Transcript of a discussion on how the expansion of automated business commerce is impacting global markets, and what's in store for Latin America.

1. SAP Ariba and MercadoLibre to Consumerize
Business Commerce in Latin America
Transcript of a discussion on how the expansion of automated business commerce is
impacting global markets, and what's in store for Latin America.
Listen to the podcast. Find it on iTunes. Get the mobile app. Download the
transcript. Sponsor: SAP Ariba.
Dana Gardner: Hello, and welcome to a special BriefingsDirect podcast coming to
you from the 2017 SAP Ariba LIVE conference in Las Vegas.
I’m Dana Gardner, Principal Analyst at Interarbor Solutions, your host the week of
March 20 as we explore the latest in collaborative commerce and learn how innovative
companies are leveraging the networked economy.
Our next digital business insights discussion explores how the expansion of automated
tactical buying for business commerce is impacting global markets, and what's in store
next for Latin America. We’ll examine how “spot buy” approaches enable companies to
make time-sensitive and often mission-critical purchases, even in complex and dynamic
settings.
To learn more about the rising tide of such tactical business buying improvements,
please join me now in welcoming our guests, Karen Bruck, Corporate Sales Director at
MercadoLibre.com in Buenos Aires, Argentina.
Karen Bruck: Thank for this opportunity, it’s great to
be here, and it’s a great partnership with our friends at
SAP Ariba.
Gardner: We are also
joined by Diego
Cabrera Canay,
Director of Financial
Planning at
MercadoLibre.
Diego Cabrera
Canay: Thank you, very much. We’re very excited
about this partnership.
Gardner: And we’re here with Tony Alvarez, General
Manager of SAP Ariba's Spot Buy Business.
Bruck
Cabrera Canay

2. Tony Alvarez: Thank you, Dana. I appreciate it.
Gardner: Tony, let’s level-set this. SAP Ariba Spot Buy has been in the market a few
years. Tell us about where it has rolled out so far, why certain markets are being
approached, and then about Latin America specifically.
International integrity
Alvarez: The concept is a few years old, but
we've been delivering SAP Ariba Spot Buy for about
a year. We began in the US, and over the past 12
months the concept of Spot Buy has progressed
because of our customer base. Our customer base
has pushed us in a direction that is, quite frankly,
even beyond Spot Buy -- and it’s getting into
trusted, vetted content.
We are approaching the market with a two-pronged
strategy of, yes, we have the breadth of content so
that when somebody goes into an SAP Ariba
application they can find what they are looking for,
but we also now have parameters and controls that
allow them to vet that content and to put a filter on
it.
Over the last 12 months, we've come a long way. We are live in the US, and with early
access in the UK and Germany. We just went live in Australia, and now we are very
much looking forward to going live and moving fast into Latin America with
MercadoLibre.
Gardner: Spot buying, or tactical buying, is different from strategic or more organized
long-term buying. Tell us about this subset of procurement.
Alvarez: SAP Ariba is a 20 year-old company, and its roots are in that rigorous, sourced
approach. We do hundreds of billions of dollars through contract catalog on the Ariba
Network, but there's a segment -- and we believe it's upward of 15% of spend -- that is
spot buy spend. The procurement professional often has no idea what's being bought.
And I think there are two approaches to that -- either ignorance is bliss and they are
glad that it’s out of their purview, or it also keeps them up at night.
SAP Ariba Spot Buy allows them to have visibility into that spend. By partnering with
providers like MercadoLibre, they have content from trusted and vetted sellers to bring
to the table – so it's a really nice match for procurement.
Alvarez

3. Liberating limits
Gardner: The trick is to allow for flexibility and being dynamic, but also putting in
enough rules and policies so that things don’t go off-track.
Alvarez: Exactly. For example, it’s like putting a filter on your kids’ smartphone. You
want them to be able to be liberated so they can go and do as they please with phone
calls -- but not to go off the guardrails.
Gardner: Karen, tell us about MercadoLibre and why Latin America might be a really
interesting market for this type of Spot Buy service.
Bruck: MercadoLibre is a leading e-commerce platform in Latin America, where we
provide the largest marketplaces in 16 different countries. Our main markets are Brazil,
Mexico, and Argentina, and that’s where we are going the start this partnership with
SAP Ariba.
We have upward of 60 million items listed on our platform, and this breadth of supplies
will make purchasing very exciting. Latin America is a complicated market -- and we like
this complexity. We do very well.
It’s complicated because there are different rates of inflation in different countries, and
so contracts can be hard to complete. What we bring to the table is an assortment of
great payment and shipping solutions that make it easy for companies to purchase
items. As Tony was saying, these are not under long-term contracts, but we still get to
make use of this vast supply.
Gardner: Tony mentioned that maybe 15% of spend is in this category. Diego, do you
think that that number might be higher in some of the markets that you serve?
Cabrera Canay: That’s probably the number -- but that is a big number in terms of the
spend within companies. So we have to get there and see what happens.
Progressive partnership
Gardner: Tony, tell us about the partnership. What is MercadoLibre.com bringing to
the table? What is Ariba bringing to the table? How does this fit together for a whole that
is greater than the sum of its parts?
Alvarez: It really is a well-matched partnership. SAP Ariba is the leading cloud
procurement platform, period. When you look in Latin America, our penetration with
SAP Enterprise Resource Planning (ERP) is even greater. We have a very strong
installed base with SAP ERP.

4. Our plan is to take the SAP Ariba Spot Buy content and make it available to the SAP
installed base. So this goes way beyond just SAP Ariba. And when you think about what
Karen mentioned -- difficulties in Latin America with high inflation -- the catalog
approach is not used as much in Latin America because everything is so dynamic.
For example, you might sign a contract but in just in a couple of weeks that contract
may be obsolete, or unfavorable because of a change in pricing. But once we build
controls and parameters in SAP Ariba Spot Buy, you can layer that on top of
MercadoLibre content, which is super-broad. If you're looking for it you’re going to find it,
and that content is constantly updated. You gain real-time access to the latest
information, and then the procurement person gets the benefit of control.
So I'm very optimistic. As Diego mentioned, I think 15% is really on the low-end in Latin
America for this type of spend. I think this will be a really nice way to put digital catalog
buying in the hands of large enterprise buyers.
Gardner: Speaking of large enterprise buyers, if I'm a purchasing official in one of your
new markets, what should I be thinking about how this is going to benefit me?
Transparent, trusted transactions
Bruck: Let me talk about this from experience.
As a country manager at MercadoLibre, I had to
do a lot of the procurement, together with our
procurement officers. It was really frustrating at
times because all of these purchases had to be
one-off engagements, with a different vendor
every time. That takes a lot of time. You also
have to bring in price comparisons, and that’s
not always a simple process.
So what this platform gives you is the ability to
be very transparent about prices and among
different supplies. That makes it very easy to be able to buy every time without having to
call and get the vendor to be in your own buying platform.
It saves a lot of time, it makes the comparison very transparent, and you are able to
control the different options. Overall, it’s a win-win. So I do believe this is a partnership,
a match made in heaven.
We were also very interested in business-to-business (B2B) industries. When Tony and
SAP Ariba came to our offices to offer this partnership, we thought this would be a great
way to leverage their needs with our supply and make it work.
It saves a lot of time, it
makes the comparison
very transparent, and you
are able to control the
different options. Overall,
it's a win-win ... a
partnership, a match
made in heaven.

5. Gardner: For sellers, this enables them to do repeated business more easily, more
automated and so at scale. For buyers, with transparency they have more insight into
getting the best prices, the best terms of delivery. Let's expand on that win-win. Diego,
tell us about the business benefits for all parties.
Big and small, meet at the mall
Cabrera Canay: In the past few years, we have been working to make MercadoLibre
the biggest “mall” in e-commerce. We have the most important brands and the most
important retailers selling through MercadoLibre.
What differentiates us is that we are confident we have the best prices -- and also other
great services such as free shipping, easy payments, and financing. We are sure that
we can offer the buyers better purchasing.
Obviously, from the side of sellers, this all provides higher demand, it raises the bar in
terms of having qualified buyers, and then giving the best services. That’s very exciting
for us.
Gardner: Tony, we mentioned large enterprises, but this cuts across a great deal more
of the economy, such as small- to medium sized (SMB) businesses. Tell us about how
this works across diverse economies where there are large players but lots of small
ones, too?
Alvarez: On the sales side, this gives really small businesses opportunity to reach large
enterprise buyers that probably weren’t there before.
Diego was being modest, but MercadoLibre's payment structure, MercadoPago, is
incredibly robust, and it's incredibly valuable to that end-seller, and also to the buyer.
Just having that platform and then connecting -- you are basically taking two
populations, the large and small sellers, and the large and small buyers, and allowing
them to commingle more than they ever had in the past.
Gardner: Karen, as you mentioned from your own experience, when you're dealing with
paper, and you are dealing with one-offs, it's hard to just keep track of the process,
never mind to analyze it. But when we go digital, when we have a platform, when we
have business networks at work, then we can start to analyze things for companies --
and more broadly into markets.
How do you see this partnership accelerating the ability to leverage analytics, leverage
some of the back-end platform technologies with SAP HANA S/3 and SAP Ariba, and
making more strides toward productivity for your customers?

6. Data discoveries
Bruck: Right. When everything is tracked, as this will be, because every single
purchase will be inside their SAP Ariba platform, it is all part of your “big data.” So then
you can actually drop it, control it, analyze it, and say, “Hey, maybe these particular
purchases mean that we should have long-term contracts, or that our long-term
contracts were not priced correctly,” and maybe that's an opportunity to save money and
lower costs.
So once you can track data, you can do a lot of things, and discover new opportunities
for either being more efficient or reducing costs – and that's ultimately what we all want
in all the departments of our companies.
Gardner: And for those listeners and readers who are interested in taking advantage of
these services, and ultimately that great ability to analyze, what should they be doing
now to get ready? Are there some things they could do culturally, organizationally, in
order to become that more digital business when these services are available to them?
Cabrera Canay: I can talk about in our
own case, where we are rebuilding our
purchase processes. Paper is terrible for
companies; you have to rethink your
purchase processing in a digital way.
Once you do it, SAP Ariba is a great
solution, and with SAP Ariba Spot Buy we
will have the best conditions for the
buyers.
Bruck: It’s a natural process. People are going digital and embracing these new trends
and technologies. It will make them more efficient. If they get up to speed quickly, it will
become less about controlling stuff that they don't need to control. They will really
understand the benefits, so it will be a natural adoption.
Gardner: Tony, coming back full circle, as you have rolled SAP Ariba Spot Buy out from
North America to Europe to Asia-Pacific, and now to Latin America -- what have you
learned in the way people use it?
Alvarez: First, at a macro level, people have found this to be a useful tool to replace
some of the contracts that were less important, and so they can rely on marketplaces.
Second, we’ve really found as we’ve deployed in the US that a lot of times multinational
companies are like, “Hey, that's great, I love this, but I really want to use this in Latin
America.” So they want to go and get visibility elsewhere.
Paper is terrible for companies;
you have to rethink your
purchase processing in a
digital way.

7. Turn-key technique
Third, they want a tool that doesn't require any training. If I’m a procurement
professional, I want my users to already be expert at using the tool. We've designed this
in the process context, and in concert with the content partners. You can just walk up
and start using it. You don’t have to be an expert, and it keeps you within the guardrails
without even thinking about it.
Gardner: And being a cloud-based, software-as-a-service (SaaS) solution you're
always analyzing how it's being used -- going after that ultimate optimized user
experience -- and then building those improvements back in on a constant basis?
Alvarez: Exactly. Always.
Gardner: I am afraid we’ll have to leave it there. We’ve been discussing how the
expansion of automated spot buying for business commerce is impacting global
markets and what's now in store for Latin America.
And we’ve learned how SAP Ariba Spot Buy enables companies to make time-sensitive
and often mission-critical purchases, even in complex and dynamic settings.
So a big thank you to our guests, Karen Bruck, Corporate Sales Director at
MercadoLibre.com in Argentina; Diego Cabrera Canay, Director of Financial Planning at
MercadoLibre, and Tony Alvarez, Global General Manager of SAP’s Spot Buy Business.
And a big thank you as well to our audience for joining this special podcast coming to
you from the 2017 SAP Ariba LIVE conference in Las Vegas. I’m Dana Gardner,
Principal Analyst at Interarbor Solutions, your host throughout this series of SAP Ariba-
sponsored BriefingsDirect digital business insights discussions. Thanks again for
listening, and do come back next time.
Listen to the podcast. Find it on iTunes. Get the mobile app. Download the
transcript. Sponsor: SAP Ariba.
Transcript of a discussion on how the expansion of automated tactical buying for
business commerce is impacting global markets, and now what's in store for Latin
America. Copyright Interarbor Solutions, LLC, 2005-2017. All rights reserved.
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