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. 2 Public © 2015 SAP SE or an SAP affiliate company. All rights reserved. 2 Public

Agenda

SAP at a Glance 1

2

3 SAP’s Evolution of Procurement

from Service to Function

Future Trends and Innovations

in Procurement


Agenda

SAP at a Glance 1

2




in Procurement

© 2015 SAP SE or an SAP affiliate company. All rights reserved. 4 Public

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

4 Public


Agenda

SAP at a Glance 1

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


http://www.sciencedaily.com/releases/2013/05/130522085217.htm

http://cporising.com/2014/10/09/introducing-ardent-partners-technology-adoption-report-on-business-networks/

http://cts.businesswire.com/ct/CT?id=smartlink&url=http://www.idc.com/getdoc.jsp?containerId=243661&esheet=50721954&newsitemid=20131003005687&lan=en-US&anchor=Internet+of+Things+(IoT)+2013+to+2020+Market+Analysis:+Billions+of+Things,+Trillions+of+Dollars&index=4&md5=59da372afbdafaa6e8563b0f5d6412f0

http://www.statista.com/statistics/218984/number-of-global-mobile-users-since-2010/


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

7 Public


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. 9 Public

© 2015 SAP SE or an SAP affiliate company. All rights reserved. 10 Internal © 2015 SAP SE or an SAP affiliate company. All rights reserved. 10 Public

Future Trends for Procurement

1 Value Creation for supporting

Business Functions –

Procurement as

Business Value Enabler


Future Trends for Procurement 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 Value CPO 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 Glance 1

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 Mobility Services

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

Launchpad Tablet/Smartphone

Access enabled

https://pgpmain.wdf.sap.corp/sap/bc/ui5_ui5/ui2/ushell/shells/abap/FioriLaunchpad.html#ShoppingCartItem-approve

https://pgpmain.wdf.sap.corp/sap/bc/ui5_ui5/ui2/ushell/shells/abap/FioriLaunchpad.htmlShoppingCartItem-track&/detail/ordertrackCollection('8464466')

https://pgpmain.wdf.sap.corp/sap/bc/ui5_ui5/ui2/ushell/shells/abap/FioriLaunchpad.htmlShoppingCartItem-track&/detail/ordertrackCollection('8464466')

https://internalstore.sap.com/sap/cp/ui/resources/cstore/html/SolutionDetails.html?pid=0000000911&pcntry=US&sap-language=EN&_cp_id=id-1416746610378-0





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