SAP’s Approach to Sourcing and Procurement Strategies in Today’s Economy


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eWorld Purchasing & Supply Conference
Day 2 - September 29th, 2010

11:05 to 11:35 AM SAP’s Approach to Sourcing and Procurement Strategies in Today’s Economy


The session will introduce the main procurement trends and challenges that our customers are facing; look at the adoption pace of procurement solutions and how SAP are approaching Sourcing and Procurement Strategies in today’s Economy.


Cathy Daws, Line of Business Procurement, SAP UK and Ireland

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SAP’s Approach to Sourcing and Procurement Strategies in Today’s Economy

  1. 1. SAP’s Approach to Sourcing and Procurement Strategies in Today’s Economy; Cathy Daw Procurement Specialist SAP UK Ltd September 29th 2010 © SAP 2010/ Page 1
  2. 2. DIRECTION MARKET ? © SAP 2009 / Page 2 2010/ Page 2
  3. 3. Global Trends are Driving Change in Procurement Practices Economic Focus on Downturn Globalization Sustainability Efficiency Increased Focus Growing Supplier Importance of Demand for Rapid on Costs Risk Governance Productivity New approaches to Supply base becoming Increased pressure on Employees requiring savings more global sustainability intuitive self services Pressure to increase Need to effectively objectives Focus on automated spend visibility and manage risk and New regional and and integrated management provide insights global regulations processes
  4. 4. In this market, “ “ my focus must be on delivering reduced costs. Maximize sustainable cost savings Optimize contracts and enforce sustainability KPIs Manage suppliers’ performance and information Deliver rapid time to value © SAP 2010/ Page 4
  5. 5. KEY ISSUES ? © SAP 2009 / Page 5 2010/ Page 5
  6. 6. Inefficient Source-to-Pay Processes Result in High Costs Ineffective Governance and High Costs Compliance Lack of centralized information; Lack of ability to enforce transparency into demand, current processes, contracts, spend, and costs sustainability goals and other Subsidiary core KPIs ! XYZ R&D Plant B Plant A CPO Direct Materials Corporate PROCUREMENT A/P Finance Services East Region Indirect Slow Time to Value Goods Gradual innovation Poor Supplier Risk Slow Productivity Increases and adoption Management Lengthy deployment times Non-standardized processes, Limited to no process and Inability to monitor and reduce supplier risk, monitor supplier poor user adoption and or data integration to ERP disparate systems performance and drive improvements © SAP 2010/ Page 6
  7. 7. Best-In-Class Procurement Organizations Significance Difference Between Top Performing Companies and Other Companies Effectiveness: Spend Under Source to Pay Supplier Return on Assets Management Automation Management Top Performing 82% 81% 64% Companies All Other 47% 37% 36% Companies 0 20 40 60 80 100 0 20 40 60 80 100 0 20 40 60 80 100 Source – Aberdeen, CPO ‘s Agenda 2009 © SAP 2010/ Page 7
  8. 8. Pace of Adoption of Procurement Solutions Speed of Change © SAP 2007 / Page 8 2010/ Page 8
  9. 9. Customer Market Adoption of Procurement Solutions Adoption of Procurement Solutions Total Continues to Accelerate 30,000 Operational Procurement Global Procurement Customers Sourcing Contract Management Supplier Management Invoice Management Spend Analysis Services Procurement On-Demand 1990 1995 2000 2005 *2009 Time Source: Forrester: TechRadar For Sourcing and Vendor © SAP 2010/ Page 9 Mgmt Professionals Q3’2009
  10. 10. Procurement Solutions Evolution Curve Across All Key Solution Areas Procurement is Evolving Across All Solution Areas Source: Forrester: TechRadar For Sourcing and Vendor Mgmt Professionals Q3’2009 © SAP 2010 / Page 10
  11. 11. What SAP have seen from CPO’s •A clear move to increased centralisation •An increase in internal prominence •Procurement goals closely related to finance •Supplier Collaboration Procurement’s Interface with the Rest of the Company 100% 80% 60% 40% 20% 0% 2008 2010 Future Proactive & Consistent Occasional proactive Reactive Rare © SAP 2009 / Page 11
  12. 12. SAP’s Approach ? © SAP 2009 / Page 12 2010/ Page 12
  13. 13. SAP Procurement Portfolio SAP Spend Performance Source Strategic Procurement Management Qualify Enables the complete source to Negotiate contract process and the consistent improvement of Analyze/ strategic sourcing activities Strategize SAP Sourcing Award Requisition or Contract Spot Source Operational Procurement Enables the complete procure to Invoice pay process from daily SAP E-Procurement Approve requisitions (including spot sourcing) to the order and pay process for all goods and Receive services Assign Order
  14. 14. Efficient Source-to-Pay Processes Ensure Cost Savings Automate Governance and Reduce Costs Compliance Centralized spend visibility Enforce processes, and opportunity identification contract usage, sustainability for sourcing and demand Subsidiary requirements and other core management XYZ governance goals R&D Plant B Plant A CPO Direct Materials Corporate A/P Finance Services East Region Provides Rapid Indirect Goods Time to Value Increase speed to value Manage Supplier Risk Deliver Enhanced Productivity through rapid innovation and adoption Automated and easy to use Quick On-Demand deployment Streamline supplier management for best practice processes; and integrated support services better efficiency, reduced risk and decreased cycle times and Seamless process and data increased supplier performance and increased adoption integration to ERP engagement © SAP 2010/ Page 14
  15. 15. SAP Procurement Solutions Deliver Choices for Deployment SAP Delivers on-premise, hosted, and on-demand On-premise: deployment options SAP Enables a common experience across all procurement solutions On-demand: Supports additional choice of Business process deployment while extending SAP outsourcing (BPO): existing investments Enabled through partners Partners Deliver BPO offerings and other flexible deployment options © SAP 2010/ Page 15
  16. 16. ON-DEMAND VALUE OF ! © SAP 2009 / Page 16 2010/ Page 16
  17. 17. Procurement On Demand Solutions Deliver Rapid Time to Value SAP Sourcing On-Demand Over 400 customers and growing rapidly Delivers closed-loop strategic source to contract process across all categories of spend Provides standard integration into ERP Rapidly innovated with 2 new releases per year Business Suite © SAP 2010/ Page 17
  18. 18. Revlon - Up and Running Quickly A Significant Increase in Managed Spend 250% increase in COGS savings over three years “The rapid, three-week Phase I implementation process allowed us to immediately start generating 300% increase in managed benefits.” spend, using same staff William Reis, levels Chief Procurement Officer Live implementation in three weeks © SAP 2010 / Page 18
  19. 19. SAP Customers are Extending Their Reach with Analytics – Spend Drive Spend Performance Management Spend Related Insight Savings Comparison to Potential Plan/Budget Price Evaluate Variance Supplier Risk Data Standardization & Contract Enrichment Performance ERP GL BI P-Cards T&E Deliver Integrated Data Provide Transparency Management and Insight “Automate data capture Comprehensive data model Enable data enrichment Powerful adhoc analytics and normalization © SAP 2010 / Page 19
  20. 20. Identifying Value ! © SAP 2009 / Page 20 2010 Page 20
  21. 21. SAP Value Discovery Offer Helps Identify and Prioritize Quick Wins SAP Performance Benchmarking Sample Analysis: Performance of primary KPIs and potential benefit Benchmark Potential Benefit One of the largest global KPI Performance (in $ Million) benchmarking programs Procurement Costs Bot 25% Average Top 25% 0 – 2.9 As % of Spend 3.0 1.5 1.1 0.6 Over 5,000 participants Average Annual Bot 25% Average Top 25% 0 – 4.4 Savings (in %) 2.0 3.3 5.0 5.8 Over 20 processes, including Spend Managed Bot 25% Average Top 25% 1.1 – 3.7 Sourcing and Procurement Strategically (in %) 68.9 69.0 74.7 89.0 Maverick Spend Bot 25% Average Top 25% 0.1 – 1.0 Comparison with industry peers (in %) 15.8 7.2 6.4 1.2 Benefit of Closing Gap to Average Benefit of Closing Gap to Top 25% Industry Specific Benchmarks Available: Example Spend Managed Strategically (Indirect) Average Top 25% © SAP 2010 / Page 21
  22. 22. THE SUMMARY ! © SAP 2009 / Page 22 2010 Page 22
  23. 23. Key Take Aways The pace of change continues to increase in all solutions areas and particularly with respect to on-demand The SAP sourcing and procurement platform provides the best opportunity to drive increased speed of productivity across your organization - no matter how diverse Increasing importance of managing all aspects of your source-to-pay process to obtain realized cost savings In today’s market, you need to drive incremental, as well as quick wins through flexible deployment options – on premise, hosted or on-demand © SAP 2010 / Page 23
  24. 24. Join us October 20th – to hear from some of our register Cathy Daw Procurement Specialist © SAP 2007 / Page 24
  25. 25. SAP’s Approach to Sourcing and Procurement Strategies in Today’s Economy; Cathy Daw Procurement Specialist SAP UK Ltd September 29th 2010 © SAP 2010/ Page 25
  26. 26. Copyright © 2010 SAP AG All rights reserved No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice. Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors. SAP, R/3, xApps, xApp, SAP NetWeaver, Duet, SAP Business ByDesign, ByDesign, PartnerEdge and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other product and service names mentioned and associated logos displayed are the trademarks of their respective companies. Data contained in this document serves informational purposes only. National product specifications may vary. The information in this document is proprietary to SAP. This document is a preliminary version and not subject to your license agreement or any other agreement with SAP. This document contains only intended strategies, developments, and functionalities of the SAP® product and is not intended to be binding upon SAP to any particular course of business, product strategy, and/or development. SAP assumes no responsibility for errors or omissions in this document. SAP does not warrant the accuracy or completeness of the information, text, graphics, links, or other items contained within this material. This document is provided without a warranty of any kind, either express or implied, including but not limited to the implied warranties of merchantability, fitness for a particular purpose, or non-infringement. SAP shall have no liability for damages of any kind including without limitation direct, special, indirect, or consequential damages that may result from the use of these materials. This limitation shall not apply in cases of intent or gross negligence. The statutory liability for personal injury and defective products is not affected. SAP has no control over the information that you may access through the use of hot links contained in these materials and does not endorse your use of third-party Web pages nor provide any warranty whatsoever relating to third-party Web pages © SAP 2010/ Page 26