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Infinite possibilities
Procurement technologyEvaluating the business and change management implications of a cloud transition
Ariba LIVE 2018
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Evaluating the business and change management implications of a cloud transitionAre you considering cloud options or even looking at expanding your e-procurement tools and trying to sort through the cloud jargon? Are you unsure of the change management impacts with cloud solutions? This session will focus on how to take a holistic view of your existing procurement systems and understand the value and challenges of transitioning to the cloud. We will explain the key considerations and challenges by module that companies encounter when transitioning to the cloud. Overall, this session will be a great opportunity to learn about migrating to the cloud and how you can evaluate and optimize this transition while setting the right solution architecture for your company.
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Speakers
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Contents
► Why? The future of procurement► What? Evaluating options► How? Implementation considerations and challenges► Open forum
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Why cloud?We are on the cusp of steep, dramatic change
Undergo an evolution to a continuous/ quantitative function integral to sourcing/ supplier management decisions- Transition away from qualitative
approaches focused on disruption
Transition from transactional procurement in a linear environment to procurement in a circular economy
Redefine go-to-market and sourcing strategies on a global scale- Changing traditional supply/demand trends
and new emerging markets trends will lead to refreshed strategies
Be centralized hubs for all corporate functions (i.e., commercial, financial and supply chain) - For supplier/supply market information
flowing into the enterprise and demand /product data flowing out to collaboration partners
Increasingly integrate with Finance functions and invest in developing financial skillsets
Be primary channels for driving innovation ideas to/from a global supply base
Be increasingly collaborative, offering various external collaboration models with suppliers- Transition away from the traditional “buy
and audit” models that typically define outsourcing and management contracts
Operate in a social media-driven environment and become increasingly visible due to rapid adoption of social technologies
Exist in a new working environment, with refreshed social skillsets, global mindsets and analytic technologies- Will have expectations around intuitive, easy to use,
fast, flexible tools
Always on, intelligent networks that provide information (not data) in a digestible format wherever needed
By 2025, leading procurement organizations will …
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However, several unknowns make clearly predicting the 2025 buying environment impossible
► Emerging requirements quickly adopted (as the market requirements are identified)
► Mobile, flexible, and always on► Intuitive, easy to use (like my phone, tablet, etc.)► Scale easy
Unknowns► Are these the right mega-trends and did we predict the
amount of disruption correctly► What will be the exact impact on the buying
environment/process/buyer► What is the exact timing of the disruptive force► How will the technology market evolve to meet emerging
needs
System Implications
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Good news Ariba fans, cloud architecture is the foundation of the application strategy
Legacy SAP
Post Aribaacquisition
Post S4 Hana rewrite
SAP has evolved from SAP SRM On-Premise to options between SAP SRM and Ariba P2P (cloud) with the future bringing tightly integrated, best-of-breed, on-demand applications with S4 Hana as the backbone.
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In the medium term, most leading procurement organizations 3–5 year agendas include technology updates
Getting the global operating model right
Upgrading tools/technology to support the operating model
Doing something with all the data —sprint to “prescriptive analytics”
Improving supply chain-base resiliency and reliability
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Contents
► Why? The future of procurement► What? Evaluating options► How? Implementation considerations and challenges► Open forum
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► Full conversion to on-demand/cloud-based solutions for all modules, possibility to add additional modules for enhanced capabilities
► Significant benefit from one, integrated system for data and user perspectives
Cloud/on-demand
► Evaluation of on-premise vs. cloud-based solutions typically boils down to customizations, innovation/ updates and TCO. ► On-premise solutions provide total control and customizations, but at a cost► Cloud solutions provide a faster time to value, lower TCO, quicker ROI and reduced risk► Hybrid solutions can provide functional benefits of both on-premise and cloud-based solutions
by module, but will require integrations for seamless end-to-end processing
High-level evaluation considerations
► Stay with on-premise (CD/ install behind the firewall)
► Maintain the current state; no need for training, data conversion or process changes
On-premise/install► Hybrid solution — Deploy
cloud/on-demand solutions for certain modules where it makes sense; keeping on-premise modules as needed
► Take advantage of each module being best in class
Hybrid solution
Few are starting with a clean sheet ⏤ what are the migration options
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While cloud may be the architecture of the future, it comes with its own set of challenges
Challenges
► Processes and data may vary significantly from the current state
► Limited customization and enhancement► Process integration to in-house
applications limited without customization► Subject to maintenance windows
► Multiple ERP integrations add complexity► Technical support required for master
and transactional data maintenance► Increased data security complexity► Managing provider communications
with the company’s suppliers
System Leading practices Speed Value
Cloud applications are designed for no/limited customization
Mature systems based on time-tested leading practice processes
Faster implementation time and testing cycles
Maximize system utilization and value
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Contents
► Why? The future of procurement► What? Evaluating options► How? Implementation considerations and challenges► Open forum
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► Data review and analysis (master, transaction and project data)
► Historical data archiving strategy► Data mapping and quality assurance
checks
► Process assessment, tasks and templates
► Review customizations and extensions► Transition strategy and approach
► Change impact and readiness assessment
► Communications► Training/re-training
Understand process constraints or limitations
Analyze current data
Engage key stakeholders
Identify historical data archive/ reporting strategy
Identify process improvements
Train and transfer knowledge
Cloud transitions include three key areas: data conversion, process transition, and change management
Change management and communications
Data conversion
Process transition
Communicate changes and program updates
Determine data conversion scope
Set transition rollout strategy
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Data conversion area Success factorsKey considerations► Extraction data into standard templates required
to load into the cloud environment► Regulatory reporting requirements of data► Creation of data mapping rules to convert
from non-standard to standard data sets
► Conversion of customized workflows to pre-defined data templates required for migration
► Clear requirements around data audit trails based on legal or regulatory needs
► Archiving/reporting for non-converted data
► Early involvement of data conversion team in requirements gathering and design process
► Rationalize the need for historical data carry forward, based on true requirements
► Early identification of customizations and efforts to minimize their requirements for migration
► Finding alternative ways to meet custom data retrieval needs other than conversion to a cloud environment
Custom data fields and non-standard validation rules
Approval workflows and audit trail history
► Determine need for creation of forms in the cloud, consider effort and time to migrate
► Extraction of custom form data using templates ► Archival of notifications in a retrievable storage
media unless a legal requirement for migration
Custom forms and notifications data
► Security design should include mapping to cloud’s standard roles or combination of roles to meet the same requirements
Custom user roles
Data migration can be challenging
Typical on-premise solutions have a number of customizations and extensions; as a result, migrating the corresponding data elements can be highly challenging.
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Projects and budgets► Define asset categories based on
purchasing type. Query POD data► Define project and allocate budgets (funds)► Define project flex master fields and link to
chart of accounts ► Imports budget adjustment data to Ariba
P2P from ERP► Update budget line status (open/close/
fiscal year/accounting period) ► Make ERP edits to increase/decrease fund
availability
User data► Group assignment► Management level► Supervisor hierarchy► Accounting information► Bill to, ship to and email► Organization, currency, locale► Automate feed from ERP via batch import
Example: data conversion considerations for POs
Purchase order► Extract open POs► Consider query optimization to avoid
data truncation► Massage files for required import► Export PO for validation► Reference legacy PO information to
enable trace► Maintain record of POD – POA order
data► Validate PO total based on open PO
calculation
Approval rules► Configure approval rules ► Create custom fields to accommodate
additional guidelines► Reference appropriate system groups basis
node conditions ► Enable replication from parent to child [LP]► Identify category and special approval rules► Disable rule check for imported POs
Groups► Translate roles, groups and permissions
into appropriate groups in Ariba On-Demand
► Parent/child group mapping► Responsible user assignments► Purchasing unit tagging► Manual file load
Chart of accounts► POD/POA mapper► GL period open► COA mapper program► Synchronizing data with On-Demand P2P
(automate feed)► Define flex master data► Define relation entry► Define valid accounting combinations in
ERP
Supplier► Mapping of fields from legacy systems to
POA ERP systems► Unassigned invoice queue management► Supplier exception handling► Supplier remittance and pay terms set-up► Link payment method► Supplier user definition► Synchronize vendor data across parent
and child realms► Segment EDI vs. online vs. paper vs.
CXML supplier base
Invoice► Synchronize P2P and ASN for routing► Consider third-party tools such as ICS to
reduce in-house invoice processing cost► Define exception types and thresholds ► Map AP groups for exception handling► Reconcile invoice vs. PO data► Enable accrual based on business need► Implement queue management and
centralize exception handling
PCards► Define company's list of valid Pcards and
tie to appropriate cost center(s)► Define linkage from buyers ERP to bank
account (for charges import)► Centralize exception handling and
implement queue management [LP]► Define exception types for reconciliation► Set parameters on Ariba Network to disable
invoicing against PCARD Orders
POD = Point of Departure system(s)POA = Point of Arrival (ERP) system(s)ICS = Invoice Conversion Services[LP] = Leading Practice
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Looking deeper into process transition considerations by module
► Analyze current state fields for quality and usage to improve reporting
► Adopt advanced features such as eAuctions
► Utilize advanced event scoring optimization
► Utilize the integration between Sourcing and Ariba Network Discovery
► Review customizations and extensions, identify constraints and limitations► Now is the time to retrain and standardize through focus on process training► Enhance current processes using industry-leading practices and new capabilities — improve and expand► Determine exactly what process templates, project tasks and forms can be exported/imported (vs. recreating)
► Analyze current state fields for quality and usage (enforce standardization)
► Integrate with Ariba Sourcing
► Utilize Contract Authoring and develop a clause library
► Expand with a cloud-based eSignature tool
► Integrate with Contracts to driving pricing compliance
► Review approval rules and specialized workflows
► Determine need for creation of forms
► Enable more complex categories of spend
► Evaluate current Commodity Code Taxonomy (move to UNSPSC?)
► Review spend reports and queries
► Determine need for customized/ extended reports
Supplier info andperf mgt (SIPM)Spend visibility Sourcing Procure-to-Pay
(P2P)Contracts
Mod
ules
All modules
► Integrate Ariba SIM with your ERP to improve master data quality and governance
► Rationalize supplier master data and improve processes to eliminate supplier duplicates
► Align the supplier onboarding process with Ariba Sourcing and Contracts
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Example: process fit/gap analysis for client transition from on-premise to the cloud
Functional area Detail On-premise buyer (P2P) – current state On-demand P2P — future state
Catalog Custom catalog hierarchy Catalog hierarchy can be changed by customers Catalog hierarchy can be changed by Ariba support
Catalog Administration ABA catalog manager UI Catalog administration has been opened up to customers through self admin feature. Can load and manage own catalogs
Approval workflow Advanced workflow capability Customizable for all requirements Configurable for most all requirements.
Custom roles and permissions
Custom permissions, roles, groups, mapping between the users --> roles --> permissions
Available. Admin UI/ customization Out of box contains leading practice permissions, roles and groups. Only child groups and unmapped custom groups are possible as an addable.
Receiving Amount-based receiving Limitations Available with out of the box roles
Invoice entry Create invoice Invoice e-form Invoice entry UI (PO flip or form for non-PO)
Invoice reconciliation
Invoice exception Create custom invoice exceptions. Require code customization.
OOTB invoice exception set with limited custom configurable Invoice exceptions. Customer admin UI for managing
E-forms Ability to create customer specific e-forms
Create custom e-forms based upon individual customer requirements
Available; limited customization requires standardization
Email notification Rich HTML email HTML email Available. Some configuration of messages
Reports Operational reports with real-time data
Buyer reports Not available. Reporting is delivered on the analysis engine. (More robust, not real-time)
Custom fields Custom fields based on customer's business process
Extrinsics can be programmatically created Flex fields. Addable item.
Potential gap Benefit
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Business engagement
Business readiness
Business adoption
► Strategy/change vision► Stakeholder engagement/
Procurement Board► Communications
► Change impact assessment
► Roles and responsibilities
Engage with the business early/often
Support leaders with centrally coordinated communications and
integration tools
Balance technology and business
readinessAlign focus and effort
between business readiness and system
readiness activities
Make the transformation
operationalIdentify ways to sustain
and measure the change as part of normal operations
Cloud based change challenges can be even more significant than installed based change challenges – do not be fooled, it is not easier
► Change management is critical for success and focuses on business engagement, readiness and adoption
► Training► Knowledge transfer► Sustainability
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A primary driver of project failure is inadequate or poor change management
Stand up and planningExecution
Sustainment
► Lack of leadership alignment
► Unclear vision for transformation
► Lack of engagement and alignment from execution resources
► Minimal buy-in for program business case and activities
► Inadequate training on the new processes
► No buy-in from the business
► Lack of collaboration with suppliers to perform new process
► Inadequate process and policy governance
► Lack of post-go-live support model
► Lack of business readiness
► Poor or limited communications
► No success metrics or KPIs
► Minimal accountability across levels
Time
Typical implementation challenges:
► Minimal return on investment► Unrealized program benefits
(e.g., savings, efficiency)
Implementation risks and negative results:► Lack of adoption and accountability► Unclear roles and responsibilities
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Challenges
The move to standardized processes may be difficult for employees to comprehend and present significant challenges for adoption and advocacy.
Approach
► Deliver communications that promote a shared vision and create a compelling case for the move to leading practice
► Engage stakeholders through events that drive ownership of the changes with a focus on potential late adopters
How can organizations be more successful at mitigating the specific challenges of cloud implementations?
Behaviors must be oriented to fit the new, standardized processes
Engagement and communications
Readiness andtraining
Adoption andsustainability
Challenges
Equip employees and vendors with the right skills to operate in the new system and perform the new processes.
Approach
► Use tailored training to build capabilities required to adopt the new processes
► Empower and educate procurement employees to take on any new responsibilities and field vendor queries
Challenges
Make sure the business is ready to accept the move to standardized processes and is focused on the overall sustainability of the changes for employees and vendors.
Approach
► Use surveys and focus groups to continually monitor whether the business has accepted and adopted the changes
► Provide an ongoing support mechanism for vendors
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► Why? The future of procurement► What? Evaluation considerations► How? Implementation considerations and challenges► Open forum
Contents
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Conclusion and open discussion
► A review of the current challenges and direction in the marketplace:► Companies and the industry in general are moving toward
cloud-based solutions► A closer look at cloud features and value
► Faster implementation time increasing speed-to-value► Cloud innovation and enhancements
► An examination of considerations for transitioning to the cloud and a leading practice approach to make it happen► Data conversion► Process transition► Change management and communications
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ObjectivesBuild project plan and
document charterGather requirements and
design solutionDevelop/load master data; configure Ariba
Conduct testing activities
Conduct training and prepare for Go-Live
Go-Live and on-going monitoring
Key deployment activities (customer/EY)► Develop project
scope► Develop project
plan with Ariba► Identify and
allocate project resources
► Develop project charter
► Conduct functional design/visioning workshops
► Define initial design and blueprint for process, approvals, users, etc.
► Conduct kick-off (with Ariba)
► Build master data file extracts and uploads
► Configure Ariba P2P and Network
► Extract and Load Master Data to P2P
► Setup catalogs (see enablement)
► Document the functional and technical design
► Perform System and Integration testing
► Perform User Acceptance testing
► Revise design/ configuration (as needed)
► Obtain testing sign-off
► Develop Cut-overplan
► Conduct user training
► Prepare and load master data to PROD site
► Integrate to PROD► Test PROD site and
integration► Perform supplier
communications (as applicable)
► Go-live and transition
► Monitor P2Pusage
► Reviewperformance and compliance
► Drive continuous improvement
Key conversion and transition activities (customer/EY)
► Identify transition and data conversion scope
► Perform data analysis► Conduct process
assessment► Develop conversion
process
► Develop conversion ETL► Create prioritized
improvement list► Develop cut-over plan
and RACI
► Perform data and process tests
► Conduct training/ re-training
► Convert and transform data
► Load historical data
► Transition
Key deliverables
► Project plan► Project charter► Transition scope
► Functional design documents
► Data and process assessments
► Functional specification documents (technical)
► Enablement workbook and templates
► Test scripts► Cut-over plan► Final business case
► Training materials► Communications
(across all activities)► PROD smoke test
► Issue tracking log► Enhancement log
Our recommendation is to conduct the data conversion and process transition along with your cloud deployment
Plan project and document charter
Design/gather requirements Test/validate
Build/configure and prep transition
Go-live/ sustain
1 2 3 4 6
Train/cut-over5