Procurement Today

Procurement organizations all have one basic task: To purchase goods and services at the best possible cost while still meeting standards for quality. Over the years, IT has come to play an increasingly important role in helping procurement organizations carry out this function.

The involvement of IT in procurement started in the 1990s when many businesses implemented software to automate procurement processes, resulting in impressive cost savings. Things have changed since then: the business world has sped up and become more globalized, and sustainability standards have become stricter. Now procurement organizations must focus on risk, efficiency, and governance in addition to cost when making purchases.

Innovations for procurement today

SAP is introducing innovations to its procurement portfolio with an eye to these new challenges. For example, enhancement package 2 for the SAP Supplier Relationship Management application 7.0 should include updates for sustainable procurement, giving employees sustainability information on suppliers so they can make informed buying decisions.

And new analytic applications, tailored to the procurement role, are now enabling organizations to get better insights into spend management and even to predict supplier risk. SAP BusinessObjects Data Enrichment and Classification OnDemand, for example, is a new solution for data cleansing. This process has been sped up considerably, so companies are now able to perform real-time analysis of their spend data.

SAP Supplier InfoNet OnDemand is another new cloud-based analytic application for procurement. It collects information on supplier performance across industries and across multiple key performance indicators like delivery, quality, and cost. Procurement organizations can then determine the risk of working with a particular supplier. Other innovations are in the areas of mobility, usability, and rapid deployment of on-premise solutions.

On the following pages, we take a look at the complete portfolio of procurement software, from on-premise applications to on-demand to third-part solution extensions. All solutions work closely together and integrate with the back-end SAP system.

•    SAP SRM and supplemental applications
•    Analytic applications and rapid deployment solutions
•    Solutions for SMEs and third-party extensions

Next page: SAP SRM and supplemental applications

SAP Supplier Relationship Management (SRM)

This application is part of SAP Business Suite. It automates, simplifies, and accelerates procure-to-pay processes. By standardizing and centralizing these processes, procurement organizations are able to ensure company-wide compliance with purchasing policies and generate significant cost savings. The first enhancement package (EHP) for SAP SRM 7.0 was released in June 2011, and according to one blogger, EHP2 for SAP SRM 7.0 was released at the very end of 2011. The following solutions complement SAP SRM functionality: SAP Sourcing, SAP Sourcing OnDemand, SAP Supplier Lifecycle Management, SAP Contract Lifecycle Management, and SAP BusinessObjects Spend Performance Management.

SAP Sourcing

This application helps procurement organizations manage the entire sourcing-to-contract process. With it, procurement organizations are able to build and update supplier profiles, create reports for spend analysis, track the results of every project for cost-saving opportunities, automate forward and reverse auctions, and manage and generate contracts. SAP Sourcing can be delivered as an on-premise application or as a hosted, subscription-based solution. To read more about SAP Sourcing OnDemand, see “SAP’s OnDemand Offerings”.

SAP Supplier Lifecycle Management (SLM)

This is a new application intended for customers who already have SAP ERP or SAP SRM and just need a way to manage all their supplier information. SAP SLM supports self-service functions for supplier registrations, allowing suppliers to enter their own data and keep it up-to-date. Companies are able to classify supplier profiles based on  and analyze supplier performance.

SAP Contract Lifecycle Management (CLM)

SAP CLM provides companies with contract templates and clause libraries in a standardized language so there is less financial and legal risk when creating contracts. And it integrates with the back-end SAP system to ensure contract compliance.

SAP BusinessObjects Spend Performance Management

This software is an advanced analytic application that allows procurement organizations to see exactly how much the company is spending with suppliers around the world and across business units. Integrated performance metrics analyze the information for savings opportunities and potential risks. And since it integrates with SAP Sourcing, users are able to start a sourcing initiative as soon as they identify a savings opportunity.

Next page: Analytic applications and rapid deployment solutions

SAP BusinessObjects Data Enrichment and Classification OnDemand

Before spend data can be properly analyzed, the information must be cleansed and classified. This process used to be more manual and time-consuming, resulting in outdated reports. This new cloud-based analytic application from SAP enables companies to cleanse data quickly. Users are then able to perform spend analysis in real time.

SAP Supplier InfoNet OnDemand

This is another new cloud-based analytic solution from SAP. Introduced in a pilot program last year, the solution gives procurement organizations information on supplier performance, allowing users to predict the risk or working with a particular supplier. The solution also tracks news alerts, government data, and financial information to predict operational risk. In the event of an unexpected disaster, like the tsunami in Japan last year, SAP Supplier InfoNet is able to quickly communicate to procurement organizations which suppliers were most impacted.

SAP Rapid Deployment Solution for SAP BusinessObjects Spend Performance Management

SAP rapid deployment solutions deliver preconfigured software and services at a fixed cost. This means companies are able to implement and start using the solution very quickly. For procurement organizations that need to start identifying savings opportunities right away, this solution fits the bill. It includes integrated data management to capture data from both SAP and non-SAP systems and out-of-the-box analytics to create ad-hoc reports and dashboards.

SAP Rapid Deployment Solution for Self-Service Procurement

Self-service procurement allows employees to shop online for goods and services and managers to approve these purchases. The software increases productivity within the procurement organization, reduces maverick spending, and ensures compliance with purchasing policies.

Next page: Solutions for SMEs and third-party solution extensions

SAP Business ByDesign

This cloud-based solution provides large-scale ERP functionality for small and midsize businesses. The fully-integrated solution covers all necessary business functions, including procurement processes. To read more about the solution, see “Your Guide to Business ByDesign”.

SAP Procurement for SMEs

SAP solutions for small and midsize companies will help SMEs reduce costs by automating, standardizing, and centralizing procurement processes. The solution spans multiple business areas, so managers can stay on top of purchasing and supplier relationships using one integrated application.

SAP Invoice Management by OpenText

This solution extension from SAP partner OpenText eliminates the need to process invoices manually, which can be a time-consuming and error-prone process. SAP Invoice Management simplifies the process of creating, managing, and monitoring invoices, and it automatically sends problem invoices to be individually resolved. The solution is integrated with SAP ERP, so accounts payable employees can easily obtain invoices, check purchase orders, and approve them. And integration of business data and rules through the SAP NetWeaver technology platform ensures compliance with company policies.

SAP Information Interchange by Crossgate

With the recent acquisition of Crossgate (see “SAP Acquires Crossgate”), the SAP Information Interchange solution is technically no longer a third-party solution extension, but the functionality remains the same. This solution provides a B2B content engine that enables companies to connect with partners and easily send and receive information electronically. Companies and partners no longer have to rely on paper-based documents. With SAP Information Interchange, they are able to instantly exchange electronic documents, such as purchase orders, forecasts, invoices, and delivery notes, using their existing SAP applications.