Transitioning Procurement to the Cloud

Many customers currently use the SAP Supplier Relationship Management (SAP SRM) application to manage their procurement processes. Transform SRM is a program from SAP Digital Business Services designed to provide customers with targeted support for their transition to the cloud – namely, to SAP Ariba.

Why does this shift make sense? Because, as well as offering additional benefits, the integrated SAP Ariba platform – unlike older releases of SAP SRM – is fully compliant with the EU General Data Protection Regulation (GDPR).

Imagine a single system that covers everything: ordering, approval, delivery, invoicing, strategic contracts with preferred suppliers, central RFQs across a global platform, and spend analyses. The cloud approach offers the potential to cover all the planning, strategic, and operational aspects of procurement in one place.

The cloud procurement platform SAP Ariba taps into a network of over 3 million connected companies that conduct more than €1.3 trillion of commerce over the network every year. Currently, the majority of SAP customers are still using the on-premise SAP SRM application.

“With SAP’s strategy aligned to the cloud, it makes sense for businesses to start thinking now about transitioning their procurement,” says Martin Boldys from the SAP Ariba Customer Value Organization.

Three Ways to Transition to the Procurement Cloud

SAP customers will find the functions they are familiar with from SAP SRM – for catalogs, discount arrangements with suppliers, auctions, RFQs, order processing, and so on – in the cloud, too.

“Among the key advantages of SAP’s cloud approach are the fact that SAP Ariba offers an end-to-end portfolio of services, and that updates and innovations are available instantly,” explains Boldys. Among the other benefits he pinpoints are the fact that the solution is relatively quick and easy to implement and that its global network of connected suppliers allows companies to drive collaboration with partners beyond the boundaries of their organization.

The program provides three transition options:

  • In the standard option, the customer initially deploys the catalogs, connects up its suppliers, and maps basic procurement processes in the cloud.
  • In the enhanced option, all the payment processes for procurement can also be mapped in the cloud. Order, delivery, invoicing, and controlling are included in the procure-to-pay process. “This is a common scenario,” says Boldys.
  • The comprehensive option additionally includes end-to-end integration into the company’s backend and two-year roll-out support.

It is also possible to map all the key processes of strategic and operational procurement in the cloud in a single project; so not just for indirect spend, but for direct spend as well.

Best Practice Processes: Configuration Replaces the Specification Sheet

Boldys is “not a fan of specification sheets.” If he is looking to inspire a new customer to embrace the cloud approach, he demonstrates the software’s configuration capabilities.

“Lots of things will be possible, but not everything,” he says. “We’re aligning with industry standards. Which means that, generally speaking, only a few technological changes are required.”

There are best practice processes for various industries. Workflows, strategic procurement, the RFQ process — many industry details are reflected in predefined parameters and configuration options. The software also suggests which purchasing processes should be used for which material group.

Dramatic Reduction in Complexity

Despite the availability of predefined industry solutions, Boldys describes transitioning procurement to the cloud as a business transformation project. “It’s much less about technology than about the need for companies to look closely at their processes,” says Boldys.

Because the advantage of procurement in the cloud is that it is based on standards that are already established in the industry. “That is the only way to dramatically reduce complexity,” explains Boldys.

But it is also the reason why companies – even if they are adopting the cloud approach – should realistically schedule six months to examine their existing strategic and operational procurement processes and to ready themselves for the cloud.

Procurement in the Cloud: A Pick of the Benefits

Opting for the transformation route presents businesses with an opportunity to streamline their processes and by doing so, gain an edge over their competitors:

  • Improved usability in the order process: The SAP Fiori user interface is intuitive. Whereas SAP SRM was used primarily by buyers, the user group for SAP Ariba is open. “Any employee can intuitively access a catalog to order the materials or services he or she needs,” is how Boldys explains the KPI he attaches most importance to, namely, user acceptance. Once a manager has approved an order, all the subsequent process steps are automated – right the way from sourcing to invoicing and payment.
  • Automated accounting: Thanks to a defined set of business rules, invoices that do not contain an order number or that specify an amount that exceeds an agreed figure can be automatically rejected. This means that a company’s accounting personnel only process invoices that have already gone through an invoice verification process. Suppliers benefit too, because they can correct their invoices immediately and receive payment for their services more quickly.
  • More efficient and transparent sourcing: Compared with managing procurement in Microsoft Excel and email, Boldys anticipates that, because it is simpler to use, SAP Ariba will improve the efficiency of processes to the tune of around 30 percent. Also, sourcing is now transparent for suppliers. When sourcing projects are created on the platform, competitors can also see the terms and conditions.
  • Simpler contract management: A single dashboard shows the purchasing department which contracts currently exist with suppliers and which are due to expire soon. Armed with this information, buyers can begin renegotiating with suppliers at an early stage. Some reports can even be run without IT skills.

More information: Learn more from SAP Digital Business Services about transforming procurement to the cloud at SAP Ariba Live, taking place April 23-25 in Amsterdam.

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