How JP Morgan Chase Saves $50 Million Each Year with SAP Ariba

Jonathan Ridgwell, Global Supplier Services Operations Director at JPMorgan Chase & Co., has learned a lot since his company began centralizing business processes across 17 countries some 15 years ago.

He shared four major lessons during a keynote talk with DJ Paoni, president of SAP North America, at the recent SAP Ariba Live event. The company initially introduced SAP ERP, followed by Concur travel and expense and Ariba for procurement, before SAP acquired both companies.

Lesson 1: Think Big Outside Your Function

Left: DJ Paoni, president of SAP North America; right: Jonathan Ridgwell, Global Supplier Services Operations Director at JPMorgan Chase & Co.

Coming from a technology background, Ridgwell has a passion for efficiency and accuracy, but quickly discovered how intelligence is changing the role of procurement.

“I was managing these functions as separate pieces at first, thinking this is what I need to make us as efficient, cheap, and user-friendly as possible,” he said. “As time went on, I realized that we’re all part of a continuum, and procurement can take the lead in driving more collaborative ways of doing business throughout the entire company, driving innovation and real value for the business,” he said.”

By feeding procurement data into its centralized system, JPMorgan Chase has achieved one million dollars in early payment discounts per one billion dollars spent. What’s more, procurement’s benefits are negating its costs.

“We’re thinking about how sourcing can help us when we’re negotiating contracts, and this has enabled us to grow procurement’s role with significant benefits to the firm,” said Ridgwell. “We’re saving $50 million annually. On top of that, the early payment discounts mean that we’re becoming a revenue generator rather than a cost for the firm. We’re not just paying invoices and procuring things, but we’re doing it at negative cost to the business.”

Lesson 2: Get Senior Backing for Global Consistency

Gaining senior-level management support was crucial to the firm’s transformation, from board-level through the C-suite leadership team. “We shared the business case with our CFO, asked her to buy into it, and she sold it to the board and the CEO,” said Ridgwell. “When anyone came to us and wanted to do something different, they couldn’t because leadership was behind it.”

Lesson 3: Strong Change Management

Open communication has been critical to gaining global buy-in for a standard operating model.

“In addition to efficient project management, one of the key elements our managers do is communicate,” he said. “You need everyone to know what you’re doing, how you’re doing it, why you’re doing it, and when you’re doing it. You end up taking away some small elements of functionality people are familiar with, and those can be sticking points. You can’t allow that to get in the way. Everyone has to understand and accept the shared vision.”

With SAP Ariba, JPMorgan Chase has a frictionless process for procurement and can make sure it’s doing the right thing through understanding the data

Lesson 4: Technologists Make Great Operations Managers

One of Ridgwell’s epiphanies was how technologists like him make great operations managers. “We asked do we really want people pushing buttons all day and not adding value? We want people running analytics, looking for fraud, finding trends and new markets. It’s much more interesting for the workforce, being able to upskill the procurement role by automation.”

Ridgwell tied procurement’s transformation directly to the company’s commitment to purpose and making the customer experience as frictionless as possible.

“Doing the right thing is always the right thing to do whether you’re dealing with a small or large customer. Having our platforms on SAP has enabled us to make sure we’re doing that through understanding the data and having a frictionless process for spend management,” he said.

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