Decoding different acronyms to define ProcureTo Pay and Source To Pay processes such as PTP, P2P, RTP, STP, S2P and STS

1. Procure-mentally Speaking…
What are the differences betweendiverse acronyms
such as PTP/P2P, RTP, STP/S2Pand STS? An SAP
Perspective
Introduction
As a SAP Practitioner for over 18 years in the ‘Procurement’ domain, I have
implemented SAP ProcurementSuite for procurementtransformation for
numerous clients fromdiverseindustry verticals. The SAP ProcurementSuite
includes SAP MM, SAP SRM, SAP Sourcing, SAP SUS, Ariba Cloud and SAP FI-AP.
During this time, I have come across acronyms such as PTP or P2P, RTP,
RTC, STP or S2P coined by clients and implementation partners to address the
procurementtransformation initiatives. While it may be clearer to a lot of SAP
Practitioners what they are and the difference in delta functionality, but it added
some confusion to the end clients, HR and the recruiters alike.
Dilemma
To respond to a client’s requirement for a specific consultant or a SME, whether it
is a full time in natureor a contracting one, whether a HR manager or a recruiter
expect, the profiles to be submitted exactly match the client’s verbiage or the
above acronyms. They don’tlisten to you when you explain to them that the
profile submitted to them shows therequired experience even though not exactly
in terms of the same acronymmentioned in the requirement.
The same with client managers too. There is an element of dilemma and
confusion.
So, I decided to make an attempt to analyzethe process and the related acronyms
at a high level, group them and also highlight the differences between any those
groups. Theemphasis is based on the following premise
- Business process, notany particular ITApplication

2. Initially I will throw light on the process ‘ProcureTo Pay’ and after that on ‘Source
To Pay’
Procure To Pay (PTP /P2P)
Process steps
Demand generation
- Manual
- MRP Run
Requisition
- Requisition creation
- Grouping requisitions
- Requisition approvaland Release
Ordering
- Selection of vendors fromwhomthe currentvendors
- Conversion of a Requisition to an Order
- Order creation and release
- Order acknowledgement
- Receipt of ASN
Receipt of goods /services
- Receive
- Return
Invoice
- PO based, non PO based and Contract based
- Matching terms (2-way &3/way)
- Reconciliation
- Exception handling

3. - Automatic Workflow approvalprocess
Payment Processing
- Paid
Best Practices
In SAP’s terms the best practice is defined as how best and optimal the processes
are integrated. These best practices include application based and also process
based. While, an outline is provided here, the same in detail will be covered in a
separate and focused article on ProcureTo Pay.
Account Payables (AP)
There are two types of Integration as explained below.
- Vendor master data
One is Vendor master data maintenance such as Account groups, Banking
information, and other financial information
- Invoice Processing
Invoiceprocessing process which includes incoming invoice verification such as
linking to an existing purchaseorder and receipt, Invoicematching, reconciliation,
exception handling, invoice routing, paymentprocessing and period closing. Using
the scanning and OCR capability facilitates AP Automation.
Purchase Order
- Account assignmentin purchaseorder
Goods receipt
- When materials are received, Inventory accountis debited and
- GR/IRclearing Account is credited
Invoice Verification
- GR/IRaccount is debited
- AP- Vendor account is credited

4. Payment
- Vendor account is debited
- Cash account is credited
Software Applications: Procure To Pay
There several softwareproducts butsomeof them are ERP applications such as
SAP, Oracleand JDE and others are only ‘procurement’ vendors such as Ariba
(now SAP), Coupa, GEP etc. While ERP applications have their inbuilt Inventory
and Finance applications for tight integration, the resthave to be integrated to
ERP applications for transactions related to Master Data, Inventory and Finance.
These ITapplications not only integrate procurementprocess with Inventory
management and Account Payables, butalso providevisibility to the selected
material or serviceduring its flow from‘Requisition to Pay’.
The tool facilitates elimination of tons of paper documents and ‘function silos’
between the process steps or functions.
SAP Procure To Pay Application– SAP ERP
Major differentiator
Procure To Pay Vendors
Purchasing departmentis responsiblefor maintenance of approved vendor
master data and update periodically with any updates to the same. Please note
that ‘procureto pay’ Vendors are the approved vendors with whomyou havean
agreement or a contract on price and other terms.
Note: I am not going to focus on the SAP Business function – SAP MM ProcureTo
Pay which is not relevant here. The focus is moreon the business perspectiveand
end to end procurementprocess fromSAP perspective.
SAP ERP: Procure To Pay (PTP/P2P)
The basic definition of Procureto Pay is integrating the process functions such as
Requisitioning, Ordering, Receiving, Invoicing and Payment and eliminate any
function silos In between.
Benefits
By automating the end to end process using SAP has the following benefits.

5. - Integration of Master data across the procurementprocess(eliminatedata
entry errors)
- Integration to approved Vendor master data such as multiple address data,
accounting and banking data
- Integration of MRP run to and automation of the ordering process
- Integration of Catalog procurementto the procurementprocess (OCI)
- Seamless Integration of process functions such as Requisitioning, Ordering,
receiving, invoicing and payment
- Ability to Monitor of the process parameters such as time to create and
approvea business document, ease of operation, invoicing and payment
process, resulting in continuous improvementof the process,
- Process automation by auto creation of the business objects such as
Requisition, PurchaseOrder using referencing technique
- Workflow approvalprocess (for requisition, purchaseorder and invoice) and
compliance of regulatory requirement such as SOX and audit requirements
- ProcurementIntegration to Finance
- Integration to a VIM(OpenTextor Ariba Invoicing) for AccountPayable
Automation (which automates such as invoice matching, invoice
reconciliation, invoice exception, invoice routing)
- Integration to Logistics for receiving and reversing
- Integration to other Sourcing Applications such as SAP SRM, SAP Sourcing and
Ariba Sourcing
- Payment Processing
The softwarecompanies use the acronyms PTP or P2P which are freely
interchangeable is very frequently used by domain and softwareapplication
experts alike. While the word PTP represents end to end procurementprocess,
the samein SAP is used more to represent the process in SAP ERP
At the end PTP, P2P and RTP are interchangeable as all of them define the same
end to end process.

6. Analysis
The major process variants to the procurementprocess with minor differences
- ProcureTo Pay (PTP/P2P)
- Request To Pay (RTP)
- Req To Check (RTC)
- SourceTo Pay (STP/S2P)
- SourceTo Settle (STS/S2S)
These acronyms or phrases areloosely maintained and used by the Software
Application vendors, professionalservices companies and the clients alike and
sometimes they are easily interchanged without any strict adherence to the
definitions. Here I would like to analyzethe similarities and differences and
providean SAP perspective.
These acronyms arenot distinct and unique and let us discuss them first.
PTP, P2P and RTP
- PTP
While the industry usageof the acronymPTP is very prevalent to describe Procure
To Pay, some consulting and productdevelopment organizations usethe term
P2P, perhaps to distinguish them fromtheir competitors. I have seen a few
manufacturing clients use the acronymRTP to describe their procurement
process.
- P2P
Coming to P2P, as per Chartered Instituteof Purchasing and Supply, P2P is the
process of obtaining and managing raw materials needed for manufacturing a
productor performing a service. Itis a seamless process, outlining the
procurementprocess fromRequisition to Payment.
- RTP
Some of the Global customers coin the acronymRTP otherwise, in all senses, it is
same as PTP or P2P to define and supportProcureTo Pay. The process starts from
PurchaseRequisition and ends with payment function. This is no different from
other acronyms which wediscussed, in representing ProcureTo Pay process

7. - RTC
The acronymRTC stands for Req-to-Check, which refer to the end to end
procurementprocess which includes requisitioning, Ordering, receiving and
payment by issuanceof a check. This acronymalso represents ProcureTo Pay
process. Butit is not that appealing becausepayment type cannot be confined to
issuanceof a check, which is a bi outdated. Of course, one can arguethat ‘check’
is symbolic and informalalternate to Pay. Other than GEP, I don’t think no one
applies the acronymand is in usagein the business. For our argumentsake, we
consider RTC represents ProcureTo Pay.
Procureto pay (purchaseto pay or P2P) is the process of obtaining and managing
the raw materials needed for manufacturing a productor providing a service.
Technically it enables data integrity during the data flows across the business
objects fromend to end process and elimination of multiple data entry.
According to the Chartered Institute of Purchasing and Supply, procureto pay
should be a seamless process frompointof order to payment. Technology can
assistthis process.
Source To Pay
In mostof the SAP transformation projects I led and participated, Sourcing
transformation is a part along with Procurementtransformation.
Though, sometimes the word ‘Procurement’ is used loosely to encompass
Sourcing’, Sourcing is always a distinct process. Itmay be the ‘process’ which
precedes ProcureTo Pay or it is triggered as a part of a business scenario of
ProcureTo Pay.
The acronyms in the usage to representSourceTo Pay are
Sourceto Pay – STP/S2P
Sourceto Settle – STS
End to End Process:Source To Pay
As I mentioned above, I will provide an outline of Sourcing Process.
I will explain SourceTo Pay process later in a separatearticle.

8. Sourcing process is triggered when the procurementorganization
- Needs to identify potential suppliers for the procurementof new materials or
services when the currentvendor base cannotsupply
- Needs to identify alternate suppliers to leverage better savings and minimize
risk of supply and logistics
Sourcing Process consists of thefollowing process steps
1. Capture of sourcing vendors/Supplier on-boarding process
- Sourcing vendor profile evaluation and qualification process
- Supplier Approvalprocess
- Supplier
2. Bid Preparation
- RFx(RFQ,RFP and RFI) preparation
3. Bid Invitation
- Supplier Invitation
- Supplier participation
4. Supplier Response
- Process Bid Response
5. Review Award scenario
- Sole award vs split award
-Contract/PurchaseOrder creation
- Contract Approvalprocess
6. Operational contractcreation
7. ProcureTo Pay Process
Sourcing Vendors (Bidders)
Sourcing Vendors areactive bidders who are invited to participate in a customer’s
bidding process. Based on the customer’s sourcing process, a bidder may
continue participate in bidding but never registered as an approved and
established ERP vendor until they are awarded any business.
Software Applications: Source to Pay
The leading ERP softwareapplication vendors like SAP, Oracle, Peoplesofthave
Sourcing application. In addition to them, there are other Application vendors
who are small in size but innovative ones are also in the market. ERP vendors due

9. to integrated applications and seamless transfer of Master Data and transactional
data fromend to end, havebetter Integration capabilities between Sourcing with
procureTo Pay.
The tool facilitates elimination of tons of paper documents and ‘function silos’
and manual efforts and repetitive entry of data.
Sourcing Application –SAP
Among all ERP Application vendors, SAP has a few Sourcing applications such as
- SRM Sourcing
- SAP Sourcing
- Ariba Sourcing (recently acquired Cloud application).
SAP ERP has virtually no ‘Sourcing’ functionality though it has a screen
RFQ/Quotation, which is a place holder or
- Integration point to integrate SAP Purchaserequisitions to be transferred to
an external ‘sourcing’ application to trigger ‘sourcing process.
- Integrating point to receive RFx froman external sourcing application and
create a purchaseOrder.
Source To Pay - Best Practices
As it was mentioned that in SAP’s terms the bestpractice is defined as how best
the processes areintegrated. The ‘Best Practices’ are systembased as well as
process based. While, an outline is provided here, the same will be discussed in
detail in a separatearticle on SourceTo Pay.
Sourcing Vendor IntegrationtoERP Vendor
- On approvalof a sourcing supplier in terms of supplier profile and
qualification process, systemreplicates the data to the backend ERP to create
an ERP Vendor
Sourcing Process IntegrationtoProcure ToPay
- ERP requisitions(ProcureTo Pay)can bereplicated to ‘external’ Sourcing
application to convertto RFx
- An agreement can be distributed to ERP to create an ERP Contract

10. - Awarded Bids can be distributed to ERP to create a PurchaseOrder (Procure
To Pay)
- ERP Master Data and Purchasing Data integration to ‘Sourcing’ application
At the end, we can safely that Sourcing process is integrated to ProcureTo Pay,
then it becomes SourceTo Pay(STP/S2P).
Source To Settle (STS)
Italso represents the same end to end process which includes Sourcing and
Procureto Pay together called as SourceTo Pay.
Settle means monetary ‘settlement with procurementvendor for the goods
supplied or services performed which is nothing but ‘Payment’. So, SourceTo
Settle is nothing but SourceTo Pay.
The acronyms STP, S2P and STS are interchangeable to represent Source To Pay.
Source To Pay= Sourcing +Procure To Pay
Conclusion:
# End To End Process Acronyms
1 ProcureTo Pay PTP, P2P, RTP and RTC
2 SourceTo Pay (Sourcing + ProcureTo Pay) STP, S2P, STS
Comment: While I attempted to providean analysis on different acronyms for
Sourcing and Procurementprocesses, I mighthaveoverstepped and provided
more details. This article should clear the confusion, which client managers and
recruiters have alike.
Next step
In my next article I will discuss SourceTo Pay, End to End Sourcing and
Procurementprocess fromdifferentangles. The major emphasis would be on the
business process and occasionally throw light on the SAP Sourcing &Procurement
Suite – Cloud and On Premise.