Krach will continue in his role as chairman, the company said. Mueller joined the company in 1999 and was named president and chief operating officer in January 2000. He had formerly served as CEO and president of Imageware, a 3D modeling firm.
Krach said Monday that the plan to make Mueller the CEO has been in the works for a while, and "in essence (was) formalized 18 months ago," when Mueller took over the COO spot.
Mueller will have a tough row to hoe. The Mountain View, Calif.-based company matched expectations for the second quarter, but only after drastically cutting its outlook.
The company previously said that falling sales would prompt it to lay off one-third of its workers and cancel a planned merger with Agile Software.
Ariba makes software that helps companies automate purchasing. The Agile acquisition would have added supply-chain management capabilities--which help companies and their partners add, update and manage products throughout the manufacturing supply chain--to that package.
Last month, Krach said he did not expect profitability anywhere in the near future.
But executives were not putting any time frame on a return to profitability.
"The question I constantly get asked is, 'When is it going to turn around? Have we hit the bottom?' and I don't think anybody knows the answer," Krach said then. "Our strategy is to be very prudent in terms of business planning functions. (We're) not going to forecast an uptick till we see that in revenue numbers."
Ariba's stock has fallen along with its sales: Shares started up 23 cents to $7.62 Monday, still well below a 52-week high of $173.50. The company recently announced plans to allow employees to trade in options that are currently worthless.
Mueller said in an interview Monday that he plans to focus on reaching specific industries--gearing sales force, consultants and product development efforts toward those targets.
Initially the company will work on financial services in the sectors for insurance, high technology, pharmaceuticals and automotive, as well as for packaged goods for consumers.
"In each one of these sectors we have the leading players," he said. Mueller said the major players in most of those categories are already Ariba customers. The next step, he said, is for the company to attract more customers in each of those categories. He also wants to adjust the company's measure of success from one that's focused on the bottom line to one that also considers its customers' bottom lines.
He acknowledged that the company could do a better job of presenting its financial picture to Wall Street.
"Our balance sheet is very strong. We have $400 million cash in the bank and no long-term debt." He said the company recorded revenue of $260 million for the first six months of the fiscal year, compared with $65 million in the year-ago period.
Mueller was also named to Ariba's board of directors Monday, along with Softbank CEO Masayoshi Son. Softbank is a shareholder of CNET Networks, publisher of News.com.