Transform Procurement with SAP S/4HANA and SAP Ariba Solutions
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Transform Procurement with SAP S/4HANA®
and SAP® Ariba® Solutions
© 2018 SAP SE or an SAP affiliate company. All rights reserved.
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Table of Contents
3 Executive Summary 24 Guided Buying
5 Trends in Procurement 25 Spot Buy
8 Procurement Solutions from SAP 26 Procurement Analytics
10 Ariba Network and Supplier Collaboration 27 Solution Extensibility
12 Supplier Management 28 Solution Integration
14 Sourcing and Contract Management 30 Deployment Options
16 Operational Purchasing – 32 Benefits and Next Steps
Indirect Procurement
18 Operational Purchasing –
Direct Procurement
20 External Workforce Management
and Services Procurement
22 Invoice and Payables Management
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.
Executive Summary
Today, many SAP customers running solutions
such as the SAP® Supplier Relationship
Management application want to understand
which solution set SAP recommends to address
their new challenges. SAP embraces digital
transformation with SAP S/4HANA® as the
digital core and supplier collaboration, guided
buying, and collaborative sourcing enabled by
SAP Ariba® solutions. This paper targets our
enterprise customers and provides an overview
of how they can transform their procurement
functions to stay relevant and focus on value
for their businesses.
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.
When transforming procurement in your organi- •• End-to-end processes – When transforming
zation, you’ll need to identify your personal path procurement, you should focus on end-to-end
for moving from where you are currently to your processes as opposed to individual solution
target state. There are three key considerations: components. You can maximize value by
•• Value realization – The key objective of procure- enabling industry-specific, integrated processes
ment transformation is to evolve the role of that span different software components.
procurement and increase the value the func- •• Choice – Every customer situation and objective
tion adds to your organization. Every step in the is different, and so are your IT strategy, your
transformation process needs to be supported existing infrastructure, and your transformation
by a clear business case. You can realize value timeline. This is why SAP built a procurement
only if the new systems and processes are strategy that works for customers of all sizes
consistently deployed and used by every single and industries. You have three main deployment
user in your organization. options, depending on your current situation.
SAP S/4HANA®*, SAP Ariba® SAP S/4HANA* and SAP Ariba solutions and
solutions, and Ariba Network Ariba Network Ariba Network
• You are driving a digital IT • You are focused on transforming • Your primary business case is
transformation agenda (including IT with an ERP suite and expect procurement transformation.
procurement transformation). essential procurement process • Strategic sourcing and supplier
• Procurement will be tightly support as part of the core management are critical to your
connected to the back end in foundation. business goal. Your operational
a single end-to-end system. • Your main focus is digital IT procurement scope is indirect;
• Our recommendation: Manage transformation. maintenance, repair, and over-
procurement processes with • You typically have less than haul; and services spend.
SAP Ariba solutions and integrate to US$1 billion in revenue. • IT has no immediate plan to go
SAP S/4HANA for core processes – to SAP S/4HANA. Your system
whether single or multiple back-end landscape may be heteroge-
systems based on your business neous and have multiple ERPs
needs. across the globe.
*Your IT strategy will drive our recommendation for either the on-premise version of SAP S/4HANA or our cloud edition.
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.
Trends in Procurement
The procurement function goes through constant ••Providing more value to the business – engag-
change as chief procurement officers (CPOs) ing with business stakeholders on topics such
continue to deliver bottom-line savings – while as evolving from selling products to delivering
increasingly focusing on value creation for the solutions and services
company. CPOs need to work with their teams to ••Becoming a strategic advisor – monitoring
respond to the following key trends that disrupt the market innovations and connecting innovative
way they currently run the procurement function: new suppliers with engineering to leverage the
••Marketplace buying experience – As in their latest technologies
private shopping, employees expect choice,
value, and features for making comparisons, For more than 40 years, SAP has been working
as well as compliant access to goods without closely with CPOs and CFOs. This way, we deliver
sourcing. best-practice processes and software solutions
••Millennial experience – Superior consumer- that allow procurement and finance to continu-
grade user experiences and easy data access ously improve their value contribution to the
across all devices are mandatory for both pro- company and help drive bottom-line impact.
fessional and casual users. No learning should
be required. Today, the following applications are widely
••Data that fuels transformation – Emerging deployed and support the procurement functions
technologies such as machine learning and of our customers:
artificial intelligence bring a new level of innova- •• Materials management component of SAP ERP
tion and automation into the source-to-settle •• SAP Supplier Relationship Management
process. (SAP SRM)
••Next-generation interaction models – Natural •• SAP Contract Lifecycle Management (SAP CLM)
language processing, gestural user interfaces, •• SAP Supplier Lifecycle Management
bots, and sensor-driven automated ordering •• SAP Sourcing
are all new to the scene. •• SAP S/4HANA Sourcing and Procurement
•• Purpose – Consumers choose companies that •• Cloud-based SAP Ariba solutions such as:
do good things, and procurement needs to drive ––SAP Ariba Buying
ethical sourcing and enforce sustainability. ––SAP Ariba Invoice Management
––SAP Ariba Sourcing
KEY VALUE DRIVERS ––SAP Ariba Contracts
Most of the CPOs we speak with have already ––SAP Ariba Spend Analysis
achieved a high degree of spend under manage- ––SAP Ariba Payables
ment. Today, they are focusing on two main areas: ––Ariba Network
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.
CAPTURING PROCUREMENT VALUE their strategic partner to deliver procurement
The business cases that procurement builds solutions, such as those listed above. What has
around IT projects are usually centered on the changed, however, are the practices that CPOs
same key value drivers that have been used over are implementing to capture value, as shown in
the past 10 to 15 years. These are the same ones this table.
that drove many companies to choose SAP as
Value Driver Value Capture – Today Value Capture – In the Future
Costs of the procurement Ownership of operative, tacti- •• Operational tasks automated to run
function cal, and strategic tasks by electronically
procurement to drive savings •• Fewer, more-experienced employees in
procurement who are focused on value
creation and strategic activities
Spend under management Rollout of catalogs to address •• Employees and functional buyers supported
indirect spend through a guided buying experience
•• Buying experience that addresses multiple
spend channels such as collaborative requisi-
tion, catalog buy, long-tail spend, and invoice
against contract
Maverick spend Mandated use of system, •• Marketplace capabilities that take sourcing
high-category coverage with and procurement team involvement out of
prenegotiated catalogs, and the equation for select categories while offer-
free-text POs ing low prices through economies of scale in
the network
Percentage of electronic Supplier portals for purchase •• Business networks enabling collaboration
invoices orders and invoices with an ecosystem of trading partners
•• Fully automated, end-to-end processes
Discount capture rate Scanning solutions followed by •• Touchless e-invoicing that provides immediate
electronic approval workflows visibility
•• Increase in payment terms with supply chain
financing or dynamic discounting
Number of invoices per Processing of all invoices •• Perfect purchase order
accounts payable employee •• Electronic processing of invoices, which
or FTE occurs after rules-engine validation
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.
Procurement is becoming more actively involved their impact with a new set of KPIs. CPOs should
in the core business of the company and working choose or complement their existing procure-
more closely with plant managers, heads of ment platforms based on a product’s ability to
supply chain, and other business stakeholders. support them in achieving these new KPIs.
And leading CPOs will soon look at measuring
Value Driver Value Capture – Today Value Capture – In the Future
Cost of managing vendor Administration through •• Enabling supplier self-service updates of their
master workflow-based processes information on Ariba Network
and controls •• Actively managing supplier lifecycles
enterprise-wide across categories, regions,
and business units
New-product lead time Minor or no supplier innovation •• Fostering adoption of supplier-driven
triggered by procurement innovations
•• Competitively negotiating component prices
during engineering
Supply chain resilience Holding inventory and issues •• Choreographing supplier collaboration
resolution through interaction electronically to optimize planning, manu
by phone or e-mail facturing execution, and inventory levels
•• Proactively managing supplier risk
Asset uptime Manual ordering •• Sensor-driven ordering of spare parts as part
of predictive asset-management scenarios
•• Specifying and buying Internet of Things–
ready assets
•• 3D printing of replacement components
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.
Procurement Solutions from SAP
The integration of SAP S/4HANA with SAP Ariba can collaborate on changed order priorities, track
and SAP Fieldglass® solutions enables a tangible shipments, provide service entries, and share
step up in performance, speed, agility, visibility, delivery schedules, forecasts, and inventory
and control. across the extended supply chain. These capabili-
ties enable real-time collaboration that reduces
With SAP S/4HANA as the digital core, you can supplier and supply chain risks.
manage massive amounts of data in order to run
live, with access to real-time digital visibility into all With SAP S/4HANA, SAP Ariba solutions, and
corners of your operations. SAP S/4HANA covers SAP Fieldglass solutions, SAP offers the most
operational procurement processes, including complete solution (see Figure 1) to manage the
purchase requisitioning and order processing, entire source-to-settle process:
invoice processing, order confirmation, and ••It has breadth. It can manage each step of this
operational contract management, supported process – from sourcing, through procurement,
by real-time embedded analytics across all to payments.
spend categories. ••It has depth. It can manage diverse spending
and expense types – direct; indirect; services;
Digitally transforming procurement processes maintenance, repair, and overhaul; capital proj-
requires fast innovations in areas such as user ects; and contingent labor.
experience, supplier collaboration, and options ••It has reach. It connects and allows collabora-
to drive competition through open marketplaces. tion between your business and a broad net-
This type of digital transformation is enabled work of partners and trusted suppliers.
by extending SAP S/4HANA with SAP Ariba and
SAP Fieldglass solutions in the cloud.
CLOUD EXTENSION POLICY
SAP Ariba solutions extend the core operational SAP customers have the flexibility and choice
processes providing full source-to-settle function- to adapt to their evolving business needs by
ality. This includes guided buying, collaborative changing their existing on-premise SAP solution
sourcing and contracting, supplier management, infrastructures. Customers that have licensed
and networked-based, end-to-end supplier collab- SAP ERP, SAP SRM, SAP CLM, SAP Supplier
oration to deliver a new, guided, and simplified Lifecycle Management, or SAP Sourcing
user experience and collaboration with suppliers applications can work with their SAP account
over Ariba Network. SAP Fieldglass solutions sup- executives to leverage our cloud extension policy.
port contingent labor procurement and external They can decide to reallocate elements of their
workforce programs. installed on-premise solutions to SAP Ariba,
SAP S/4HANA Cloud, or SAP Fieldglass solu-
Combining SAP S/4HANA with SAP Ariba and tions, replacing the affected on-premise licenses
SAP Fieldglass solutions provides access and out- and maintenance agreements with public cloud
reach to partners and suppliers outside the four subscriptions.
walls of your organization. You and your suppliers
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.
Customers are asking SAP for recommenda- to their current SAP software implementations.
tions on how to best take advantage of the Over the next pages, we will guide you through
continuous stream of innovations delivered with our recommendations along the source-to-settle
SAP S/4HANA, SAP Ariba, and SAP Fieldglass process.
solutions. They also want to know how this relates
Figure 1: Procurement Solutions from SAP – Overview
Supplier Collaboration Through Ariba® Network
PO, invoice, service entry sheet automation, supply chain automation, and payables automation
Operational procurement •• End-user sourcing and contract and supplier risk
•• Self-service requisitioning requests
•• Central requisitioning •• Contract compliance
•• Guided buying, procurement policies, and buying •• Purchase order processing
channels •• Requirements processing
•• Spot Buy marketplace •• Procurement operations
•• Catalog management
Catalogs, open APIs, business-to-business integration, and portal
Sourcing and contract management •• Direct material sourcing
Event management, RFx, contract, and supplier profile
•• Spend classification and enrichment •• Contract authoring, execution, and repository
•• Strategic sourcing •• Operational contract management
•• Category management, projects, and workflow •• Source assignment
Supplier management •• Supplier evaluation
•• Supplier discovery •• Supplier onboarding and qualification
•• Supplier information management •• Supplier performance management
•• Classification and segmentation •• Supplier risk management
•• Third-party risk and data augmentation
Inventory and basic warehouse Procurement analytics Invoice and payables management
management •• Spend visibility •• Invoice workflow and exception
•• Goods issue or receipt •• Real-time reporting and monitoring management
•• Inventory search and reservation •• Invoice processing
•• Basic warehouse management •• Contract invoicing
•• Basic shipping •• Services invoicing
•• Accounts payable
External workforce management •• Worker onboarding, management, and offboarding
•• Guided work sourcing •• Live insights
•• Job requisition distribution •• Analytics and reporting
•• Rate management and automation •• Invoice, discount, and taxation
•• Worker review and selection
Services procurement •• Services requisitioning and service orders
•• “Statement of work” bid management •• Services contract management
•• Contractual terms and conditions enforcement •• Services contract compliance
•• Deliverable tracking and management •• Service entry sheets
•• Invoice and taxation •• Services invoicing
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.Ariba Network and
Supplier Collaboration
All processes across sourcing, direct and indirect procure-
ment, and payments are natively connected to Ariba Network
in the following way:
•• Most processes require supplier collaboration and must
match the process of the supplier: sourcing needs to
match with the supplier’s sales process, buying with the
supplier’s dispatch process, and paying with the supplier’s
receivables process.
•• The network is key to automating business processes. It
goes beyond transmitting documents to understanding
context, checking and correcting documents, and returning
to sender when agreed-upon business rules are not met.
•• The benefits of automated collaboration can only be
achieved with a high level of adoption. This, in turn, requires
a user experience that people gravitate to and a service to
intuitively and quickly onboard all suppliers at scale.
RECOMMENDATION
Customers should replace supplier self-services in
SAP SRM as well as slow and costly paper-based
processes by automating operational procurement
with supplier collaboration over Ariba Network.
Customers should evaluate new supply chain collabora-
tion features that extend Ariba Network beyond pure
purchase order and invoice collaboration to supply
chain message types, such as exchanging demand
forecasts, schedule agreements, and component
inventory and consumption.
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.END-TO-END USE CASES
Core Purchasing and Invoice Collaboration
Core purchasing processes in SAP S/4HANA such as purchase orders, goods receipts, and invoices
can be extended with supplier collaboration through Ariba Network.
Confirmation and Invoicing and
Purchase order Goods receipt Invoice receipt
ship notice discounting
SAP S/4HANA Ariba Network SAP S/4HANA Ariba Network SAP S/4HANA
Standard integration delivered by SAP between SAP S/4HANA and Ariba Network
Forecast Collaboration
The demand plan is provided to the supplier for forecasting and committing, which results
in a constrained plan.
Constrained
Demand plan Forecast Commit
plan
SAP Integrated Business SAP Ariba Supply SAP Ariba Supply SAP Integrated
Planning solution, Chain Collaboration Chain Collaboration Business Planning,
SAP S/4HANA for Buyers for Buyers SAP S/4HANA
Standard integration delivered by SAP between SAP S/4HANA and Ariba Network
Supply Chain Execution
The material requirements planning (MRP) run triggers a purchase order, and the supplier
continuously provides updates on delivery progress until goods and invoice receipt.
Purchase order or Supplier
MRP Invoice receipt
scheduling release collaboration
SAP S/4HANA SAP S/4HANA SAP Ariba Supply SAP S/4HANA
Chain Collaboration
for Buyers
Standard integration delivered by SAP between SAP S/4HANA and Ariba Network
VALUE CAPTURE
•• Savings from reduced FTE and communication costs by automating the catalog management,
purchasing, receiving, and routing of invoices for approval and payment
•• Savings from touchless invoicing (automating the invoice and reconciliation process and preventing
submission of invoices with errors) leading to clean invoices received in SAP ERP or SAP S/4HANA
•• Increase in on-time payments and ability to capture early-payment discounts
•• Improved visibility and collaboration with suppliers, reducing the need to expedite shipments and
decreasing the necessary inventory safety stock
•• Reduced cycle times for demand, supply, and forecast collaboration scenarios with suppliers
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.Supplier Management
All processes across sourcing and procurement require
collaboration with business partners, and successful
companies manage these relationships very closely.
•• A clean and up-to-date vendor master is key to flawless
process execution as well as identifying savings potential
through analytics.
•• Working with suppliers across their supplier lifecycles
enables you to stay close to your most-critical business
partners and draw on their innovations. The supplier life
cycle process covers scalable supplier onboarding and
supplier qualification and segmentation, and it enables
suppliers to keep their data up to date.
•• You can make procurement more risk aware by proactively
understanding supplier risk and taking corrective actions.
As a buying organization, you can monitor your critical sup-
pliers on potential financing issues and include them in a
supply chain finance program to safeguard their liquidity.
As a service for customers using Ariba Network, SAP is
handling the full supplier onboarding process on their behalf.
RECOMMENDATION
Customers – including customers who run SAP Supplier
Lifecycle Management and SAP Sourcing applications –
should implement the SAP Ariba Supplier Lifecycle and
Performance solution to support sell-side tasks such as
registration, onboarding, and qualification of suppliers.
The solution can be extended with the SAP Ariba Sup-
plier Risk solution to drive risk-aware procurement.
In case operational procurement is done in SAP S/4HANA,
this system keeps the vendor master for operational pro-
cesses and is the source of internal supplier evaluations
(based on quality incidents or delivery performance,
for instance).
Customers with multiple back-end SAP systems should
consider implementing the SAP Master Data Governance
application as well.
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.END-TO-END USE CASES
Supplier Onboarding and Qualification
The supplier self-registers on Ariba Network and provides input for qualification. The vendor master
in SAP S/4HANA is then updated to facilitate core process execution.
Qualification and Information Supplier
Onboarding Supplier master
approval management self-service
Ariba Network, SAP Ariba Supplier SAP Ariba Supplier SAP S/4HANA SAP Ariba Supplier
SAP Ariba Supplier Lifecycle and Lifecycle and Lifecycle and
Lifecycle and Performance Performance Performance
Performance
Standard integration delivered by SAP between SAP S/4HANA and SAP Ariba solutions, including
SAP Master Data Governance, Supplier, in case of multiple back-end systems.
Supplier Risk and Performance Management
Supplier risk is proactively monitored through a scoring model and external data feeds. Supplier
performance is evaluated based on qualitative criteria in SAP Ariba Supplier Lifecycle and
Performance and information resulting from transactions in SAP S/4HANA, such as product
quality and delivery performance.
Supplier risk Supplier risk Supplier performance Supplier performance
assessment monitoring management management
SAP Ariba SAP Ariba SAP Ariba Supplier SAP S/4HANA
Supplier Risk Supplier Risk Lifecycle and
Performance
Project-based integration between SAP S/4HANA (on premise) and SAP Ariba solutions
Operational Supplier Performance Management
Supplier performance is evaluated based on product quality and delivery performance.
Categories and Supplier Supplier performance
segmentation evaluation management
SAP S/4HANA SAP S/4HANA SAP S/4HANA
Standard integration delivered by SAP between SAP S/4HANA and Ariba Network
VALUE CAPTURE
•• Reduced supplier management maintenance costs
•• Increased continuity of supply through proactively acting on risk insights
•• Optimized supplier performance by combining qualitative supplier qualifications with data on quality
and delivery performance
•• Increased shareholder value through brand protection and adherence to standards in social
responsibility
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.Sourcing and Contract Management
One of the key objectives of a purchasing organi-
zation is to reduce risk and cost through increased RECOMMENDATION
savings opportunities, sourcing efficiency, and
Customers should plan to adopt the SAP Ariba
contract and supplier compliance.
Collaborative Sourcing bundle and replace
•• Getting the best prices is the biggest lever and
current sourcing solutions that are part of
the way to get measurable value early on in your
the SAP SRM or SAP Sourcing applications.
deployment journey to SAP S/4HANA. Procure-
This bundle includes SAP Ariba Contracts
ment has the authority to bundle indirect spend
for customers who want to collaboratively
across suppliers. In direct procurement, getting
create purchasing contracts with suppliers
better prices with higher volumes is done in
and digitalize paper-based contracts.
partnership with your engineering team. A good
example of this is the platform strategy in
Customers in manufacturing and consumer
the automotive industry, where synergies are
industries should evaluate the new, innova-
created by using the same component in many
tive capabilities for direct material sourcing
different models and by adapting specifications
in SAP Ariba solutions.
during live auctions.
••Managing risk is critical, and only a collabora-
SAP S/4HANA enables users to send basic
tive sourcing tool enables you to engage with
price requests to suppliers, and it covers oper-
the suppliers that adhere to the strictest
ational contract management. Additionally,
standards of quality, delivery, and integrity.
SAP S/4HANA now contains legal content
••Managing specifications makes sure that you
management for addressing the needs of
know exactly what you’re buying. For indirect
central legal departments. It is a central layer
spend, this is asking stakeholders or analyzing
for linking legal content to objects across all
previous spending projects. For direct spend,
lines of business. This solution can be used for
it is integrating with engineering and planning
generic legal content. For purchasing-related
systems.
contracts, however, we recommend you use
SAP Ariba Contracts.
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.END-TO-END USE CASES
Operational Sourcing
The employee buys from an existing supplier and sends an inquiry for current pricing through
Ariba Network or SAP Ariba Sourcing for more complex sourcing events.
Unsourced Quote Purchase order
Award
requisitions automation or contract
SAP S/4HANA Ariba Network SAP S/4HANA SAP S/4HANA
Unsourced Purchase order
Sourcing Award
requisitions or contract
SAP S/4HANA SAP Ariba Sourcing SAP Ariba Sourcing SAP S/4HANA
Standard integration delivered by SAP between SAP S/4HANA and SAP Ariba solutions
Strategic Sourcing for Indirect Goods
The category manager starts the tendering process to optimize conditions and pushes the final
contract into SAP S/4HANA. Customers who choose to extend procurement into the cloud with
SAP Ariba Buying can also realize unified and smooth operational contract compliance management.
Project or category Operational Contract
Sourcing Contract
management contract monitoring
SAP Ariba Sourcing SAP Ariba Sourcing SAP Ariba Contracts SAP S/4HANA SAP S/4HANA
Standard integration delivered by SAP between SAP S/4HANA and SAP Ariba solutions
Direct Materials Sourcing
Procurement receives a bill of materials from engineering and selects suppliers for unsourced
components.
Operational
Engineering Sourcing Quoting Contract
contract
SAP S/4HANA SAP Ariba Sourcing SAP Ariba Sourcing SAP Ariba Contracts SAP S/4HANA
Standard integration delivered by SAP between SAP S/4HANA and SAP Ariba solutions
VALUE CAPTURE
•• Reduced sourcing cycle times
•• Increased spend under management with fewer nonsourced and free-text purchase orders
•• More favorable pricing through increasing competitiveness of sourcing events, allowing more bids
and identifying potential new suppliers and price reductions
•• Reduced time to market for new products through better supplier collaboration
•• Lower cost of goods sold through more competitive negotiation of component prices
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.Operational Purchasing – Indirect Procurement
Indirect demand can potentially come from any
person in the company. Users should be guided RECOMMENDATION
through the process, spend as little time as possi-
As customers replace indirect procurement
ble with procurement, and be empowered to use
currently implemented with SAP SRM or
their mobile devices. With the Internet of Things
SAP ERP, they have different choices.
(IoT) being deployed in more and more organiza-
tions, demand also comes from all sorts of sen-
For companies with less than US$1 billion
sors. Demand from sensors is hard to predict and
in revenue and low indirect spend, where
may come from various scenarios. A shop-floor
essential indirect procurement capabilities
worker might zap a bar code on the bottom of the
are usually sufficient, customers can move
bin as she takes the last box of disposable safety
indirect procurement to SAP S/4HANA,
gloves. Or a temperature-warning sensor might go
complemented by Ariba Network and the
off on a piece of equipment, requiring parts to be
SAP Ariba Catalog solution.
autoreplenished and an engineer to be dispatched.
When indirect spend is a significant cost
Successful indirect procurement requires the
driver, customers should leverage the
following:
SAP Ariba Buying solution. This can happen
••High adoption, which can be achieved only by
in two ways:
making sure the solution is available to all
•• Manage indirect procurement processes
employees, and all suppliers are present and
in SAP Ariba Buying, integrated to
correct in the system
SAP S/4HANA for core procurement pro-
••Compliance, which is achieved when users
cessing, which is typically considered when
are guided simply and painlessly to preferred
driving a digital transformation agenda
suppliers and are motivated to follow company
including a strong charter for procurement
policies – which should be easier than sending
transformation
e-mails
•• Running all indirect procurement in
••Intuitive use, even for untrained employees
SAP Ariba Buying, integrated with
to use the system at any time, from anywhere,
SAP S/4HANA for invoicing
and from any device to get the job done
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.END-TO-END USE CASES
Catalog Buying
For companies extending core purchasing in SAP S/4HANA with managed catalogs, the employee
uses a catalog to create a shopping cart and sends the purchase order out.
Purchase order Supplier Goods receipt
Requisitioning Managed catalog
or reservation collaboration Invoice receipt
SAP S/4HANA SAP Ariba Catalog SAP S/4HANA Ariba Network SAP S/4HANA
Standard integration delivered by SAP between SAP S/4HANA and SAP Ariba solutions
Guided Buying
Casual users and functional buyers are guided through the buying process and company policies
(for instance, a facilities employee commissioning a new office setup). If an item is unavailable in the
catalog, a simple “three bids and a buy” process is started.
Catalog or simple Purchase order Supplier Goods receipt
Guided buying
quote request or reservation collaboration Invoice receipt
SAP Ariba Buying SAP Ariba Buying SAP S/4HANA Ariba Network SAP S/4HANA
Standard integration delivered by SAP between SAP S/4HANA and SAP Ariba solutions
Internet of Things–Triggered Buying
Sensors trigger the automatic replenishment of components.
IoT sensor or Replenishment Supplier Core
asset metrics order collaboration processing
SAP Cloud Platform SAP Ariba Buying Ariba Network SAP S/4HANA
Project-based integration between SAP S/4HANA and SAP Ariba solutions (SAP Cloud Platform
Internet of Things service)
VALUE CAPTURE
•• Move from medium-touch to no-touch buying by pushing the buying process to the casual user
and improving procurement employee efficiency
•• Increase spend compliance to contracts, preferred vendor lists, procurement policies, and preferred
pricing
•• Realize negotiated sourcing savings by reducing maverick spend
•• Secure spot savings for tail spend through three bids and a buy and connectivity to marketplaces
•• Reduce total cost of ownership by avoiding use of a separate catalog management tool; eliminate
loading of supplier catalogs
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.Operational Purchasing –
Direct Procurement
The needs in direct procurement are fundamentally different
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 connections from
back-end software systems straight to the digital systems
of supply chain partners.
•• Data integrity is key for smooth execution across functions
in your company with complex, hierarchical data objects.
•• As the procurement function takes a more prominent role
in the company to help ensure a stable and fast supply
chain, speed is critical. It is the role of procurement to
react quickly to disruptions from global suppliers and to
hear about them immediately through supplier risk tech-
nology across the network. Changes to demand forecasts
in SAP S/4HANA are communicated to your suppliers in
real time.
RECOMMENDATION
Direct procurement is managed in SAP S/4HANA.
Customers should transfer direct procure-to-pay
processes currently implemented with the materials
management component in SAP ERP or with SAP SRM
to the SAP S/4HANA Enterprise Management solution.
Customers should plan to extend the process flow to
suppliers with the SAP Ariba Supply Chain Collaboration
for Buyers solution for collaboration on forecast commit,
schedules, inventory, consignment, and contract manu-
facturing. They should also integrate with SAP Ariba
Sourcing to better leverage supplier innovations, design
for reduced cost of goods sold, and speed up the product
innovation lifecycle.
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.END-TO-END USE CASES
Plan-Driven Replenishment
The MRP run triggers a purchase order to refill stock in time for manufacturing execution.
Source Supplier
MRP Requisition Purchase order
determination collaboration
SAP S/4HANA SAP S/4HANA SAP S/4HANA SAP S/4HANA Ariba Network
Standard integration delivered by SAP between SAP S/4HANA and Ariba Network
Work Order and Project-Driven Procurement
A shortage of materials triggers an employee to create a purchase order to replenish the materials.
Plant maintenance Purchase order Supplier Goods receipt
Managed catalog
or project system or reservation collaboration Invoice receipt
SAP S/4HANA SAP Ariba Catalog SAP S/4HANA Ariba Network SAP S/4HANA
Standard integration delivered by SAP between SAP S/4HANA and SAP Ariba solutions and
Ariba Network
VALUE CAPTURE
•• Maximized process efficiency through 100% plan-driven process automation
•• Reduced inventory
•• Increased customer fill rates
•• Improved visibility and collaboration with suppliers
•• Extended asset uptime by reacting to material shortages early
•• Heavy maintenance, repair, and overhaul and direct material spend capture and compliance with
automatic replenishment
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.External Workforce Management
and Services Procurement
Customers increasingly utilize their ecosystems to commis-
sion one of three types of services to get tasks done:
••Qualified services where success is highly dependent on
who does the job – In this case, it is critically important to
identify the right candidates from a broad ecosystem of
contractors. This includes reviewing resumes, onboarding,
and setting up HR or establishing temporary labor
contracts, certifying and building contractor profiles,
managing time sheets, and finally, paying market rates.
••Complex services where the scoping of engagements
around the “what” and “how much” is important –
Consider mowing 100,000 square meters of lawn or cater-
ing for 20,000 people daily. This is usually done through
statements of work, service descriptions, and negotiated
rates. The aim is to maximize preferred-supplier savings
and eliminate overbilling.
••Nonqualified or simple services where the “who” is not
important, and the service may include items and goods,
for example, painting a corridor, having a field engineer
perform an unplanned valve inspection, or replacing the
antenna in a relay station – This includes ordering from
release contracts and obtaining service approvals, as
well as completing service entry sheets, making sure
the work complies with agreed-upon rates.
RECOMMENDATION
Customers should consider implementing SAP Fieldglass
solutions for use in services procurement if it is important
“who” provides the service and if onboarding or offboard-
ing of contingent workers is required (temporary labor or
professional services, for example).
For nonqualified or simple services and scenarios
where the “what” is more important, customers
should leverage the SAP Ariba solutions integrated to
SAP S/4HANA. This includes, for instance, project or
field services that combine material consumption with
services or recurring services that are invoiced against
a contract.
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.END-TO-END USE CASES
Complex Services – Project-Based Field Services
The service technician submits service entry sheets to create an invoice based on contracted rates.
If necessary, the buyer can enter service entry sheets on behalf of the service technician into the
system through SAP Ariba Invoice Management.
SAP S/4HANA–initiated scenario:
Service entry Invoice
Service order Service receipt Invoice receipt
sheet collaboration
SAP S/4HANA Ariba Network, SAP S/4HANA Ariba Network SAP S/4HANA
SAP Ariba Invoice
Management
SAP Ariba solution–initiated scenario:
Service-order Service entry Rate sheet valida-
Invoice creation Invoice receipt
item additions (field ticket) tion and approval
SAP Ariba Buying Ariba Network SAP Ariba Contracts SAP Ariba Invoicing SAP S/4HANA
Ariba Network
Standard integration delivered by SAP between SAP S/4HANA and Ariba Network
Qualified Services – Contingent Labor
External workers are selected, onboarded, and compensated based on time-sheet information.
Posting and candi- Invoice creation
Work order Time sheet entry Invoice receipt
date assignment and approval
SAP Fieldglass SAP Fieldglass SAP Fieldglass SAP Fieldglass SAP S/4HANA
solutions solutions solutions solutions
Standard integration delivered by SAP between SAP S/4HANA and SAP Fieldglass solutions
VALUE CAPTURE
•• Early visibility of spend exposure through capture of service entry sheets
•• Better compliance with line items of the PO or contract rate sheet for services and materials
•• Improved timeliness of payments for services-based invoices
•• Eliminated overpayments through accurate and clean invoicing
•• Optimized discounting and working-capital improvements
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.Invoice and Payables
Management
Simplified processes for collecting and checking invoices,
verifying them against preconfigured business rules, and
handling exceptions increase process efficiency and help
eliminate data-entry errors and duplicate invoices:
•• This addresses the key requirement of all customers:
automation and reduction of administrative tasks.
•• 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.”
•• The invoicing process allows both buyers and suppliers
to create additional business value and win-win situations
in optimizing cash flow. You can use capabilities such as
supply chain financing and dynamic discounting, allow-
ing you to establish close relations with your suppliers
and letting treasury departments optimize days payables
outstanding (DPO) and days sales outstanding.
RECOMMENDATION
Accounts payable teams should plan to adopt
SAP S/4HANA to support final invoice approval and
payment processes.
Nonprocurement invoices and payment requests should
be channeled directly into SAP S/4HANA for payment
execution.
All your suppliers should send all PO and contract-based
invoices through Ariba Network to digitalize your entire
invoice volume. Customers using SAP Ariba solutions
for use in procurement should channel invoices through
SAP Ariba solutions for use in procurement verification,
enrichment, and exception management and send clean
and compliant invoices to SAP S/4HANA for final invoice
approval and faster payments.
In addition, customers can offer their suppliers dynamic
discounting and supply chain financing programs
through capabilities available on Ariba Network.
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.END-TO-END USE CASES
Smart Invoicing
The supplier offers special payment terms based on an e-invoice that was automatically validated
against the purchase order.
Invoice receipt Self-service, Payment
Smart invoicing discounting, supply Settlement
and approval chain financing execution
Ariba Network SAP S/4HANA SAP Ariba Payables SAP S/4HANA SAP Ariba Payables
Standard integration delivered by SAP between SAP S/4HANA and Ariba Network
Contract Invoicing
The invoice is created against the contract, based on rate sheets.
Invoice receipt Self-service, Payment
Contract invoicing discounting, supply Settlement
and approval chain financing execution
Ariba Network, SAP S/4HANA SAP Ariba Payables SAP S/4HANA SAP Ariba Payables
SAP Ariba Invoice
Management
Standard integration delivered by SAP between SAP S/4HANA and SAP Ariba solutions and
Ariba Network
Dynamic Discounting
You can leverage open cash positions to pay suppliers earlier and capture discounts.
Selection of invoices Early payment Adjusted open Payment
Open payables for dynamic
discounting offer payables execution
SAP S/4HANA SAP Ariba Payables Ariba Network SAP S/4HANA SAP Ariba Payables
Standard integration delivered by SAP between SAP S/4HANA and Ariba Network
VALUE CAPTURE
•• Higher discount capture rate through more on-time payments resulting in better use of available
cash positions
•• Extended DPO extension and increased subsequent cash flow
•• Fewer invoice exceptions through electronic invoicing and a rules engine on Ariba Network, leading
to a reduction in overpayment errors
•• Greater number of invoices processed by accounts payable employees
•• Lower payment processing costs
•• Increased rate-card compliance
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.Guided Buying
With a procurement system in place, it is key to
capture the value laid out in the business case.
Specifically, in indirect procurement, the key levers
for realizing value are:
•• Guiding the end user to preferred suppliers,
items, and processes for a reduced number
of low-risk, low-spend transactions that
procurement needs to touch
•• Maximizing the amount of spend that is compli-
ant with procurement policies and preferred
pricing
•• Maximizing spend managed through a compet-
itive bidding process
•• Executing processes efficiently and spotting Key capabilities include:
savings for tail spend •• Clean, user-friendly layout
•• One place for all goods, services, and travel
All of this is addressed by “guided buying,” a •• Buying channel strategy compliance and
simple, smart, and elegant experience for end approval flow
users and functional buyers to increase user •• Easy and powerful search that can connect to
engagement across all spend. Smart guidance external buying systems
and predictive search functionality help people •• In-context, company-specific community for
inside and outside the procurement area find FAQs and category expertise
the items and suppliers they need, with rules •• Support for ad hoc requests
and policies provided within the context of the •• Support for three bids and a buy – self-service
buying process. Scalable to meet the needs of quote request based on policies and thresholds
functional departments, guided buying enables •• Support for intuitive receiving and non-PO
distributed, compliant procurement for all users. invoice entries
For instance, facility managers who commission
a new workspace setup and run a quick vendor Guided buying is available as part of
selection are now guided and supported by a SAP Ariba Buying and runs in combination
buying system. This is a great improvement with SAP S/4HANA.
over complying with procurement processes by
capturing a purchase order that is the result of
e-mail-based negotiations.
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.Spot Buy
Many chief procurement officers face a similar •• Better integration – Any purchase requisition
problem: a growing “long-tail” list of one-time, goes through a budget check in the back-end
ad hoc suppliers required to support tactical system, and the order is released only if there
buying needs. Most of these types of buys are are enough funds available – paid directly
simply too expensive to manage with traditional through the company and not paid via an
processes – sourcing, contracts, and catalogs. employee credit card to be reimbursed later.
Companies are increasingly using online market- Using a single vendor for all purchases in
places to address this need. However, this is Spot Buy eliminates long-tail, one-off vendors.
introducing a whole new set of challenges that •• Ease of use – A single search across contracted
sourcing and procurement professionals must and marketplace content results in a much
address – establishing policies; ensuring they better experience for users.
are getting the best price, quality, selection,
and delivery; and perhaps most important, inte- Many sourcing and procurement teams use Spot
grating into procurement and ERP from order, to Buy to address their ad hoc buying requirements.
invoice, to payment, and finally, to reconciliation. But they also increasingly use the solution to aug-
ment, and in some cases even replace, sourced
SAP has partnered with leading marketplace catalogs where the marketplace prices are as good
providers and key suppliers on Ariba Network or better than the traditionally sourced content.
to create the Spot Buy capability. It provides
regionally curated high-quality supply for easy
purchasing of nonsourced goods from procure- RECOMMENDATION
ment solutions that are based on SAP S/4HANA,
SAP ERP and SAP SRM customers should
SAP ERP, SAP SRM, and SAP Ariba solutions.
evaluate the use of the Spot Buy capability as
a short-term value addition to their existing
How is this a superior approach to traditional
platforms as they reassess their digital trans-
punch-out catalogs?
formation strategies.
•• More control and compliance – Procurement
departments have the ability to prefilter mar-
For customers running SAP S/4HANA and
ketplace supply and content to make sure
SAP Ariba solutions, Spot Buy should be part
Spot Buy adheres to company buying policies,
of the solution blueprint from the beginning –
avoiding the potential reputational risk that
to start buying from day one.
could result from use of controversial suppliers.
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.Procurement Analytics
Many of the benefits that come from a procure- •• SAP recommends that users connect these APIs
ment transformation business case will materialize to SAP Analytics Cloud to build out analytics and
only if procurement professionals have real-time to also leverage real-time decision support such
information about their businesses and are also as through SAP Digital Boardroom.
proactively alerted by their systems when their •• In case of nonharmonized pools of spend or
predictive analytics or machine learning algorithms for one-off merger-and-acquisition situations,
detect critical deviations. This includes identifying SAP offers SAP Ariba Spend Analysis, which
the right spend categories for contract reviews, contains data enrichment and classification
making sound predictions of when contracts will be services.
fully consumed, appropriately phasing out selected •• SAP S/4HANA, SAP Analytics Cloud, and
suppliers based on risk and quality, optimizing SAP Ariba Spend Analysis all run on the SAP
delivery performance, or realizing economies of HANA® business data platform, which is at the
scale with acquisition spend. This is why analytics core of the reporting strategy.
is at the core of the SAP procurement strategy. •• SAP BW/4HANA is available as an on-premise
group-reporting tool for collecting data from
There are usually three types of analytic various sources.
scenarios:
•• Operational reporting on the transaction level
•• Group-type reporting, combining several data RECOMMENDATION
sources in one report for new insights and
To uncover savings opportunities for strategic
drill-down capabilities
sourcing and to report on disparate sources or
•• Spend visibility combining data from various
uncleansed data that needs to be aggregated
systems with manually or automatically
to identify synergies – such as during or
enriched and classified data
before mergers and acquisitions – customers
should leverage SAP Ariba Spend Analysis.
Customers can leverage analytical capabilities
in procurement using SAP S/4HANA, SAP Ariba
For deploying SAP S/4HANA and SAP Ariba
solutions, the SAP BW/4HANA solution, and the
solutions, customers should initially leverage
SAP Analytics Cloud solution:
the built-in operational reporting capabilities.
•• Each procurement functionality within
We have seen several CPOs successfully
SAP S/4HANA and SAP Ariba solutions pro-
increase internal buy-in for procurement
vides real-time operational reporting. Reporting
transformation by setting up “digital board-
functionality is embedded in the solution and
room” analytics to outline their new levels
can also be extended and enriched through
of transparency and their abilities to drive
custom fields or calculations.
savings and reduce supplier risks.
•• For broader analytical reporting, SAP S/4HANA
and SAP Ariba solutions provide reporting APIs
Customers operating in countries that have
that allow users to extract data for reporting
works councils should pay special attention
purposes, so it can be combined to address
to their analytics, as any report that refer-
specific customer needs.
ences people or teams is subject to works-
council approval.
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.Solution Extensibility
With extensibility options, SAP helps organiza- •• Data behind firewall – Supplier exposure to
tions chart their own journeys while delivering systems behind the firewall such as product
innovations at an increasingly faster pace. lifecycle management and quality management
Extensibility options allow customers moving systems
from on premise to the cloud to realize their
key differentiated business processes. Both SAP provides two powerful extensibility concepts:
SAP Ariba solutions and SAP S/4HANA provide •• Side-by-side extensibility with SAP Cloud Plat-
a large set of APIs enabling extensibility. form enables customers of both on-premise
and cloud solutions to build completely new
Here are some examples of processes that are user interfaces (UIs) based on the SAP Fiori®
often realized as extensions: user experience, to integrate with other cloud
•• Special user groups – Ability to provide tailored applications, or to build new applications.
mobile applications and user interfaces for •• In-application extensibility with built-in tool sets
specialized business processes and functions enables customers to adapt the UI layout and
•• Internet of Things – Automated active manage- context, create custom fields and tables, create
ment and monitoring of inventory, components, and extend analytical reports or forms, and
machinery, and other resources change the business logic.
•• Document management – Access to document
management systems enabling sharing and
collaboration on engineering and other critical
documents in the sourcing process
Figure 2: SAP® Cloud Platform
Ecosystem
SAP® solutions SAP Cloud Platform API Marketplace
Business Hub
Security Integration Business Mobile User Analytics Machine Internet
services experience learning of Things
and services
collaboration
SAP HANA® Big Data Any database
Amazon SAP Vora™ engine
Web Services
Microsoft Azure Altiscale
Hadoop
Google Cloud
Non-SAP Homegrown
Platform
solutions
27 / 33
© 2018 SAP SE or an SAP affiliate company. All rights reserved.Solution Integration
SAP delivers business value through individual mance Management solution, its data model is
product capabilities and also by facilitating end-to- identical to that of its business partner using
end processes that often span lines of business. SAP S/4HANA. Integration simply comes down
For fast time to value, SAP customers expect to data load and synchronization.
smooth integration of the product functionalities
realized in SAP S/4HANA and SAP Ariba solutions Key features of SAP Ariba Cloud Integration
– in data model design and in integration configu- Gateway (Figure 3) include:
ration, testing, and maintenance. •• More than 100 preconfigured integration sce-
narios for direct, indirect, and services spend,
So how does SAP address integration of end- spanning the whole source-to-settle process
to-end procurement processes? •• Automated self-testing framework to dramati-
•• Customers leverage a single integration gateway, cally reduce overall testing and setup time
the SAP Ariba Cloud Integration Gateway, to (as 70% of the time of an integration project
connect to all SAP Ariba and SAP S/4HANA can be consumed by the testing portion, based
solutions. on SAP Ariba customer project experience)
•• This integration gateway is realized as part of •• State-of-the-art, enterprise-grade security
SAP Cloud Platform, which provides the single that helps ensure fail-safe protection for your
integration and extensibility layer. data, enabling you to connect the cloud to your
•• Many companies are connected to Ariba enterprise without compromising the corporate
Network also as suppliers; SAP Cloud Platform firewall
also facilitates integration of sales-and- •• Real-time monitoring and alerts providing
distribution capabilities in SAP S/4HANA visibility and control to help you proactively
to Ariba Network. manage your integrations and identify
•• All integration scenarios are developed natively problems early
for SAP S/4HANA, but SAP also supports •• Mediated connectivity support that helps
customers currently using SAP ERP who have you leverage existing middleware such as the
midterm plans to adopt SAP S/4HANA. SAP Process Integration offering, SAP Process
•• Back-end integration with non-SAP systems Orchestration software, and SAP Cloud Platform
is possible through the same platform, which Integration
allows for flexible mapping options between •• One solution that handles integration to
systems. SAP ERP and SAP S/4HANA, integration to
•• SAP delivers integration by design. For example, Ariba Network and SAP Ariba solutions, as
if a supplier’s master data is managed through well as connection with SAP Solution Manager
the SAP Ariba Supplier Information and Perfor-
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© 2018 SAP SE or an SAP affiliate company. All rights reserved.You can also read
