Ariba is one of those companies that comes along and creates a sea change in the way businesses and individuals organize themselves or conduct business. Keith Krach Keith Krach , co-founder, chairman and chief executive, is the guy rowing the boat.
His four-year-old company pioneered e-procurement, relieving companies of the paperwork and associated time and cost for buying goods. It initially helped companies Webify their office purchases but quickly expanded to the mammoth market for business-to-business (B2B) transactions.
“I have no doubt that this whole area of B2B e-commerce is the biggest market the world has ever seen,” Krach says. “It’s driving global economies.”
And he saw it early on. He left Rasna , a developer of mechanical computer-aided design software, to start Ariba in 1996. At the time, business-to-consumer selling was the order of the day, but Krach was one of a handful of tech executives who foretold the explosion in B2B electronic marketplaces, where tens of billions of dollars in commerce is already being transacted.
Before building a prototype of its B2B software, Krach spent time with leading companies, asking them exactly what they would want in an electronic marketplace.
“Early [Ariba] adopters like Hewlett-Packard, Intel, Seagate and Cisco Systems really designed our first product,” he says.
The Mountain View, Calif., company broadened its customer base beyond tech world to include huge banks, retail chains and energy companies.
That it doesn’t rely on technology companies has helped Ariba ride out the carnage in Internet stocks. Ariba shares are off about 65% from its 52-week high, but are still up 30% for the year, to a recent $70.50. Even better, Ariba will hit profitability next quarter, nearly a year ahead of schedule. This comes after 12 consecutive quarters of positive cash flow from operations, and a 515% jump in sales last year, to $279 million.
And analysts are expecting torrid growth. Consensus estimates compiled by Zacks Investment Research call for Ariba to record earnings per share of two cents in the December quarter and 15 cents by the September 2001 quarter. If the company maintains its pace, it will hit $1 billion in sales by the end of next year, faster than almost any other software company ever.