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Infinite possibilities Procurement technology Evaluating the business and change management implications of a cloud transition Ariba LIVE 2018

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Page 1: EY- SAP Ariba LIVE 2015 Implications of a Cloud Transition ...€¦ · Evaluating the business and change management ... What is the exact timing of the ... needs System Implications

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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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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EY | Assurance | Tax | Transactions | Advisory

About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

Ernst & Young LLP is a client-serving member firm ofErnst & Young Global Limited operating in the US.

© 2015 Ernst & Young LLP.All Rights Reserved.

© 2014, Oracle. All rights reserved. PeopleSoft is a registered trademark of Oracle Corporation and/or its affiliates.

©2013 by SAP AG. All rights reserved. SAP, R/3, SAP NetWeaver, Duet, PartnerEdge, ByDesign, SAP Business ByDesign, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and other countries.

SCORE no. XX0000BSC no. 1503-1412639

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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