The Future is definitely heading the Network way for Procurement part 1

[tridip_chakraborthy]

1.0 Topic Overview & Context Setting

SAP acquired Ariba; it was a mixed feeling for many and a great vision context setting for the rest. There are several blogs that explain to you the numbers, outbursts, frustrations, accolades, strategy, road-mapping and other emotions.

In a 3 part series, with simple but powerful examples, am aiming at creating a cognizance for the procurement customer / partner / consulting in understanding the real crux of how important the topic of Procurement business networks would get.

PART 1: This post is an educative illustration of looking at the Procurement Business Network as a game changer of how enterprises would design their strategies for the future to maximize the gain from their cloud investments, more importantly, taking the SAP Procurement transactions / other enterprise procurement transactions to the Ariba Supplier Network.

We know one strategy that is loud and clear from the SAP Procurement shop

On-Premise: Go with the SAP native suite of applications

On-demand: craft your strategies with the Ariba Cloud offering

This was difficult for me to absorb initially, but later when I started to look at the bigger picture, I understood the reasoning behind this strategy, rest assured am much happier that an SAP Procurement consultants footprint is now multi-dimensional.

This will drive a lot of change in the way we would help customers as consultants, understand and choose the right approach in designing the most ideal road-map powered by SAP Procurement solutions.

2.0 Agenda

Via this post, we will try and understand these basic -> complex questions to set the context to the graffiti around the role of a procurement business network in the enterprise. I was able to think out loud as a consultant on what those important pressing questions from the install base. This will be our desired agenda that we decipher with the 3 part blog series.

• Starting point: What is the difference b/w a point to point communication v/s a Network based approach to procurement?
• DEFINITION: What is a Procurement Business Network, who should move to the network?
• What would be the positives of moving from Point to Point to a Networked approach?
• What are some of the considerations while making the switch to the network? Cost, ownership with the complete 360◦ perspective?
• Why is the Ariba Supplier Network such a big success story?
• ..What makes the Ariba Supplier Network and the SAP Information Interchange on-demand: a game changer for Procurement customers?

3.0 Supporting artifacts

I ran a poll on my LinkedIn group couple weeks back on “what people loved most about the SAP-Ariba acquisition? Though there were limited responses, the summary was interesting.

Why was it interesting?

It’s because of the highlighted section below on what I call a surprising poll result.

A very limited section of folks voting for the Network (Ariba Supplier Network) and that’s the reason, I wanted to bring that message on how folks must look at the broader perspective and gain more vision into the Networked approach for Procurement in the cloud.

The future will also be about the SAP Procurement customer, partner, consultant to educate themselves on the concept and the power that the network will change the way we do procurement in the cloud

When I put the poll out, I thought that the option “Honing the best from the Ariba Supplier Network would top charts”, but it did not.

Am sure that after reading this simple blog, one would be able to visualize the power of the network approach & had wished to vote that option on the poll.

4.0: The Story

4.1  Starting point: What is the difference b/w a point to point communication v/s a Network based approach to procurement?

     A picture is definitely a thousand words delivered

One has to consider these following points before understanding the difference

1. Companies are increasingly doing business across boundaries, taking procurement transactions outside the firewall.
2. Business networks are both internal and external.
3. Businesses are more reliant on their network of partners than ever before, switching to the cloud makes that a reality with minimal supplier risk and supply chain disruption.

Let me quickly walk you through an overview abstract from an

• Aberdeen Study: source: Source: SAP Performance Benchmarking 2011
  • B2B Collaboration - No longer optional
  • 50% of the leaders have the ability to electronically collaborate with a network of key customers
  • 46% have the ability to electronically collaborate with a core set of critical suppliers
  • 39% of the leaders still lack infrastructure or resources
  • 33% face trading partner resistance to B2B collaboration

How can one explain this in more relation so that an SAP Procurement consultant / customer can understand the difference from a solution perspective? For this I need to explain the 2 philosophies with real-time transaction talk

Point to Point communication philosophy

• In the SAP Vendor master we define the standard communication method for a Vendor, could be Fax, e-mail, EDI or XML
• In the SAP SRM –Supplier self-services we generate a login for the supplier that gets a URL to login to SAP SRM-SUS to view the PO and collaborate electronically
• Each supplier is unique and we generally enable a supplier on SUS with a thumb rule, high volume of transactions, low $ amounts.

Network based philosophy

• Suppliers and Buyers share a collaborative environment via subscription: which is hosted by the network provider. Think of Google or Facebook or any other cloud platform of a network of social flavor and bring that message into your business space.
• When the buyer creates and releases a PO, it is visible electronically for a supplier that logs into the sell-side of the network, from then on, all the other procurement documents like Invoice etc follow.
• The SAP Information Interchange on-demand and the Ariba Supplier Network enable this protocol of collaboration. Taking the transactions beyond the enterprise is the underlying principle.
• You don’t have to configure, but align to standards such as cXML etc.
• You have the ability to choose from an ocean of collaborative commerce catalogs that you wish to switch on and use for the enterprise, this further reduces TCO and echoes for the Centralized approach to de-centralized procurement.
• You take advantage of the cloud, No hardware, software or resources needed.
• This also allows you to keep a standard process without any surprises or complications.

5.0  What is a Procurement Business Network, who should move to the network?

Definition: The Procurement Business Network provides an intelligent way for buyers and sellers to search, connect, and collaborate in an electronic ecosystem. For the buy side, the procurement Business Network becomes the central hub for sourcing, procurement and accounts payable activities, providing a strong conduit between the enterprise and its suppliers, once the connection is made electronically; it creates a strong guaranteed bond that links preferred suppliers. Being platform neutral, doesn’t really matter which ERP platform or source-to-pay application, the suppliers dock with the buyers in real-time

Who should move: typically, any enterprise that is dealing with vendors in a highvolume transaction with low $ spending on every transaction, however, there are more reasons, but if you are looking at reducing cost and ownership and be error free with 100% Invoice matching, you should move the network way.

Collaborative Commerce Content: empower the buying experience with a catalog management and search experience that is as intuitive as consumer shopping websites. just like the Amazon experience.

We really want you to go back and absorb the message before we discuss in part 2, the spillover topics

• What would be the positives of moving from Point to Point to a Networked approach?
• What are some of the considerations while making the switch to the network? Cost, ownership with the complete 360◦ perspective?

In Part 3, we would cover the following

• Why is the Ariba Supplier Network such a big success story?
• ..What makes the Ariba Supplier Network and the SAP Information Interchange on-demand: a game changer for Procurement customers?

Please read the following blogs where Joe Fox explains the power of the Ariba Supplier Network and what makes it so successful, this will give you a prelude into “What makes the Ariba Supplier network, such a great success story?”

6.0 Further Reading on SCN about Ariba

Read joe.fox blog on The specified item was not found. to understand the techno-functional length, breadth and benefits of the Ariba Supplier Network

the first Rapid Deployment solution rds_ariba to integrate the SAP Business Suite with the Ariba Business network was out, this will be a game changer for many, read that blog here The specified item was not found.

there was also a fun blog on why the SAP-Ariba combination would be a competitor nightmare, completely acceptable :smile: read the post here Ariba and SAP: Procurement Dream Team, Competitors Nightmare