Zukunftstrends im Einkauf – Run Simple and Stay · PDF fileZukunftstrends im Einkauf – Run Simple and Stay Relevant ... 3 SAP’s Evolution of Procurement from Service to Function

Zukunftstrends im Einkauf – Run Simple and Stay RelevantDie Beschaffungslogistik als Schlüsselrolle im Business Netzwerk

Dr. Marcell Vollmer, CPO SAP SE April 21, 2015

2© 2015 SAP AG or an SAP affiliate company. All rights reserved.

Agenda

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3 SAP’s Evolution of Procurement from Service to Function

Future Trends and Innovations in Procurement

Disruptive Trends and SAP’s Path to 20201


Increasing Globalization• Expansion into new markets• Global process standardization• International supply chains• Increased off/near shoring

Economic Volatility• Volatility in markets• Decreased stock valuation• Slow economic growth• High expense ratio

More Competition• Pricing pressures• New sources of competition• Decreased budgets and spending

Greater Risk• Supply chain disruption• Financial risk and fraud• Commodity risk

Accelerating Technological Change• Changing business models• Faster innovation cycles• Expanding partnerships and channels• Leveraging big data for decisions

Regulatory Changes• Increasing disclosure

requirements• Country-specific regulations• Industry-specific disclosures

Changing business environment increases pressure on companiesIncreases Pressure on Companies


1 ScienceDaily. ScienceDaily, 22 May 20132 Technology Adoption Report: Business Networks, Ardent Partners, 2014

3 Internet of Things (IoT) 2013 to 2020 Market Analysis: Billions of Things, Trillions of Dollars, IDC, 20134 Statista, 2014

Accelerating Technological ChangeBusiness landscape transformation 2020 is increasingly digital and networked

http://www.sciencedaily.com/releases/2013/05/130522085217.htm

http://cporising.com/2014/10/09/introducing-ardent-partners-technology-adoption-report-on-business-networks/

http://cts.businesswire.com/ct/CT?id=smartlink&url=http://www.idc.com/getdoc.jsp?containerId=243661&esheet=50721954&newsitemid=20131003005687&lan=en-US&anchor=Internet+of+Things+(IoT)+2013+to+2020+Market+Analysis:+Billions+of+Things,+Trillions+of+Dollars&index=4&md5=59da372afbdafaa6e8563b0f5d6412f0

http://www.statista.com/statistics/218984/number-of-global-mobile-users-since-2010/


€1.95bn to €2.05bncc Cloud subs

8% to 10% ccCloud & software

€5.6 to €5.9bncc operating profit

€3.5 to €3.6bnCloud subs

€21 to €22bnTotal revenue

65% to 70%Support + Cloud subs –share of revenue

€6.3 to €7bnOperating profit

€7.5 to €8bnCloud subs

€26 to €28bnTotal revenue

70% to 75%Support + Cloud subs –share of revenue

€8 to €9bnOperating profit

2015guidance

ambition

2020ambition

Across 25 industries

in 180 countries

253,000 customers

70+ million Cloud Users

40+ million On-premise users

74,400+ employees

17,6bn € Revenue full year 2014 (IFRS)

2015 Outlook and Path to 2020 – Run Simple, Simple WinsFast cloud growth, growing highly predictable revenue and operating profit

Procurement and Shared Services with end-to-end process automation are key forSAP to support operating profit ambition


Agenda

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Future Trends for ProcurementThree Trends in the Market – From Service to Function

Value Creation for supporting Business Functions – Procurement as Business Value EnablerValue creation is more important than procurement savings, which are not hitting the bottom line.

Focus on implementing new innovations to deliver business value and drive transition to source ‘services’ insteadof ‘goods’.

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3 Leveraging Shared Services Concepts – Sourcing FactoryIntelligent managed service concepts to discover untapped spend (like for small countries) and to increasecompliance incl. centralized category management.

Networked Economy – Business Networks to Revolutionize Sourcing for ProcurementUse cloud networks to link various platforms and consolidate spend while achieving real time collaboration. Enablethe function to harness the power of predictive analytics to be first to get competitive market insights and drivebetter business decisions. Leverage network and analytics to improve working capital and reduce transactionalcosts by end-to-end process automation incl. public cross-industry Procurement Catalog and Market Places.


Future Trends for ProcurementBusiness Value Enabler – Value Creation

Value creation is more important than procurement savings, which are often not hitting the bottom line. A buyer role needs toadvise the business and be a valued partner to focus on strategic sourcing decisions rather than ordering goods or services –systems will connect to order automatically, monitor status and delivery will be fully automated

Services not Goods Automated Ordering

Services Warehouses

Product Creation

3D Printing

The role of a buyer will change significantly as Procurement transitions from Goods to Services. Buyers will be asked toprovide solutions to the business and implement new (supplier) innovations that align with strategic objectives and deliverbusiness value.





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Evolution of Procurement towards a Strategic FunctionHow to explain best Business Networks in a ‘Networked Economy’?

Transition to fully integrated and automated purchase-order to invoice process will be a must in the future toreduce transactional costs and free up resources to focus on value adding activities in the end-to-end process.

The social media capabilities of

like shopping market place

End-to-end Automation for all transactions

Ariba Network will be THE B2B Network of the future

Ariba Business Network Combines Business Network Spend Distribution

Global capital andoperational spending for theGlobal 2000 is distributedacross different categories.SAP Business Networks canhelp companies address allof the spend categoriesSource: Spend Categories for GlobalTop2000

26%Direct & SupplyChain

21%Indirect & MRO

46%Contingent Laborand Services

7%Travel &Expenses


AutomationIncrease in invoice automationwithin short timeframeSAP: +50% in 12 months

ProductivityIncrease in overall productivity forprocurementSAP: +20% in 18 months

InvoicingReduction in procurementcosts using cloud solutionsfrom Ariba, an SAP company, andthe Ariba Network (from €11.5 to€6.7 per invoice) Example: SAP

Evolution of Procurement towards a Strategic FunctionCPO and CFO Value Proposition on Ariba Network & Catalog of Catalogs

Ariba Network provides benefits for both

CPO – to leverage purchasing power and reduce transactional costsCFO – to reduce transactional costs by invoice automation

SAP can sell to both! CPO and CFOProbably CFO can support getting budget for CPO as he benefits with real cost savingsbusiness case

CFO ValueCPO ValueSpendWill be leveraged to a highextend to realize additionalsavings (Margin impact)

POIncrease in overall productivityfor procurement to automatepurchase orders

100%Compliance and capturing ofall information / knowledge onthe Network

Ariba Cloud for GoodsFieldglass for ServicesConcur for Travel

Transaction automationon the combined networkof Ariba, Fieldglass andConcur


Transition to fully integrated and automated purchase-order to invoice process will be a must in the future to reducetransactional costs and free up resources to focus on value adding activities in the end-to-end process.

Manual paper based processfrom Purchase Order to Invoice

Purchase Order to Invoice fullyautomated on Ariba Network

Invoicecreation ina system

Invoice management will change from a paper based invoice handling process with manual data entry on two screens to anetworked automated invoice solution without manual process steps.Almost all invoices in today’s time are getting created by a system (ERP, Word, Excel and others). Invoice gets printed, shippedas letter per mail before the receiving company has to open the envelop, scans the invoice and is either entering the datamanually or tries to capture the information by an OCR system.

Printing MailShipping

ManualData Entry

Purchase Ordercreation / Invoice data

Purchase Orderdata conversion in invoice

Scanning

Example Purchase Order Invoice Automation and Run SimpleAutomation of Invoice to Pay – Eliminate Manual, no Value Adding Tasks





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Sourcing FactoryLeverage Organizational Capabilities

Problem:Strategic spend is managed by globalcategories or on regional level with strategicand/or preferred suppliers.

Tail spend and spend for small countries(Tier 3 countries) are not or partly managedwhich leads to missed savings opportunityand non-compliance risk.

Solution:Sourcing Factory model is an answer tobetter manage not globally/regionallycovered spend

Sourcing on Business Networks or based on global supply database to ensure fast and compliant processing of non-strategic spend.

Managed byGlobal Categories

Option 1:Captive Shared Service or

Center of Expertise concept

Option 2:Oursourced / Managed

Services

Spend to be shifted topreferred suppliers or intocaptive / managed service

High automation (spot buy, spot quote, eSourcing)

Intelligent managed organizational concepts are required to manage untapped spend areas or serve very small countries in a compliant way.A sourcing factory model – captive or as managed (outsourced) service – will expand the reach of procurement organizations in the future.


Agenda

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Operational Strategic Partner

Today

Processes & SystemsE2E P2P & Cloud Systems,

Networks, Mobile

OrganizationGlobalization Category

Managements

PeopleDevelopment & Change

Management

RegionalPurchasing

SRM 5.0 SRM 7.02 Cloud

ChangeManagement

Tactical

ProcurementOperations

PeopleDevelopment

Business PartnerLeadership

GlobalCategories

Evolution of Procurement at SAP towards a Strategic FunctionThe Transformation Journey towards Run Simple and Business Value Enabler Role


CPO and Business Owner for ‚Source-to-Pay‘

>3.8 billion €Spend FY 2014

>710,000Annual invoices

to-PayAccounts Payable and

Travel & Expenses

Source-to-PurchaseStrategic and Tactical Procurement

Purchase-OperationalProcurement

>970,000Trips

Source-to-Pay Strategy Group

IT Marketing Facility MobilityServices

Procurement Solutions Excellence Team

Leverage purchasing powerand driving sustainablesavings across allgeographies

Deliver best-in-classprocurement processes andhighest possible servicelevels to internal customers

Mitigate risk to SAP

Be a fair partner to oursuppliers

Process Organization Source-to-Pay @ SAPImplementation of a Globalized Category Management Organization


End-to-End Process and AutomationEvolution from Accounts Payable to Procure to Pay

From different process standards and scope…

Execute ClosingandReconciliation

Perform InvoiceProcessing andPerform Payment

Perform CatalogLifecycleManagement

PerformSourcing andBiddingContractManagement

Execute pretrip, on trip andexpense entry.Auditing

Request, order andreceive goods andservices

Define andperform strategicsouring planningand suppliermanagement

Global Source to Pay Process 2004

…to one end-to-end P2P process standard in Shared Services

Execute ClosingandReconciliation

Perform InvoiceProcessing andPerform Payment

Perform CatalogLifecycleManagement

PerformSourcing andBiddingContractManagement

Execute pretrip, on trip andexpense entry.Auditing

Request, order andreceive goods andservices

Define andperform strategicsouring planningand suppliermanagement

Global Source to Pay Process 2014

to-PaySource-to-Purchase Purchase-

Local / regionalProcessShared ServicesProcess


Ariba for Goods,Fieldglass for Services andConcur for Travel

to-PayAccounts Payable and

Travel & Expenses

Source-to-PurchaseStrategic and Tactical Procurement

Purchase-OperationalProcurement

Processes & SystemsE2E P2P & Cloud Systems,

Networks, Mobile

Organization & PeopleGlobalization Category

Managements

Evolution of SAP’s Source-to-Pay SystemsOne Global Source-to-Pay Processes with Hybrid System Cloud & On Premise

20© 2015 SAP AG or an SAP affiliate company. All rights reserved.© 2014 Fieldglass, Inc. All rightsreserved. Proprietary and

Delivering Total Workforce ManagementCompanies for more than 25bn have been acquired in the last 8 years


Run Simple Real Life Examples from GPO @ SAPEase of Use and Optimized User Interfaces for Procurement, Analytics and Travel

Catalog Ordering with Spot Buy (ebay) live‘ebay like shopping’

Improve to Run Simple Innovate NEW Ideas to Run Simple

New Fiori Approval Launchpad Live‘easy to use App’

Old SRM Catalog Old Workflows

NEW Ariba Catalog withSpot Buy ebay integration(live in US since November)

SAP Fiori Launchpad:Approval App and DesktopVersion available for allWorkflows, like ShoppingCart, Shopping Cart Tracking,Access Fiori Launchpad

TabletAccess enabled

Tablet / SmartphoneAccess enabled

https://pgpmain.wdf.sap.corp/sap/bc/ui5_ui5/ui2/ushell/shells/abap/FioriLaunchpad.html

https://pgpmain.wdf.sap.corp/sap/bc/ui5_ui5/ui2/ushell/shells/abap/FioriLaunchpad.html

https://internalstore.sap.com/sap/cp/ui/resources/cstore/html/SolutionDetails.html?pid=0000000911&pcntry=US&sap-language=EN&_cp_id=id-1416746610378-0


Ariba Cloud SolutionsStrategic & Tactical Procurement

Ariba Spend Visibility

Ariba Supplier Management

Ariba e-Sourcing

Service Procurement

Ariba Contract Management

Ariba Catalog

Procurement Dashboards arekey to manage the Procure-to-Pay Process and to definesourcing strategies

Leverage Supplier ManagementProgram on Ariba (SIPM) andimplement preferred supplierstrategy to consolidate andoptimize spend allocation

Leverage purchasing power anduse highly standardized andautomated eSourcing solution.Benefit from eAuctions

Cloud-based technology toprocure and manage the non-employee workforce, incl.contingent workers and servicessuch as Statement of Work(SOW) projects, offshore laborand independent contractors

New CatalogGoogle fast and eBaylike shopping experiencewith Ariba Catalog

Procurement integrated CMSsolution to eliminate paper andink from the creation, execution,and management of any type ofcontractual agreement.

Source-to-Purchase (Strategic and tactical procurement)


Before After PO and non-PO Spend aggregated

SRMERPERP SRMERPERP

PO-SpendBW

nonPO-Spend

Run Simple Real Life Examples from Source-to-Pay @ SAPEase of Use and Optimized User Interfaces Spend Vis on HANA


Streamline entire Source-to-Pay Process

§ Leverage economies of scale and control throughshared services

§ Cut costs through automated data extraction andprocess automation

§ Create workforce efficiency through streamlinedprocesses including mobile approvals

§ Reduce errors at the source§ Improve working capital management through

better visibility to cash requirements§ Optimize cash discount utilization including

dynamic discounting

Achievements: Facts & Figures

3 Months Implementation Time

>4,000 Suppliers on ARIBA Network

268,000 Documents transmitted

50% Increase in Automation

20% Productivity gain

<1.0bn Purchase Order value sourced

Achievements Source-to-PayBusiness Network with high Automation and Global Shared Services


Transform to Run Simple

Transform Organization to fit future needsDevelop people and manage change

Implement end-to-end processes and cloudsystems to automate transactional processes

Get Linked to Stay Relevant

Leverage the power ofsocial, supplier, and business networks

to get innovations and to deliver solutions to thelines of businesses

Key Takeaways on Transforming Source-to-PayRun Simple and Get Linked are Key Success Factors for the Future


RUNBETTERWITH

Many Thanks

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