Six of every 10 German companies purchase goods and services electronically, according to a report from BITKOM (Bundesverband Informationswirtschaft, Telekommunikation und neue Medien e.V.) released at the end of 2008 on the basis of 2007 figures from the European statistics authority Eurostat. BITKOM sees companies now recognizing the key role online procurement plays in reducing costs. However, most concentrate on partial aspects and choose their software accordingly.
E-procurement solutions, for example, focus on improving procurement of C-items (such as office materials, operating materials, and IT hardware). But when companies also need to exchange purchasing invoices or coordinate stock levels and replenishment scheduling, these solutions often fail to provide an integrative, strategic approach. This in turn gives rise to isolated solutions whose harmonization requires complex interface programming.
Enter SAP SRM – a solution that provides components covering every area of electronic purchasing, plus the advantage of integrating into any SAP-based ERP system. At its core, the solution connects suppliers through Web-based applications, which enhances an ERP system’s traditional purchasing processes and reduces costs thanks to its comprehensive integration. After all, the old merchant’s adage “Profit lies in purchasing” will ring no less true in the 21st century.
First-time implementation: Web Dynpro for ABAP
SAP SRM 7.0
has been available to select customers (ramp-up phase) along with the other components of SAP Business Suite since November 2008. General availability is planned for May 2009.
SAP SRM 7.0 is the first version to utilize Web Dynpro for ABAP, replacing its predecessors’ use of Internet Transaction Server. The advantage of this new technology is that it sees use in both SRM and ERP environments and is available as an SAP enhancement package for current systems. It thus forges process content from both areas into a homogeneous user interface users can adjust to their own specific requirements without significant programming effort.
This exclusively portal-based release requires SAP NetWeaver Portal, through which users can access the functions of both SAP SRM (an online shopping cart, for instance) and SAP ERP (such as the corresponding order) without noticing which system they are currently in. They can operate the portal using their choice of a standard browser or SAP NetWeaver Business Client. In addition, the portal technology enables companies to integrate suppliers easily into their cross-area procurement processes.
Tried and true, meet new
Though not as fundamentally as in its technology, SAP SRM 7.0 also differs from previous versions in terms of its functions. SAP has enhanced the solution’s proven aspects with features that further streamline procurement processes. Of particular interest is the new team purchasing function, which enables an employee to create a requirement request in the form of a shopping cart and send it to a colleague for completion. This function will be especially intriguing to companies who run shift operations, as well as in situations where employees stand in for colleagues who are on vacation.
Earlier versions of SAP SRM did not support such transfers of requirement requests; an employee either had to entrust his or her personal user data to or create a new shopping cart for the successor or stand-in in question.
The new version also offers updates in sourcing and bid requests. Users can now immediately initiate an electronic bid request or online auction from a requirement request stored in their ERP system. The purchaser in question used to have to create the bid request manually based on the incoming ERP requirement request. While companies still generally make too little use of these forms of sourcing, bid requests and auctions do present significant potential savings.
In addition, SAP SRM 7.0 addresses a major issue in contract management. Generated central contracts are available as sources of supply in both SAP SRM and connected ERP systems. Users can store legal contracts in various formats in SAP SRM and perform full-text searches on them. The application also serves as a central repository for all legal and operational contracts, while integration with the SAP sourcing process facilitates effective contract negotiations. For example, SAP SRM can incorporate expiring contracts into a current bid request for negotiation following a system alert. The purchaser in question receives a simple check and overview of the contracts to be met, including the agree-upon key performance indicators (KPIs).
The further innovations in SAP SRM 7.0 deal with the hierarchical structure of multisupplier catalogs and the transfer of long texts from catalogs into orders as detailed item descriptions.
Functional innovations in SAP SRM 7.0
- Self-service procurement: Team purchasing with stand-in management functions to prevent duplicate requirement requests
- Contract management: Harmonization of contract creation and management between SAP SRM and SAP ERP
- Service procurement: An end-to-end process for procuring services, from the MDM catalog and sourcing (including bid-request functionality) to order generation
- Sourcing: Initiates a bid request or auction from SAP ERP based on a requirement request
- MDM catalog: Creates a hierarchical service index, with the option of transferring individual services directly to the shopping cart; stores a service provider for each service phase; branches off directly into the ERP system and back (supplier generates a requirement request/confirmation regarding the service rendered)
Particular potential for SMEs
Generally speaking, the new version of SAP SRM offers innovations that help further optimize the procurement of materials and services. Small and midsize enterprises (SMEs) in particular can look forward to significant potential savings.
Such companies still often work with paper – especially in ordering C-materials – and as long as their structures are manageable, this traditional means of doing business is certainly tenable. However, what happens when a company goes global? It is clear that SAP SRM is also an excellent value for smaller operations, but this notion has yet to establish itself in the minds of potential users. The option of installing SAP SRM 7.0 as an add-on for SAP ERP should be particularly attractive to SMEs thanks to the especially low total cost of ownership (TCO) involved.
A one-stop SAP shop
The SAP partner itelligence has already supported numerous SRM projects in Germany and throughout the rest of the world, among them at Swiss Post. The professionals at work in its special expertise division for SRM solution consulting tailor the various components of electronic procurement to users’ individual needs and integrate them into their customers’ existing IT infrastructures. The itelligence company also contributed its own test system to the ramp-up version of SAP SRM 7.0.