision. They don’t know
what’s going on inside the four walls of the bank for those many weeks.
The second thing we did is to help our partners understand the exceptions that they
traditionally encounter in their credit decision process. As a result, they can reduce those
manual exceptions or completely eliminate them with the help of technology.
Again, the insights we generated from the data that we already had about the
businesses helped us overcome those challenges and overcome the friction points in the
entire interaction on both sides.
Gardner: Alan Cohen, where do you go next with this particular program around
financing? Is this a bellwether for other types of business services that depend on the
platform, the data integrity, and the simplicity of the process?
Win-win lending scenarios
Cohen: Simplicity is, I think, first and foremost. Vishal and Winslow talked about it. Just
as you can get a consumer loan online, it should be just as simple for a business to get
access to capital online. Make that a pleasurable process, not a complex process that
takes a long time. Simplicity cannot be underrated to help drive this change.
When it comes to the data, we’ve only
scratched the surface of what can be done.
We talked about risk-adjusted lending
decisions based on transactional
information. What we’ll see more of is price
elasticity, around both risk and demand,
come into play as banks help to better
manage their portfolio -- not with
theoretical information but through practical information. They’ll have better insights to
manage their portfolios.
Let’s not lose sight of what we’re trying to accomplish: Broaden the capital availability to
the community of businesses. There are so many different types of lending scenarios
that could happen. You’ll see more of those scenarios become available to businesses
over time in a much more efficient, cost-effective, and economic manner.
It’s not just a shifting of cost. It will be an elimination of cost -- where both parties win in
Gardner: Winslow, for other SMBs that face credit issues or didn’t pursue revolving
credit because of the complexity, what advice can you offer? What recommendations
might you have for organizations to rethink their financing now that there are processes
like what Apparent Financing provides?
We’ll see more price elasticity,
around both risk and demand,
come into play as banks help to
better manage their portfolio – not
with theoretical informations but
through practical information.
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Garnier: If I take a step back, we made the classic mistake that we should have put in
place a bank line of credit prior to this event happening for us. The challenge was the
time needed for the vetting process. We would rather pursue new clients than spend our
time having to work with the different lenders.
Financing really is something that I think most small businesses should pursue, but I
highly recommend they pursue it under something like what Apparent Financing has
arranged. That’s because of the simplicity, the one-stop portal to find what you are
looking for, the efficiency of the process, and the quality of the lenders.
All the folks that we ended up speaking to were very capable, and they wanted to do
business with us, which was really outstanding. It was very different from the pushback
and the, “We’ll let you know within the next 30 to 60 days or so.” That is very
We have not only added new clients since we put in the revolving credit, but our DUNS
score has improved, and our credit-rating has continued to improve. It’s low risk for an
SMB to look at a platform like Apparent Financing to see if this could be useful to them. I
highly recommend it. It’s been nothing but a positive experience for us.
Gardner: I’m afraid we’ll have to leave it there. You have been listening to a sponsored
BriefingsDirect digital business innovation podcast on how new financing applications
are assisting small businesses impacted by natural disasters.
We have heard how leveraging the data and trust inherent in an established business
network like SAP Ariba has allowed Apparent Financing by SAP to create a digital
handshake between lenders and businesses in ways that just weren’t available before.
So please join me now in thanking our guests, Vishal Shah, Co-founder and General
Manager of Apparent Financing by SAP. Thank you, Vishal.
Shah: Thank you, Dana. My pleasure.
Gardner: We have been joined by Alan Cohen, Senior Vice President and General
Manager of Payments and Financing at SAP Ariba. Thank you so much, Alan.
Cohen: My pleasure.
Gardner: And thanks as well to Winslow Garnier, President of Garnier Group
Technology Solutions LLC in San Diego.
Garnier: Dana, thank you.
Gardner: And a big thanks to our audience for joining this SAP Ariba-sponsored thought
leadership discussion. I’m Dana Gardner, Principal Analyst at Interarbor Solutions, your
host and moderator. Thanks again for listening, and do come back next time.
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Listen to the podcast. Find it on iTunes. Download the transcript. Sponsor: SAP
Transcript of a discussion on how data-driven supplier ecosystems enable new kinds of
matchmaker finance relationships that work rapidly and at low risk for small- to medium-
sized businesses in need. Copyright Interarbor Solutions, LLC, 2005-2018. All rights
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