CPO Event - Dr. Marcell Vollmer, Transform Procurement with Integrated Processes

Public
Dr. Marcell Vollmer, CPO SAP SE
CPO Event, June 18th 2015
Ariba Business Network
Transform Procurement with Integrated Processes

© 2015 SAP SE or an SAP affiliate company. All rights reserved. 2Public© 2015 SAP SE or an SAP affiliate company. All rights reserved. 2Public
Agenda
SAP at a Glance1
2
3 SAP’s Evolution of Procurement
from Service to Function
Future Trends and Innovations
in Procurement

Agenda
SAP at a Glance1
2
in Procurement

© 2015 SAP SE or an SAP affiliate company. All rights reserved. 4Public
2015 Outlook and Path to 2020 – Run Simple, Simple Wins
Fast cloud growth, growing highly predictable revenue and operating profit
€1.95bn to €2.05bn
cc Cloud subs
8% to 10% cc
Cloud & software
€5.6 to €5.9bn
cc operating profit
€3.5 to €3.6bn
Cloud subs
€21 to €22bn
Total revenue
65% to 70%
Support + Cloud subs
– share of revenue
€6.3 to €7bn
Operating profit
€7.5 to €8bn
Cloud subs
€26 to €28bn
Total revenue
70% to 75%
Support + Cloud subs –
share of revenue
€8 to €9bn
Operating profit
2015
guidance
ambition
2020
ambition
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 SAP SE or an SAP affiliate company. All rights reserved.
Procurement and Shared Services with end-to-end process automation are key for
SAP to support operating profit ambition
4Public

Agenda
SAP at a Glance1
2
in Procurement

Accelerating Technological Change
Business landscape transformation 2020 is increasingly digital and networked
1 ScienceDaily. ScienceDaily, 22 May 2013
2 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, 2013
4 Statista, 2014
Next 2 years
90%of the world data has been generated1
40%
growth in adoption of business networks2
212B
things will be connected3
9B
mobile users in the world4
51%
of workloads
processed in the cloud
Last 2 years
End of 2020 By 2020 In 2020

Changing business environment increases
pressure on companies
© 2015 SAP SE or an SAP affiliate company. All rights reserved.
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
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
7Public

We think about the way the world should work
PLATFORM
OPEN
APPLICATIONS
INNOVATIVE
NETWORK
CONNECTED
HANA
BREAKTHROUGH

Future Trends for Procurement
Three Trends in the Market – From Service to Function
Value Creation for supporting Business Functions – Procurement as Business Value Enabler
Value 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’ instead of ‘goods’.
Networked Economy – Business Networks to Revolutionize Sourcing for Procurement
Use cloud networks to link various platforms and consolidate spend while achieving real time
collaboration. Enable the function to harness the power of predictive analytics to be first to get
competitive market insights and drive better business decisions. Leverage network and analytics to
improve working capital and reduce transactional costs by end-to-end process automation incl.
public cross-industry Procurement Catalog and Market Places.
Leveraging Shared Services Concepts – Sourcing Factory
Intelligent managed service concepts to discover untapped spend (like for small countries) and to
increase compliance incl. centralized category management.
1
2
3

© 2015 SAP SE or an SAP affiliate company. All rights reserved. 10Internal© 2015 SAP SE or an SAP affiliate company. All rights reserved. 10Public
1 Value Creation for supporting
Business Functions –
Procurement as
Business Value Enabler

Business Value Enabler – Value Creation
–Value creation is more important than procurement savings, which are often not hitting the bottom line. A buyer
role needs to advise 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 Product Creation
Services Warehouses 3D Printing
–The role of a buyer will change significantly as Procurement transitions from Goods to Services. Buyers will
be asked to provide solutions to the business and implement new (supplier) innovations that align with
strategic objectives and deliver business value.

2 Networked Economy –
Business Networks to
Revolutionize Sourcing
for Procurement

–Business Network Spend Distribution
Evolution of Procurement towards a Strategic Function
How to explain best Business Networks in a ‘Networked Economy’?
–Ariba Network will be THE B2B Network of the future
–Ariba Business Network Combines
–Transition to fully integrated and automated purchase-order to invoice process will be a must in the future to
reduce transactional costs and free up resources to focus on value adding activities in the end-to-end process.
Global capital and
operational spending
for the Global 2000 is
distributed across
different categories.
SAP Business
Networks can help
companies address
all of the spend
categories
Source: Spend
Categories for Global
Top2000
26%
Direct &
Supply Chain
21%
Indirect &
MRO
46%
Contingent Labor
and Services
7%
Travel &
Expenses
The social media capabilities of
– like shopping market place
– End-to-end Automation for all transactions

Evolution of Procurement towards a Strategic Function
CPO and CFO Value Proposition on Ariba Network & Catalog of Catalogs
Automation
Increase in invoice automation
within short timeframe
SAP: +50% in 12 months
Productivity
Increase in overall productivity
for procurement
SAP: +20% in 18 months
Invoicing
Reduction in procurement
costs using cloud solutions
from Ariba, an SAP company,
and the Ariba Network (from
€11.5 to €6.7 per invoice)
Example: SAP
CFO ValueCPO Value
Spend
Will be leveraged to a high
extent to realize additional
savings (Margin impact)
PO
Increase in overall productivity
for procurement to automate
purchase orders
100%
Compliance and capturing of
all information / knowledge on
the Network
Ariba Cloud for Goods
Fieldglass for Services
Concur for Travel
Transaction automation on
the combined network of
Ariba, Fieldglass and Concur
SAP can add value for both CPO and CFO
CFO can support getting budget for CPO and also benefit with
real cost savings business case

Example Purchase Order Invoice Automation and Run Simple
Automation of Invoice to Pay – Eliminate Manual, no Value Adding Tasks
–Transition to fully integrated and automated purchase-order to invoice process will be a must in the future to reduce
transactional costs and free up resources to focus on value adding activities in the end-to-end process.
Manual paper based process from Purchase Order to Invoice Purchase Order to Invoice fully automated on Ariba Network
–Invoice management will change from a paper based invoice handling process with manual data entry on two screens to a networked
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, shipped as letter per mail
before the receiving company has to open the envelop, scans the invoice and is either entering the data manually or tries to capture the information
by an OCR system.
Invoice creation
in a system
Printing Mail
Shipping
Manual
Data Entry
Scanning Purchase Order
creation / Invoice data
Purchase Order
data conversion in invoice

3 Leveraging Shared
Services Concepts –
Sourcing Factory

Sourcing Factory
Leverage Organizational Capabilities
Problem:
Strategic spend is managed by global
categories or on regional level with strategic
and/or preferred suppliers.
Tail spend and spend for small countries
(Tier 3 countries) are not or partly managed
which leads to missed savings opportunity and
non-compliance risk.
Solution:
Sourcing Factory model is an answer to better
manage not globally/regionally covered spend
–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.
Managed by
Global Categories
Option 1:
Captive Shared Service or
Center of Expertise concept
Option 2:
Oursourced / Managed
Services
Spend to be shifted to
preferred suppliers or into
captive / managed service
High automation (spot buy, spot quote, eSourcing)
Sourcing on Business Networks or based on global supply database to ensure fast and compliant processing of non-strategic
spend.

Agenda
SAP at a Glance1
2
in Procurement

Evolution of Procurement at SAP towards a Strategic Function
The Transformation Journey towards Run Simple and Business Value Enabler Role
Today
Operational Strategic Partner
Regional
Purchasing
SRM 5.0 SRM 7.02 Cloud
Change
Management
Tactical
Procurement
Operations
People
Development
Business Partner
Leadership
Global
Categories
Processes & Systems
E2E P2P & Cloud Systems,
Networks, Mobile
Organization
Globalization Category
Managements
People
Development & Change
Management

‘Source-to-Pay’ @ SAP
Implementation of a Globalized Category Management Organization
Leverage purchasing power and drive
sustainable savings across all geographies
Deliver best-in-class procurement
processes and highest possible service
levels to internal customers
Mitigate risk to SAP
Be a fair partner to our suppliers
>3.8 billion €
Spend FY 2014
>710,000
Annual invoices
>970,000
Trips
CPO and Business Owner for ‚Source-to-Pay‘
to-Pay
Accounts Payable and
Travel & Expenses
Source-to-Purchase
Strategic and Tactical
Procurement
Purchase-
Operational
Procurement
Source-to-Pay Strategy Group
IT Marketing Facility MobilityServices
Procurement Solutions Excellence Team
Request, order
and receive
goods and
services
Perform invoice
processing and
perform
payment
Execute closing
and
reconciliation
Execute pre
trip, on trip and
expense entry.
Auditing

Evolution of SAP’s Procurement Function
Organization Source-to-Pay, People Development and Change, Processes & Systems: Cloud only
Organization & People
Globalization Category
Managements
to-Pay
Accounts Payable and
Travel & Expenses
Source-to-Purchase
Strategic and Tactical
Procurement
Purchase-
Operational
Procurement
Ariba for Goods,
Fieldglass for Services and
Concur for Travel
Processes & Systems
E2E P2P & Cloud Systems,
Networks, Mobile

Run Simple Real Life Examples from GPO @ SAP
Ease of Use and Optimized User Interfaces for Procurement, Analytics and Travel
Catalog Ordering with Spot Buy (ebay) live
‘ebay like shopping’
New Fiori Approval Launchpad Live
‘easy to use App’
Improve to Run Simple
Old SRM Catalog
NEW Ariba Catalog with Spot Buy ebay
integration (live in US since November)
Tablet access
enabled
Innovate NEW Ideas to Run Simple
Old Workflows
SAP Fiori Launchpad: Approval
App and Desktop Version
available for all Workflows, like
Shopping Cart, Shopping Cart
Tracking, Access Fiori
LaunchpadTablet/Smartphone
Access enabled

Run Simple Real Life Examples from GPO @ SAP
Ease of Use and Optimized User Interfaces for Purchase Requisition
Fast and intuitive ‘Purchase Requisition’ Mobile Approval
Enabling
interactions
where and when
desired
Seamless
experience and
connectivity across
multiple devices

New User Experience
Simple and Clean, The Current and the Renewal

Achievements: Source-to-Pay Automation, Business Networks
and Shared Services
Streamline entire Source-to-Pay Process Achievements: Facts & Figures
3 Months
Implementation Time
>4,796
Suppliers on
ARIBA Network
302,000
Documents
transmitted
50%
Increase in
Automation
20%
Productivity gain
>1.1bn
Purchase Order
value sourced
© 2015 SAP SE or an SAP affiliate company. All rights reserved. 25
 Leverage economies of scale and control through
shared services
 Cut costs through automated data extraction and
process automation
 Create workforce efficiency through streamlined
processes 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
Public

Key Takeaways on Transforming Procurement
Run Simple and Get Linked are Key Success Factors for the Future
Transform Organization to fit future needs
Develop people and manage change
Implement end-to-end processes and cloud
systems to automate transactional processes
Leverage the power of
social, supplier, and business networks
to get innovations and to deliver solutions
to the lines of businesses
Transform
to Run Simple
Get Linked
to Stay Relevant

CPO Event - Dr. Marcell Vollmer, Transform Procurement with Integrated Processes

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CPO Event - Dr. Marcell Vollmer, Transform Procurement with Integrated Processes