Transform Procurement with SAP S/4HANA® and SAP® Ariba

Transform Procurement with SAP S/4HANA®

and SAP® Ariba® Solutions

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Table of Contents

3 Trends in Procurement

7 Procurement Solutions from SAP

10 Recommendation for SAP Customers

11 Ariba Network

12 Source

14 Procure

15 Decision Tree for Operational Procurement

21 Settle

22 Solution Extensibility

23 BenetsandNextSteps

The procurement function goes through constant

change as chief procurement ocers (CPOs)

continue to deliver bottom-line savings but

increasingly focus on value creation for the

company. CPOs need to work with their teams to

respond to the following key trends that disrupt

the way CPOs currently run the procurement

function:

• Hyperconnectivity: Every supplier, consumer,

and machine is connected, disrupting estab-

lished business channels, processes, and

relationships.

• Big Data: The limits of twentieth-century

computing power are gone. Networking and

in-memory computing allow for the creation

of new business opportunities previously

unimaginable.

• Cloud computing: Both technology and soft-

ware infrastructure are now leased to eliminate

barriers to entry. Project timelines are short-

ened dramatically, and customer relationships

are becoming increasingly direct.

• User experience: Enhanced user experience

through technology and easy data access using

mobile devices are quickly becoming basic

requirements as smartphones and tablets

become mainstream in the workforce.

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Trends in Procurement

SAP embraces digital transformation with SAP S/4HANA® as the digital core

and supplier collaboration enabled by SAP® Ariba® solutions. Today, many SAP

customers running solutions such as the SAP Supplier Relationship Management

(SAP SRM) application want to understand which solution set SAP recommends

to address their new challenges. This paper targets our enterprise customers and

provides an overview on how they can transform their procurement function

to stay relevant and focus on the value for the business.

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Today, the following solutions are widely deployed

and support the procurement function of our

customers:

• SAP Suppler Relationship Management

application

• SAP ERP application, the materials manage-

ment component

• SAP Contract Lifecycle Management

application

• SAP Supplier Lifecycle Management application

• SAP Sourcing application

• SAP Ariba solutions

• Business intelligence oerings

The business cases that procurement builds

around IT projects are usually centered on the

same key value drivers that have been used over

the past 10 to 15 years, the same ones that drove

many decisions for SAP to become the strategic

partner to deliver the procurement solutions

such as those listed above.

KEY VALUE DRIVERS

Most of the CPOs we speak with have achieved a

high degree of spend under management. Today,

they are focusing on two issues:

• Providing more value to the business: engaging

with the business on topics such as evolving

from selling only products to delivering solu-

tions and services

• Becoming a strategic advisor: monitoring

market innovations and connecting innovative

new suppliers with engineering to leverage their

latest technologies

For more than 40 years, SAP has been working

closely with CFOs and CPOs to deliver best-

practice processes and software solutions that

allow nance and procurement to continuously

improve their value contribution to the company

and help drive bottom-line impact.

Integration of SAP S/4HANA with SAP Ariba

solutions and SAP Fieldglass solutions provides

access and outreach to partners and suppliers

outside the four walls of the organization.

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What has changed, however, are the practices that CPOs implement to capture value, as shown in

this table.

Value Driver Value Capture – Today Value Capture – Future

Costs of procurement as

percentage of spend

Ownership by procurement func-

tion of operative, tactical, and

strategic tasks to drive savings

Operational tasks are automated

and

run electronically. The pro-

curement function has fewer but

more-experienced employees

that are focused on value cre

ation and strategic activities.

Spend under management

Rollout of catalogs to address

indirect spend

Guided buying (curated shop-

ping) offers state-of-the-art user

experiences and in-context trans

parency on policies and workflow

approvals. Address functional

buyers, such as facilities, market

ing, and IT, with in-context collab

oration and predictive

information such as preferred

suppliers.

Percentage of electronic

invoices

Supplier portals for purchase

orders and invoices

Business networks enable collab-

oration with an ecosystem of

trading partners in a fully auto

mated, end-to-end process.

Number of procurement FTEs

per €1 billion of spend

Automation through catalogs

Spot-buy capabilities reduce

sourcing efforts. Increase sup

plier responsibilities through the

network.

Discount capture rate

Scanning solutions followed by

electronic approval workflows

Touchless e-invoicing provides

immediate visibility. Increase

in payment terms is supported

with supply chain financing or

dynamic discounting.

Number of invoices per

accounts payable FTE

All invoices are processed

Electronic processing of invoices

occurs after rules-engine

validation.

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CPOs should choose their procurement platform

based on its ability to support them capturing

value with tomorrow’s best practices.

As procurement becomes more actively involved

in the core business of the company and works

more closely with plant managers, heads of supply

chain, and others, leading CPOs will look at mea-

suring their impact with the following key perfor-

mance indicators (KPIs) of the core value chain.

Value Driver Value Capture – Today Value Capture – Future

New-product lead time

Minor or no supplier innovation

triggered by procurement

• Fostering adoption of supplier-

driven innovations in highly

outsourced environments

•

Quotation for components

during design

•

3D printing of components

Supply chain recovery time

Standard supplier collaboration

by e-mail, mail, and workflow

• Electronic supplier collaboration

in manufacturing and supply

chain

•

Supplier risk management

Asset uptime

Manual ordering

• Sensor-driven ordering of spare

parts as part of predictive asset

management scenarios

•

Buying and specifying Internet-

of-Things-ready assets

Supply chain resilience

Hold inventory

• Inventory minimized by vendor-

managed inventory

•

Rapid refills

•

Enhanced logistics

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Procurement Solutions from SAP

Integration of SAP S/4HANA with SAP Ariba

solutions and SAP Fieldglass solutions provides

access and outreach to partners and suppliers

outside the four walls of the organization. From a

nance perspective, for example, this means that

treasury and accounts payable will have accurate

and real-time views of cash positions and digital

transactional data (eliminating paper) that open

up more opportunities to leverage early-payment

discounts with suppliers using either buyers’

own funds or the capabilities of the Ariba Supply

Chain Finance solution.

Together, SAP S/4HANA, SAP Ariba solutions,

and SAP Fieldglass solutions cover the global,

integrated, end-to-end, source-to-pay process.

This includes guided buying, collaborative sourc-

ing and contract management, operational pur-

chasing, supplier information and master data,

inventory management, plan-driven procurement

and supply determination, services manage-

ment, and invoice and payables management.

This table shows the key capabilities provided by

SAP solutions.

The integration of SAP S/4HANA with SAP Ariba

solutions and SAP Fieldglass® solutions enables

a tangible step change in performance, speed,

visibility, and control. With SAP S/4HANA as the

digital core, organizations have the ability to

manage massive data in order to run live with

access to real-time digital visibility into all cor-

ners of their operations. SAP S/4HANA covers

all operational procurement processes, including

purchase requisitioning and order processing,

invoice processing, order conrmation, and oper-

ational contract management. Procurement is

supported by real-time embedded analytics

across all spend segments, enabling improve-

ments in the performance, visibility, and usability

of procurement processes.

As shown in Figure 1, SAP Ariba solutions extend

these core operational processes with guided

buying, collaborative sourcing and contracting,

and networked-based, end-to-end supplier col-

laboration to deliver a new, guided, and simplied

user experience that reaches all employees of a

company and meets the expectations of a new

generation of millennial users. With SAP Ariba

solutions and SAP Fieldglass solutions, organiza-

tions have the added visibility into suppliers’ abil-

ity to commit and fulll goods and service orders.

They can collaborate on changed order priorities,

track shipments, provide service entries, and

share delivery schedules, forecasts, and inven-

tory across the extended supply chain. These

capabilities are designed to enable real-time col-

laboration that optimizes the supply chain and

reduces supplier and supply chain risks.

Figure 1: Procurement Solutions from SAP

Supplier collaboration with Ariba® Network

Guided user buying

Collaborative sourcing and

contract management

Operational purchasing

Supplier management

Inventory and basic

warehouse

management

External workforce

management

Invoice and payables

management

Procurement analytics

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Solution Area Key Capability

Ariba® Network for supplier

collaboration

• PO, invoice, and service entry sheet automation

•

Supply chain automation

•

Payables automation

•

Catalogs

•

Open application programming interfaces (APIs) and

business-to-business integration

•

Portals

•

Supplier profiles

•

Event management, RFx documents, and contracts

Guided buying

• Guided services and materials requisitioning

•

Policy configuration

•

Category buying channel management

Collaborative sourcing and contract

management

• Creation and supplier collaboration

•

Category management, projects, and workflow

•

Bill of materials, workflow, and syndication

•

Operational contract management*

•

Source assignment*

Operational purchasing

• Self-service requisitioning#

•

Purchase order processing*

•

Purchase order collaboration

•

Managed catalogs (internal and external), price validation,

and content enrichment

•

Requirements processing*

Supplier management

• Supplier discovery

•

Classification and segmentation*

•

Third-party risk and data augmentation

•

Supplier evaluation*

Inventory and basic warehouse

management

• Goods issue and receipt

•

Basic warehouse management

•

Basic shipping

External workforce management

• Contingent worker lifecycle management

•

Services purchasing and entry*

•

Vendor management system

Invoice and payables management

• Invoice workflow and exception management

•

Invoice collaboration

•

Invoice processing*

•

Contract invoicing

•

Dynamic discounting and supply chain finance

•

Accounts payable*

Procurement analytics

• Spend visibility*

•

Real-time reporting and monitoring*

*Core capability oered with SAP S/4HANA Enterprise Management

#For cloud deployments with SAP Ariba solutions and for on-premise deployments with SAP S/4HANA

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SAP customers and partners have the exibility

and choice to adapt to their evolving business

requirements by changing their existing on-

premise SAP solutions. Customers that have

licensed SAP ERP, SAP SRM, SAP CLM, SAP

Supplier Lifecycle Management, or SAP Sourcing

can work with their SAP account executive to

leverage our cloud extension policy. They can

decide to reallocate elements of their installed

on-premise solutions to SAP Ariba solutions or

SAP Fieldglass solutions, replacing the aected

on-premise license and maintenance with public

cloud subscriptions.

All spend – from low-value, nonsourced items to

catalogs and maintenance, repair, and overhaul

(MRO) spend, services, and direct materials – is

supported by SAP’s vision for digital procurement.

Now, all purchasing can be managed in one place

and in a highly collaborative, real-time manner

because it is all digital, from SAP S/4HANA across

the network to your suppliers. The coupling of

SAP S/4HANA with Ariba Network expands the

reach of digital communications way beyond your

enterprise.

With its extensibility options, SAP S/4HANA

helps organizations chart their own journey

while delivering the innovations at an increasingly

faster pace and staying ahead of the curve.

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Recommendation for SAP Customers

how this relates to their current SAP software

implementations. This is best done by reviewing

the key processes within the procurement line

of business (see Figure 2).

Customers are asking SAP for recommenda-

tions on how best to take advantage of this con-

tinuous stream of innovations delivered with

SAP S/4HANA, SAP Ariba solutions, and

SAP Fieldglass solutions. They also want to know

Figure 2: The Source-to-Settle Process

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ARIBA NETWORK

All processes across sourcing, direct and indirect

procurement, and payments are natively con-

nected to the Ariba Network in the following ways:

• Most of the solution requirements have a need

for collaboration and must match the process

of the supplier. Sourcing needs

to match with the supplier’s sales marketing

process, buying with the supplier’s dispatch

process, and paying with the supplier’s

receivables process.

• With the need for a high level of adoption

comes the need for a service to welcome and

onboard all suppliers at scale.

• The network is key to automating business

processes. It goes beyond transmitting docu-

ments to understanding context, checking and

correcting documents, and returning to sender

when agreed-upon business rules are not met.

RECOMMENDATION

Customers should reduce slow and costly

paper-based processes by extending opera-

tional procurement with supplier collabo-

ration over the Ariba Network. Customers

should evaluate new supply chain collabora-

tion features that extend the Ariba Network

beyond pure purchase order and invoice

collaboration to supply chain message

types, such as exchanging demand fore-

casts, schedule agreements, and component

inventory and consumption.

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RECOMMENDATION

Customers should plan to adopt Ariba

Collaborative Sourcing (including contracts)

and replace current sourcing solutions

that are part of SAP® Supplier Relationship

Management or SAP Sourcing applications.

Customers in manufacturing and consumer

industries should evaluate the new, inno-

vative capabilities for direct material sourc-

ing in SAP Ariba solutions. Operational

contract management will be available in

SAP S/4HANA®.

SOURCE

The sourcing and contract lifecycle solution is

part of SAP Ariba solutions, and it is deployed in

the cloud. It supports the following activities:

• Getting the best prices is the biggest lever and

the way to get measurable value early on in

your deployment journey to SAP S/4HANA.

Procurement has the authority to bundle

indirect spend across suppliers. In direct pro-

curement, getting better prices with higher vol-

umes is done in partnership with engineering.

A good example of this is the platform strategy

in the automotive industry, where synergies are

created by using the same component in many

dierent models and by adapting specications

during live auctions.

• Managing risk is critical, and only a collabora-

tive sourcing tool helps ensure that you engage

only with suppliers that adhere to the strictest

standards of quality, delivery, and integrity.

• Managingspecications makes sure that we

know exactly what is bought. For indirect spend,

this is asking stakeholders or analyzing previ-

ous spending projects. For direct, it is integrat-

ing with engineering and planning systems.

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Use Case: Execute Sourcing in SAP Ariba® Solutions

Figure 3: Integrated Sourcing and Purchase Order Creation

SAP Ariba® solutions

Sourcing requisition

SAPS/4HANA®

Request for quotation

Award

Quote rewarded

Create purchase order

Implement the Ariba Sourcing solution to gener-

ate incremental savings by tapping into the large

supply base of the Ariba Network. Once business

is awarded, continue operational processes in

SAP S/4HANA.

Value capture:

• Increase spend under management with

Ariba Sourcing

• Increase savings percentage per year through

professional supplier selection

• Increase percentage of spend that is e-sourced

• Reduce nonsourced and free-text purchase

orders

Integration: Native integration between

SAP S/4HANA and SAP Ariba solutions is

available for this use case.

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RECOMMENDATION

The indirect procurement process is sup-

ported by SAP Ariba® solutions, SAP

S/4HANA® Enterprise Management, or a

combination of the two. Customers need to

evaluate the amount of their potential sav-

ings for indirect spend to determine their

direction.

For an on-premise deployment, and in

cases where basic indirect procurement ca-

pabilities are sucient, customers can move

indirect procurement to SAP S/4HANA En-

terprise Management. Areas where this solu-

tion oers major improvements over SAP

ERP or SAP SRM are usability, embedded

analytics, global search across master data

and business documents, and cross-catalog

search for self-service processes. Custom-

ers should leverage the Ariba Procurement

Content solution for catalog provisioning

and Ariba Network for transaction collabora-

tion with suppliers.

For a cloud deployment or when indirect

spend is a signicant cost driver, customers

may consider the Ariba Procure-to-Order

and Ariba Procure-to-Pay solutions, replac-

ing indirect procurement currently imple-

mented with SAP SRM or SAP ERP. SAP

Ariba solutions generate savings by lever-

aging guided buying with consumer grade

shopping, mobile buying scenarios, and by

addressing functional buyers such as mar-

keting, IT, or facilities.

PROCURE

Both sourcing and payables processes are usu-

ally independent of what you are buying and very

similar across spend categories. This is dierent

for the central part of the choose-buy-pay ow. It

varies considerably by industry and by what you

are buying.

Request: Indirect Procurement

Potentially, indirect demand can come from

every person in the company. Users should be

guided through the process, want to spend

as little time as possible with procurement, and

might want to use their mobile devices.

Demand also comes from all sorts of sensors:

think Industry 4.0. Demand from sensors is hard

to predict and may come from scenarios such as

a shop-oor worker zapping a QR code on the

bottom of the bin as she takes the last box of dis-

posable safety gloves. Or a temperature-warning

sensor goes o on a piece of equipment, requir-

ing an engineer to be dispatched.

Successful indirect procurement requires the

following:

• High adoption can be achieved only by making

sure all users and all suppliers are present and

correct in the system.

• To achieve compliance, guide users simply and

painlessly to preferred suppliers, following com-

pany policies in a way that is easier than send-

ing e-mails.

• The solution must be easy to use and enable

untrained users to use the system at any time,

from anywhere, and from any device to get the

job done.

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Figure 4: Transformation to SAP S/4HANA Enterprise Management and SAP Ariba Solutions

Ye sIs inventory and production

relevant in operative

procurement

Is SAP® SRM deployed

in a hub model?

Ye s

Keep SAP SRM running

(currently no transfer

path to SAP S/4HANA

Enterprise Management

to build up hub

deployment scenarios)

Size of potential savings

in indirect

Consider transforming operative

procurement currently in

SAP ERP or SAP SRM to

Ariba® Procure-to-Order

and Ariba Procure-to-Pay

High

Low

Transform

procurement in

SAP ERP to

SAP S/4HANA®

Enterprise

Management

Analyze self-service features

implemented with SAP

S/4HANA Enterprise

Management and transform

to that solution once

functional t exists

SAP Supplier Relationship Management applica-

tion. Depending on current usage, the transfor-

mation path to SAP S/4HANA Enterprise

Management and SAP Ariba solutions looks

slightly dierent, as shown in Figure 4.

DECISION TREE FOR OPERATIONAL

PROCUREMENT

As described above, SAP customers are running

operational procurement with the SAP ERP

application (materials management) or with a

combination of materials management and the

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Use Case: Guided Buying to Address Functional Buyers

Figure 5: Guided Buying

SAP Ariba® solutions

Guided buying

SAPS/4HANA®

Create purchase order

Purchase order

Send purchase

order to supplier

Create goods receipt

Receive invoice

from supplier

Supplier: receive electronic

purchase order

Supplier: send electronic

ship notice

Supplier: send

electronic invoice

Support functional buyers, such as those in mar-

keting who usually follow procurement processes

only on a pro forma basis, with guided buying,

and enforce better control. Continue operational

processes in SAP S/4HANA and communicate

with suppliers over Ariba Network.

Value capture:

• Increase spend under management by address-

ing functional buyers with guided buying

• Increase percentage of e-invoices

• Increase number of invoices processed by

accounts payable FTEs through e-invoicing and

a rules engine in Ariba Network

• Increase the discount capture rate through

reduction of average invoice-approval time

Integration: The SAP Ariba Procure-to-Order

solution is connected to SAP S/4HANA through

SAP Process Integration technology. Native

integration is planned for future enhancements.

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Use Case: Buying Nonsourced Goods

Figure 6: Self-Service Procurement

Leverage content provided from your suppliers

through their catalogs maintained in the Ariba

Network. Execute the operational procurement

process in SAP S/4HANA.

Value capture:

• Decrease maverick spend with broad catalog

coverage of items

• Decrease number of procurement FTEs per

US$1 billion in spend by shifting tasks to

suppliers

Integration: Native integration between

SAP S/4HANA and SAP Ariba solutions is

available for this use case.

SAP Ariba® solutions

Browse catalog

SAPS/4HANA®

Select item to buy Create purchase requisition

Create purchase order

Launch self-service

procurement

SAP oers one of the most complete suites

of software solutions – including cloud and

on-premise solutions – for procurement on

the market today, covering the entire process

from source to buy to pay.

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RECOMMENDATION

Customers should consider implementing

SAP® Fieldglass® solutions for service pro-

curement scenarios if it is important who

provides the service (temporary labor or pro-

fessional services, for example). For scenarios

where the “what” is more important, follow

your strategy on indirect procurement: either

transforming from materials management in

SAP ERP to SAP S/4HANA® or implementing

SAP Ariba® solutions

Procure: Services Procurement

Customers increasingly use their ecosystem to

get tasks done by commissioning services.

• For services where success is highly dependent

on who does the job, it is critically important to

identify the right candidates from a broad eco-

system of contractors, manage statements of

work, and ensure you pay market rates.

• For services where the scoping of complex

engagements around the “what” and “how

much” is important (think maintaining and

mowing 100,000 square meters of lawn), the

focus is on maximizing preferred-supplier

savings and eliminating overbilling.

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Procure: Direct Procurement

For SAP customers, the key element of the direct

procurement process is SAP S/4HANA Sourcing

and Procurement. The needs in direct procure-

ment are fundamentally dierent from indirect.

Demand in direct procurement comes from make

to stock (MRP runs), make or engineer to order

(project system), and service orders (service or

maintenance orders).

Issues such as compliance or adoption are

replaced by the need for high automation, data

integrity, and speed:

• Automation is driven through digital connec-

tions from back-end systems straight to the

digital systems of supply chain partners.

• Data integrity is key for seamless execution

across functions in your company with com-

plex, hierarchical data objects.

• As the procurement function takes a more

prominent role in the company to ensure a

stable and fast supply chain, speed is critical.

It is the role of procurement to react quickly on

disruptions from global suppliers and to hear

about them immediately through supplier-

Procurement is supported by real-time

embedded analytics across all spend

segments, enabling improvements in the

performance, visibility, and usability of

procurement processes.

risk technology across the network. As supply

chains become agile, changes to demand

forecasts in SAP S/4HANA are communicated

to your suppliers in real time.

RECOMMENDATION

Customers should transform direct procure-

to-pay processes currently implemented with

the materials management component in

the SAP® ERP application or with the SAP

Supplier Relationship Management application

to SAP S/4HANA® Enterprise Management to

benet from increased usability, embedded

analytics, and real-time material requirements

planning. Customers should plan to extend

the process ow to suppliers with the Ariba®

Collaborative Supply Chain bundle and

integrate with the Ariba Sourcing solution to

better leverage supplier innovations, design

for reduced cost of goods sold, and speed up

the product innovation lifecycle.

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Use Case: Materials Shortage Triggers Replenisher to Create a Purchase Order

Figure 7: Integrated Purchase Order Processing

Leverage new capabilities of SAP S/4HANA

Sourcing and Procurement to order stock-based

materials. Increase overall order process cycle

time by collaborating electronically with suppliers.

Value capture:

• Increase asset uptime by reacting to material

shortages early

• Increase percentage of electronic invoices

• Increase number of invoices processed by

accounts payable FTEs through electronic

invoicing and the rules engine on Ariba Network

• Increase discount capture rate through reduc

tion of average invoice approval time

Integration: Native integration between

SAP S/4HANA and SAP Ariba solutions is

available for this use case.

SAP Ariba® solutions SAPS/4HANA®

Analyze inventory levels

for spare parts

Create purchase

requisition

Create purchase order

Send purchase order

to supplier

Create goods receipt

Receive invoice

from supplier

Supplier: receive electronic

purchase order

Supplier: send electronic

ship notice

Supplier: send

electronic invoice

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This is achieved when you eliminate paperwork

and e-mails and start communicating digitally

with suppliers – a key element in your journey to

“lights-out shared services.”

SETTLE

For SAP customers, the key element of the

reconcile-and-pay process is SAP S/4HANA

Finance. New cash management dashboards

provide real-time information as you automate

accounts payable communication. Capabilities

such as supply chain nancing and dynamic dis-

counting allow you to establish close relations

with your suppliers and create win-win situations

for the respective treasury departments as they

optimize days payables outstanding (DPO) and

days sales outstanding (DSO), respectively.

With the new capabilities of SAP S/4HANA, we

address the key requirement of all customers:

automation and reduction of administration.

RECOMMENDATION

Customers should plan to adopt

SAP S/4HANA® Finance to support

accounts payable processes. Customers

should evaluate SAP® Ariba® nancial

solutions such as AribaPay™ to optimize

payment terms and turn the treasury

department into a prot center.

AribaPay frees buyers from capturing and maintain-

ing supplier bank account information and removes

the risk of fraud associated with paper checks.

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Figure 8: Extensibility Concepts in SAP S/4HANA

Cloud edition

On premise

Key-user extensibility

Managed extensibility

Key-user extensibility

Classic extensibility

User interface

SAPS/4HANA®

In-application extensibility

User interface

Application

Database (SAP HANA)

Application

Database (SAP HANA®)

Side-by-side

extensibility on

SAP HANA

Cloud Platform

APP

Public APIs; SAP; Customer or partner

interfaces (UI) based on the SAP Fiori® user

experience, integrate with other cloud applica-

tions, or build new applications.

• In-application extensibility with built-in tool sets

enables customers to adapt the UI layout and

context, create custom elds and tables, create

and extend analytical reports or forms, and

change the business logic. Customers running

solutions on premise get classic extensibility to

change or adapt the UI, application, and data-

base, compared to cloud solution customers.

SOLUTION EXTENSIBILITY

With its extensibility options, SAP S/4HANA

helps organizations chart their own journey while

delivering the innovations at an increasingly

faster pace and staying ahead of the curve.

SAP provides two powerful extensibility concepts,

as shown in Figure 8:

• Side-by-side extensibility with SAP HANA® Cloud

Platform enables customers of both on-premise

and cloud solutions to build completely new user

23 / 24

Benets and Next Steps

around optimization potential for cost reduc-

tion, process eciency, scal control, and

cash management (see Figure 9).

• Plan the digital transformation. Execute a

benchmarking assessment and create a joint

point-of-view document. Adopt the business

case and conduct a readiness check.

• Start migration and transition planning. Dene

migration and implementation strategy, includ-

ing dependencies and prerequisites for the

target cloud scenario. Address security and

privacy requirements. Create a migration

and transformation plan, including timeline,

service levels, and priorities.

• Execute technical implementation including

system integration. Run technical tests. Migrate

data and implement functions based on ready-

to-use business-process templates. Perform

system checks and business-process tests and

analyze operations impact.

• Execute change management. Enable suppliers

to successfully adopt collaborative business

commerce practices and tools by conducting

administrator and user training.

Today, more than 20,000 SAP customers use

SAP ERP (materials management) or SAP Supplier

Relationship Management for procurement and

sourcing. To ensure you can take advantage of our

procurement strategy, we have developed an

approach to jointly review your business processes

and develop your procurement road map.

With this approach, we:

1. Analyze your current usage

2. Discover new value-adding scenarios and

opportunities for digital transformation

3. Run the implementation to drive maximum

value capture

To execute jointly on procurement transforma-

tion, leverage the following SAP services:

• Identify expected value and benets. Attend

a value discovery workshop. Uncover busi-

ness priorities (including combination with

SAP S4/HANA) and dene target cloud sce-

nario (cloud or hybrid). SAP will develop a

collaborative value assessment centered

All purchasing can be managed in one place

and in a highly collaborative, real-time manner

because it is all digital, from SAP S/4HANA

across the network to your suppliers.

24 / 24

Figure 9: Improvement Opportunities for Source to Pay

Cost reduction

Rationalize supply base through spend visibility and

centralized sourcing

Negotiate better pricing based on advanced negotiation

tools and insights into consumption history

Save on ad hoc purchases through demand

management and spot quoting

4%to15% in average unit price reduction*

Fiscal control and compliance

Control maverick spending, risk, and fraud through use

of contracted suppliers and preferred specications

and terms with standard, repeatable buying processes

Ensure supplier compliance to preferred terms with

reconciliation of invoice, purchase order, receipt,

and contract

US$20 million in contract leakage per $1 billion of spend*

Processeciency

Drive sourcing productivity through deep spend

analytics and immediate supplier discovery

Reduce supply chain operation costs, such as content

management, supply chain planning and execution, and

order processing

Reduce cycle times and increase accounts payable

productivity through invoice process automation

40%to60% in operating cost reduction*

Cash management

Avoid unintended cash ow drainage with a formalized

payment-terms strategy

Realize early-payment discounts and supply chain

nancing margin sharing through shorter invoice

processing cycle times and greater percentage of spend

on discount or nancing

Capture rebates on high-volume, low-value spend

through card programs

$1 million to $2 million in savings

per $1 billion of target spend*

*Source: SAP performance benchmarking and SAP organizational change management practice

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