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SAP Thought Leadership | EXTERNAL

Procurement Transformation:
How to Make the Right Choice for Your Journey
© 2018 SAP SE or an SAP affiliate company. All rights reserved.

1 / 19
Table of Contents
3 The Right Choice

4 The Full Picture of Procurement Transformation


with SAP S/4HANA and SAP Ariba Solutions

5 Customer Story 1: Procurement Transformation That Starts with


SAP Ariba Strategic Sourcing and SAP Ariba Contracts

8 Customer Story 2: Procurement Transformation


with Guided Buying from SAP Ariba Solutions

11 Customer Story 3: Procurement Transformation Starting with Ariba Network

14 Customer Story 4: Procurement Transformation as Part of a Broad Digital Initiative

17 Reimagine the Possibilities for Your Business with SAP Ariba Solutions

2 / 19

© 2018 SAP SE or an SAP affiliate company. All rights reserved.


Procurement Transformation: How to Make the Right Choice for Your Journey

The Right Choice

Now that you have decided to start your procurement transformation journey, you need
to determine the best way to get there. Every customer situation and objective is different,
as is every IT strategy, existing infrastructure, and transformation timeline. SAP® Ariba™
solutions support a variety of deployment options, giving you the flexibility and choice
you need to support your digital transformations.

No matter where you are in your procurement “The key to success in this new
transformation, SAP Ariba solutions provide
a complete solution portfolio for managing
era lies in connected, digital
your source-to-settle process. solutions that support the
entire source-to-settle
By using SAP S/4HANA® as your digital core,
along with a variety of rich capabilities from
process and provide a
SAP Ariba Solutions, you can successfully: gateway for collaboration —
both within and beyond the
• Manage each step of the procurement
process – from sourcing through
enterprise — on a global scale.”
procurement to payment
• Handle diverse spend and expense types such
as direct; indirect; services, maintenance,
repair, and operations (MRO); capital
projects; and contingent labor
• Connect and collaborate with a broad
network of partners and trusted suppliers

To help you evaluate the best path for your


specific goals, we invite you to read this white
paper. We’ll explore the different deployment
options that some of your peer companies chose
to achieve their procurement transformation.

3 / 19

© 2018 SAP SE or an SAP affiliate company. All rights reserved.


Procurement Transformation: How to Make the Right Choice for Your Journey

The Full Picture of Procurement Transformation


with SAP S/4HANA and SAP Ariba Solutions

While each company takes a unique path, See Figure 1 to explore the landscape running
the ultimate end state is the same: to deploy on SAP S/4HANA and with SAP Ariba solutions,
the full landscape with SAP S/4HANA as the where full integration and innovative technology
digital core and to support supplier collaboration, can provide greater value to your business.
guided buying, and collaborative sourcing
with SAP Ariba solutions.

A Procurement Transformation Landscape with SAP S/4HANA and SAP Ariba Solutions*
Figure 1

SAP Ariba
Strategic Sourcing
SAP Ariba Buying SAP Analytics SAP Ariba Catalog SAP Ariba Supply
with Guided Buying Cloud SAP Ariba Spot Buy Chain Collaboration

SAP Ariba Contracts

SAP Ariba SAP Ariba Cloud


Supplier Lifecycle Integration Gateway
& Performance SUPPLIERS

SAP Ariba Supplier Ariba Network


Risk Management
SAP S/4HANA
Enterprise Management
SAP Master Data FINANCIAL INSTITUTIONS
Governance for SAP S/4HANA for
Dynamic
Suppliers (optional) Central Procurement
Discounting

Supply Chain
Finance

LOGISTIC SERVICE PROVIDERS


SAP ERP SAP ERP SAP S/4HANA

SAP S/4HANA – THE DIGITAL CORE


*Some items above subject to SAP Ariba labs preview.
CUSTOMER

THE D3 APPROACH: HEAR FROM YOUR PEERS


DISCOVER, DELIBERATE, AND DELIVER Deciding on the best path to procurement
Based on your business needs and guided by transformation can be overwhelming. However,
your corporate priorities, we can help design an learning from peer companies can help. You
innovation plan that works for your business. Our can explore their challenges, existing technology
D3 approach involves a current-state examination landscape, deployment approach, the length
to discover how things work today. This is followed of the implementation, lessons learned along
by time spent on deliberating and reviewing options the way, and the key performance indicators
to decide on the right implementation and integration achieved. The next section of this white paper
plans. Finally, we deliver the future state for your highlights four different companies with four
procurement solution landscape to clearly articulate different paths to procurement transformation.
where you will be at the end of this journey.

4 / 19

© 2018 SAP SE or an SAP affiliate company. All rights reserved.


Procurement Transformation: How to Make the Right Choice for Your Journey

Customer Story 1

Procurement Transformation That Starts with SAP


Ariba Strategic Sourcing and SAP Ariba Contracts

Customer
A leading international material handling
equipment, warehousing, and material
flow engineering company

Company Size
15,000 employees

Challenges with Current Landscape


This leading multinational mechanical Starting Point For Transformation Journey
engineering company had run up against Our customer experienced a disconnected
several challenges with their largely manual source-to-settle process that required largely
sourcing and procurement process: manual efforts. At the same time, the company
needed to minimize inaccuracies in purchase
• D  isconnected processes for managing requisitions and invoices — and transforming
indirect and direct materials spend the sourcing process seemed the logical place
• Low percentage of spend under management, to achieve some big wins quickly.
with catalog-based spend at only 30%
• No automation in purchase order creation To build a consistent foundation for automation,
and invoicing resulting in high error rates realize sourcing project savings, and reduce the
• Manual approach to data entry into a supplier overall total cost of ownership in the source-to-
relationship management solution and settle process, the following SAP Ariba solutions
to purchase-order matching to contracts were recommended:
• High catalog maintenance, too many
vendors, and low catalog-adoption rates • SAP Ariba Strategic Sourcing and
• Minimal annual savings due to lack SAP Ariba Contracts to get direct and
of transparency into the sourcing indirect spend under management
and payment processes • SAP Ariba Supplier Lifecycle and
Performance for efficient onboarding
and supplier management
“We embraced SAP Ariba • SAP Ariba Spend Analysis to understand,
and SAP solutions to fuel a measure, and control procurement spend
• Ariba Network for improved automation
unified process for managing and collaboration
all our spend and trading • Guided buying capability to enhance catalog
relationships from end-to-end coverage and improve the end-user experience

on a single, integrated platform.” These solutions helped them address their


source-to-settle challenges, improve customer
satisfaction, and provide a good starting point
on their journey to procurement transformation.

5 / 19

© 2018 SAP SE or an SAP affiliate company. All rights reserved.


Procurement Transformation: How to Make the Right Choice for Your Journey

Best Practices Implemented


The following best practices were key
to the success of this project:

• Allow time to thoroughly understand the


current landscape and investigate the best
options to address the company’s unique needs
• Improve supplier qualification processes
and supplier management with a 360-degree
view of supplier profiles
• Integrate templates in the operational
procurement system to drive best-in-class
strategic sourcing and contracting processes
• Focus on the end-user catalog experience
to set a foundation for the success of the
sourcing process

Road Map
Based on the company’s initial starting point, a comprehensive road map
was developed for their specific procurement transformation journey.

1 2 3 4
SAP Ariba SAP Ariba Ariba SAP Ariba SAP Ariba Buying SAP S/4HANA
Strategic Sourcing Supplier Lifecycle Network Catalog with Guided Buying for central
& Performance procurement
SAP Ariba
Contracts SAP Ariba
Supplier Risk

Improve Strategic 360º Supplier Improve Collaborative Simplify End-User Establish


Sourcing and Management Automation Catalog Requisitioning SAP S/4HANA
Contract Management for central
Management procurement

6 / 19

© 2018 SAP SE or an SAP affiliate company. All rights reserved.


Procurement Transformation: How to Make the Right Choice for Your Journey

Transition Timeline
The key to road map success is understanding how long this process will take so expectations
can be set from the beginning. Below is the timeline for this procurement transformation project.

Ariba Network2 SAP Ariba SCC2 continuous supplier enablement

SAP Ariba Supplier SAP Ariba SAP Ariba


Management1 Supplier Risk Catalog1
SAP Ariba SAP Ariba Prep SAP Ariba Buying/ Roll Out SAP Ariba Buying/
Strategic Sourcing1 Contracts1 Guided Buying Guided Buying

SAP SRM

SAP ERP Prep S4H Start Rollout S4H

TIME
1 Average time from project start to go-live: 10-12 weeks
2 Average time from project start to go-live: 3 months

Value Delivered
As a result of the actions taken and the solutions implemented, the company has seen some great success.

€1 million –
~16,000 €2 million
76%
suppliers added to addressable spend
the master vendor list saved in working capital managed strategically
per €1 billion of
impacted spend

37% 47%
more savings less maverick
on spend spend

7 / 19

© 2018 SAP SE or an SAP affiliate company. All rights reserved.


Procurement Transformation: How to Make the Right Choice for Your Journey

Customer Story 2

Procurement Transformation with Guided


Buying from SAP Ariba Solutions

Customer
A leading global pharmaceutical company
with 150 affiliates worldwide

Company Size
50,000 employees

Challenges with Current Landscape


This global pharmaceutical company faced
several challenges with an outdated platform Giving employees an easy way to buy what they
and user adoption issues including: need and make use of negotiated contracts
resulted in happy users and dramatic savings.
• An instance of the SAP Supplier Relationship
Management (SAP SRM) application, version By integrating its system to the Ariba Network,
5.0, that was end of standard maintenance the company improved purchase order and
• Low user adoption of internal catalogs, invoice automation, while reducing the time
leading to a high degree of maverick buying needed to onboard new suppliers.
• Significant compliance issues that
could only be managed by manual, Best Practices Implemented
time-consuming administrative checks The following best practices were key
• Limited use of negotiated contracts to the success of this project:
and missed savings opportunities
• Outdated interfaces and a poor • Understand the pressing issues and determine
user experience quick wins to prepare and execute the right
• Complex processes, long cycle times, procurement transformation road map
and limited guidance from the system • Involve end users in the planning phase to
engage them early on and improve adoption
Starting Point For Transformation Journey • Manage change at the start of the process
The perfect impetus to begin a procurement to maximize user acceptance and decrease
transformation journey was driven by the time delays
end of standard maintenance of SAP SRM 5.0.
The company also understood that the
procurement process for their end users was
“An integrated platform where we
not user-friendly and didn’t encourage adoption. can consolidate all of our spend
and collaborate with a global
With these issues on the top of every
decision-maker’s mind, the company quickly
network of partners on everything
realized that jump-starting the procurement from sourcing and orders through
transformation process with a guided buying invoicing and payment will help
capability would alleviate critical issues
with user complaints and adoption.
us achieve our business goals.”

8 /19

© 2018 SAP SE or an SAP affiliate company. All rights reserved.


Procurement Transformation: How to Make the Right Choice for Your Journey

Road Map
Based on company’s initial starting point, a comprehensive road map
was developed for their specific procurement transformation journey.

SAP Ariba
1 Ariba SAP Ariba
2 SAP Ariba SAP S/4HANA
3 Ariba Centralized
4 SAP S/4HANA
Buying with Network Supplier Lifecycle Strategic & Ariba Network Procurement & Ariba
Guided Buying & Performance Sourcing Integration Guided Buying
Integration
SAP Ariba SAP Ariba
Supplier Risk Contracts

Simplify End-User Improve & 360º Supplier Improve Strategic SAP S/4HANA Supply Chain Central SAP S/4HANA
Requisitioning Standardize Management Sourcing and Template Collaboration Requisition, Roll-out
Automation Contract Contract & Order
Management with Central
Analytics

Transition Timeline
A timeline was developed as part of the planning process to provide goals
and set expectations for what the transformation journey would look like.

Ariba Network2 continuous supplier enablement SAP Ariba SCC2

SAP Ariba Supplier SAP Ariba


Management1 Supplier Risk

Prep SAP Ariba Buying/ Roll Out SAP Ariba Buying/ SAP Ariba SAP Ariba SAP Ariba
Guided Buying Guided Buying Strategic Sourcing1 Contracts1 Catalog1

SAP SRM

SAP ERP Prep S4H Start Rollout S4H

TIME
1 Average time from project start to go-live: 10-12 weeks
2 Average time from project start to go-live: 3 months

9 / 19

© 2018 SAP SE or an SAP affiliate company. All rights reserved.


Procurement Transformation: How to Make the Right Choice for Your Journey

Value Delivered
The procurement transformation produced great results and happy users.

30% 47%
reduction in lower maverick
compliance costs spend

>50%
global indirect spend 50%
processes through fewer exceptions
a centralized, easy- and disputes
to-use goods and
services catalog

10 / 19

© 2018 SAP SE or an SAP affiliate company. All rights reserved.


Procurement Transformation: How to Make the Right Choice for Your Journey

Customer Story 3

Procurement Transformation
Starting with Ariba Network

Customer
A large consumer products manufacturer
of personal-care products and pressure-
sensitive adhesives

Company Size
20,000 employees

Challenges With Current Landscape


This consumer products company interacted Ariba Network was also used as a basis for
with a broad variety of suppliers around the a guided buying capability to provide an easy-
world on a daily basis, but was challenged to-use catalog and a significantly improve the
to do this effectively due to: user experience and adoption. The SAP Ariba
Buying solution was later deployed on top
• Multiple, inconsistent supplier enablement of SAP S/4HANA, serving as the company’s
processes using several different portals procurement hub.
and channels, such as supplier self-service
• Lack of automation in supplier registration By integrating its sourcing solutions into
and qualification processes that differed this landscape, the company brought their
by region and category entire procurement process into the cloud.
• Manual and disparate supplier collaboration
with paper-based invoicing and purchase
order processing, which delayed payments
• No centralized vendor master data “With SAP Ariba’s innovative
management
technology and business
Starting Point For Transformation Journey network, we can fuel a simple,
With so many challenges around their supplier transparent procurement
interactions and the company’s desire to
accelerate their purchase order and invoice process that delivers savings,
processing, the company chose to first implement efficiencies, and market advantage.”
Ariba Network. The thinking behind this decision
was the urgent need to improve collaboration
with its many suppliers, automate and accelerate
the purchase order and invoicing process, and
leverage early payment discounts. It also wanted
to minimize the risk of human error and free up
resources in procurement and accounts payable
to focus on procurement transformation.

11 / 19

© 2018 SAP SE or an SAP affiliate company. All rights reserved.


Procurement Transformation: How to Make the Right Choice for Your Journey

Best Practices Implemented


The following best practices were key
to the success of this project:

• Understand the root cause of critical issues


with the current landscape and plan carefully
the next steps to successfully transform
processes to benefit all stakeholders
• Integrate core suppliers early in the process to
quickly leverage the benefits of Ariba Network
• Embrace a large-scale use of the light account
feature – which is free and simple to use –
for long tail suppliers to process more spend
in Ariba Network

Road Map
Based on the company’s initial starting point, a comprehensive road map
was developed for their specific procurement transformation journey.

Ariba
1
SAP Ariba SAP Ariba
2
SAP Ariba SAP Ariba Buying
3 SAP S/4HANA
Network Strategic Sourcing Supplier Lifecycle Supply Chain with Guided for central
& Performance Collaboration Buying procurement
SAP Ariba
Contracts SAP Ariba
Supplier Risk

Improve Improve Strategic 360º Supplier Improve Supplier Simplify End-User Establish
Automation Sourcing and Management Collaboration Requisitioning SAP S/4HANA
Contract for central
Management procurement

12 /19

© 2018 SAP SE or an SAP affiliate company. All rights reserved.


Procurement Transformation: How to Make the Right Choice for Your Journey

Transition Timeline
Understanding the timing upfront in the planning process helped set expectations for all stakeholders.

Ariba Network2 continuous supplier enablement

SAP Ariba Supplier


Management1

SAP Ariba SAP Ariba Prep SAP Ariba Buying/ Roll Out SAP Ariba Buying/
Sourcing1 Contracts1 Guided Buying Guided Buying

SAP SRM

SAP ERP Prep S4H Start Rollout S4H

TIME
1 Average time from project start to go-live: 10-12 weeks
2 Average time from project start to go-live: 3 months

Value Delivered
The procurement transformation produced great results and significant cost and time savings.

1,000 40%
vendors eliminated for reduction in
one-time purchases operating costs

4x
6% higher process efficiency
fewer accounts by reducing touch points
payable errors in the source-to-pay
process

13 / 19

© 2018 SAP SE or an SAP affiliate company. All rights reserved.


Procurement Transformation: How to Make the Right Choice for Your Journey

Customer Story 4

Procurement Transformation
as Part of a Broad Digital Initiative

Customer
A global plastics and chemicals
manufacturer that delivers products
used in a wide variety of applications,
including food and electronics packaging

Company Size
3,000 employees

Challenges with Current Landscape Starting Point For Transformation Journey


Automation and business growth were To help ensure business processes could
challenging to achieve for this plastics and support its growth, the company embarked
chemical manufacturer. Its outdated global on a comprehensive digital transformation
IT infrastructure was the main culprit, project. Best-in-class procurement
bringing inefficiencies such as: transformation was a significant part
of this broader digital project.
• Several disparate solutions from
different providers To reduce manual efforts and bring scalability
• Highly manual efforts for every step to the business, the company decided to move
of the source-to-settle process away from its existing supplier relationship
• Complex end-user experiences that management platform to take advantage of the
were not user-friendly latest cloud solutions available on the market.
• Time-consuming manual invoice processing With SAP Ariba solutions, the manufacturer
that drained resources from accounts payable gained a fully integrated source-to-settle solution.
• Limited capabilities for spend analysis,
making spend control difficult The company soon recognized tremendous
savings potential by leveraging SAP Ariba
Strategic Sourcing and SAP Ariba Contracts
“We embraced SAP Ariba solutions. This approach enabled competitive
bidding and upfront discounts, as well as
solutions to create a automating the purchase order and invoicing
collaborative digital process process to free up resources in accounts
for sourcing goods and payable. In fact, within the next five years,
the company expects to fund not only its
services that can deliver procurement transformation, but also its
savings and efficiencies, full IT transformation. The understanding
while at the same time, fueling was a win-win for the company– facilitating
a digital transformation with an up-to-date
business innovation and growth.” solution at effectively no cost.

14 / 19

© 2018 SAP SE or an SAP affiliate company. All rights reserved.


Procurement Transformation: How to Make the Right Choice for Your Journey

Best Practices Implemented


The following best practices were key
to the success of this project:

• Prepare a thorough business case to help


stakeholders gain a clear understanding
of the potential of SAP Ariba solutions, as
compared to the current supplier relationship
management solution with disparate
third-party add-ons
• Remove process complexity by enabling
a single, seamless end-to-end SAP
solution landscape
• Create a funding opportunity for other
SAP offerings with savings achieved
from using SAP Ariba solutions

Road Map
Based on the company’s initial starting point, a comprehensive road map
was developed for their full transformation journey.

SAP Ariba
Strategic Sourcing
1 Success SAP Ariba
2 Success Ariba
3 SAP Ariba
4
SAP S/4HANA
Factors Supply Chain Factors Talent Network Buying with & Ariba
SAP Ariba Contracts
Employee Collaboration Management Guided Guided Buying
SAP Ariba Supplier Central Buying Integration
SAP Integrated
Management
Business Planning

Improve Strategic Enhanced Improve People Improve Simplify End-User SAP S/4HANA
Sourcing and Contract People Supplier Development in Automation Requisitioning Roll-out
Management Management Collaboration the Cloud
360º Supplier
Management

15 / 19

© 2018 SAP SE or an SAP affiliate company. All rights reserved.


Procurement Transformation: How to Make the Right Choice for Your Journey

Transition Timeline
Managing the transformation timeline and setting expectations
was an important step for the company’s success:

Ariba Network2 continuous supplier enablement

SAP Ariba Invoice Management


& Commerce Automation
SAP Ariba SAP Ariba Supplier Prep SAP Ariba Buying/ Roll Out SAP Ariba Buying/
Sourcing1 Management1 Guided Buying Guided Buying
SAP Ariba
Contracts1 SAP Ariba Supply Chain Collaboration, SAP Integrated Business Planning

Concur Travel &


Expense
Success Factors Employee Central Success Factors Talent Management, Recruiting,
& Time and Attendance2 Learning, Talent, Compensation, Analytics1

SAP SRM Start Rollout S4H

From ERP to the Digital Core SAP S/4HANA

TIME
1 Average time from project start to go-live: 10-12 weeks
2 Average time from project start to go-live: 3 months

Value Delivered
The manufacturer’s procurement transformation produced
great results and funded its broader IT digital transformation.

€45 €10
million 60% million
forecasted to be saved increase in invoice saved annually
to self-fund a automation through an integrated
complete business sourcing solution
transformation

16 / 19

© 2018 SAP SE or an SAP affiliate company. All rights reserved.


Procurement Transformation: How to Make the Right Choice for Your Journey

Reimagine the Possibilities for Your Business


with SAP Ariba Solutions and SAP S/4HANA

As these four customer procurement Another path to consider is combining SAP


transformation stories prove, there are Ariba solutions with Ariba Network to automate
many ways to move your supplier relationship processes on top of SAP SRM while designing
management system to SAP Ariba solutions a strategy around SAP S/4HANA. This approach
and SAP S/4HANA. Although, most customers can generate enough savings to fund your full
tend to move in “waves,” they typically benefit investment in S/4HANA.
from the latest procurement cloud innovations
from SAP almost immediately. Alternatively, you can choose to implement
SAP Ariba solutions with SAP S/4HANA in
Take, for example, the SAP Ariba Spot Buy parallel and slowly phase out SAP SRM.
Catalog solution. Running this solution on Whatever journey you choose, SAP will design a
top of SAP Supplier Relationship Management road map that is tailored to your specific needs
(SAP SRM) while you are working on your digital and can help you reach your final destination.
transformation roadmap will give you a quick
and easy start, often within just a few weeks,
and will engage your employees with an intuitive,
user-friendly experience.

SAP Supplier Relationship Management


Figure 2

SAP Supplier Relationship Management


Stepping stone before
moving to SAP S/4HANA

Focus: Focus: Focus: Focus:


Transforming IT Procurement Digital IT Leverage Cloud
with an ERP suite Transformation* Transformation Innovations

SAP Ariba
SAP S/4HANA SAP S/4HANA SAP SRM
Application Suite

+ + + +
SAP Ariba SAP Ariba
Ariba Network Ariba Network
Application Suite Application Suite

+ +
Ariba Network Ariba Network

*When IT has no immediate plans for SAP S/4HANA.

17 / 19

© 2018 SAP SE or an SAP affiliate company. All rights reserved.


Procurement Transformation: How to Make the Right Choice for Your Journey

PROCUREMENT TRANSFORMATION OPTIONS “Procurement is no longer


Whatever your path to procurement
about buying things at the
transformation, we can help you deliver
tangible results in performance, speed, best prices, but collaborating
and control, such as: in new and more efficient
ways that create value across
• Negotiated savings by empowering users
to follow the right policy to buy the right the entire source-to-settle
goods and services at the right price process. To do this requires
• Freed-up working capital by capturing
an end-to-end offering that
early payment discounts and extending
days payable outstanding combines the convenience
• Lower operating costs for processing and agility of the cloud
purchase orders, invoices, and payments
with the connectivity and
and improving supplier onboarding
global reach of business
networks and the strength
of enterprise applications.
In combining SAP Ariba and
SAP, this is exactly what we get.”

GET STARTED TODAY


Begin your digital procurement transformation journey by reaching out to
your local SAP sales or service representative. Your contact will get in touch
with our procurement transformation experts who can provide a comprehensive
set of services to help you accelerate your digital procurement transformation.
These services include calls and face-to-face meetings with experts who will
work with you to understand your current landscape and the best path to
transformation for your unique requirements.

You can also learn more about your procurement transformation with
these great resources:

• Register to attend our free online course, “Procurement Transformation


with SAP Ariba and S/4HANA,” to access extensive content on enabling
procurement transformation by migrating from SAP SRM to SAP S/4HANA.

• Complete our brief transformation survey to get in contact with the right
person who can help you achieve your procurement transformation vision.

• Visit our resource center for details on how we’re helping SAP Supplier
Relationship Management (SAP SRM) customers achieve complete
digital transformation in procurement, by combining the rich capabilities of
SAP Ariba and SAP Fieldglass solutions with the digital core of SAP S/4HANA.

18 / 19

© 2018 SAP SE or an SAP affiliate company. All rights reserved.


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