sap’s approach to sourcing and procurement strategies in today’s economy

SAP’s Approach to Sourcing andProcurement Strategies inToday’s Economy;

Cathy DawProcurement SpecialistSAP UK Ltd

September 29th 2010

© SAP 2010/

© SAP 2009 /

MARKETDIRECTION ?

© SAP 2010/ Page 2

Globalization SustainabilityEconomicDownturn

Focus onEfficiency

Growing SupplierRisk

Supply base becomingmore global

Need to effectivelymanage risk andprovide insights

Importance ofGovernance

Increased pressure onsustainabilityobjectives

New regional andglobal regulations

Increased Focuson Costs

New approaches tosavings

Pressure to increasespend visibility andmanagement

Global Trends are Driving Change inProcurement Practices

Demand for RapidProductivity

Employees requiringintuitive self services

Focus on automatedand integratedprocesses

In this market,my focus must be ondelivering reduced costs.“

Maximize sustainablecost savings

Optimize contracts and enforcesustainability KPIs

Manage suppliers’ performanceand information

Deliver rapid time to value“© SAP 2010/

© SAP 2009 /

KEYISSUES ?

© SAP 2010/ Page 5

Non-standardized processes,poor user adoption anddisparate systems

Slow Productivity Increases

Lack of ability to enforceprocesses, contracts,sustainability goals and othercore KPIs

Ineffective Governance andComplianceLack of centralized information;

transparency into demand, currentspend, and costs

High Costs

Inability to monitor and reducesupplier risk, monitor supplierperformance and drive improvements

Poor Supplier RiskManagement

!

A/PFinance

Corporate

Plant A

Plant BR & D

SubsidiaryXYZ

CPOPROCUREMENT Direct Materials

Services

IndirectGoods

East Region

Inefficient Source-to-Pay ProcessesResult in High Costs

Gradual innovationand adoptionLengthy deployment timesLimited to no process andor data integration to ERP

Slow Time to Value

© SAP 2010/

Best-In-Class Procurement Organizations

TopPerformingCompanies

All OtherCompanies

Effectiveness:Return on Assets

0 20 40 60 80 100

47%

82%

0 20 40 60 80 100

81%

37%

0 20 40 60 80 100

64%

36%

Spend UnderManagement

Source to PayAutomation

SupplierManagement

Source – Aberdeen, CPO ‘s Agenda 2009

Significance Difference Between TopPerforming Companies and Other Companies

© SAP 2010/

Pace of Adoption of Procurement Solutions

© SAP 2007 /

Speed of Change

© SAP 2010/ Page 8

Customer Market Adoption ofProcurement Solutions

Time

Glo

bal P

rocu

rem

ent C

usto

mer

s

1990 1995 2000 2005 *2009

30,000Adoption of Procurement Solutions

Continues to Accelerate

Operational ProcurementSourcingContract ManagementSupplier ManagementInvoice ManagementSpend AnalysisServices Procurement

Source: Forrester: TechRadar For Sourcing and VendorMgmt Professionals Q3’2009© SAP 2010/

Total

On-Demand

Procurement Solutions Evolution CurveAcross All Key Solution Areas

© SAP 2010 /

Source: Forrester: TechRadar For Sourcing and VendorMgmt Professionals Q3’2009

Procurement is Evolving Across All Solution Areas

© SAP 2009 /

•A clear move to increased centralisation

•An increase in internal prominence

•Procurement goals closely related to finance

•Supplier Collaboration

What SAP have seen from CPO’s

0%

20%

40%

60%

80%

100%

2008 2010 Future

Proactive & Consistent Occasional proactive Reactive Rare

Procurement’s Interface with the Rest of the Company

© SAP 2009 /

SAP’sApproach ?

© SAP 2010/ Page 12

SAP Procurement Portfolio

Strategic Procurement

Enables the complete source tocontract process and theconsistent improvement ofstrategic sourcing activities

Operational Procurement

Enables the complete procure topay process from dailyrequisitions (including spotsourcing) to the order and payprocess for all goods andservices

Analyze/Strategize

SourceQualify

Negotiate

Award

Requisition orSpot Source

Approve

Assign

Order

Receive

Invoice

Contract

SAP Spend PerformanceManagement

SAP Sourcing

SAP E-Procurement

Direct Materials

Services

IndirectGoods

East Region

A/PFinance

Corporate

Plant A

Plant BR & D

SubsidiaryXYZ

CPO

Efficient Source-to-Pay Processes EnsureCost Savings

Increase speed to valuethrough rapid innovationand adoptionQuick On-Demand deploymentand integrated support servicesSeamless process and dataintegration to ERP

Provides RapidTime to Value

Reduce CostsCentralized spend visibilityand opportunity identificationfor sourcing and demandmanagement

Streamline supplier management forbetter efficiency, reduced risk andincreased supplier performance andengagement

Manage Supplier RiskAutomated and easy to usebest practice processes;decreased cycle times andincreased adoption

Deliver Enhanced Productivity

Enforce processes,contract usage, sustainabilityrequirements and other coregovernance goals

Automate Governance andCompliance

© SAP 2010/

SAP Procurement Solutions Deliver Choicesfor Deployment

On-demand:

SAPBusiness process

outsourcing (BPO):Enabled through partners

On-premise:

SAP

SAPDelivers on-premise,hosted, and on-demanddeployment options

Enables a commonexperience across allprocurement solutions

Supports additional choice ofdeployment while extendingexisting investments

PartnersDeliver BPO offerings and otherflexible deployment options

© SAP 2010/

© SAP 2009 /

VALUE OFON-DEMAND

© SAP 2010/ Page 16

!

Procurement On Demand Solutions DeliverRapid Time to Value

Over 400 customers andgrowing rapidly

Delivers closed-loopstrategic source tocontract process acrossall categories of spend

Provides standardintegration into ERP

Rapidly innovated with 2new releases per year

SAP Sourcing On-DemandSAP Sourcing On-Demand

Business SuiteBusiness Suite

© SAP 2010/

Revlon - Up and Running QuicklyA Significant Increase in Managed Spend

250% increase in COGSsavings over three years

300% increase in managedspend, using same stafflevels

Live implementation inthree weeks

“The rapid, three-week Phase Iimplementation process allowed usto immediately start generatingbenefits.”William Reis,Chief Procurement Officer

© SAP 2010 /

SAP Customers are Extending Their Reachwith Analytics – Spend

Deliver Integrated DataManagement

“Automate data captureEnable data enrichmentand normalization

Provide Transparencyand Insight

Comprehensive data modelPowerful adhoc analytics

Drive Spend Performance Management

SavingsPotential

PriceVariance

EvaluateSupplier Risk

Spend RelatedInsight

Comparison toPlan/Budget

ContractPerformance

GL

P-Cards T&E

BI

ERP

Data Standardization &Enrichment

© SAP 2010 /

SAP Value Discovery OfferHelps Identify and Prioritize Quick Wins

SAP Performance Benchmarking

One of the largest globalbenchmarking programs

Over 5,000 participants

Over 20 processes, includingSourcing and Procurement

Comparison with industry peers

Sample Analysis:Performance of primary KPIs and potential benefit

KPIBenchmark

PerformancePotential Benefit

(in $ Million)

Procurement CostsAs % of Spend 0 – 2.9

Average AnnualSavings (in %) 0 – 4.4

Spend ManagedStrategically (in %) 1.1 – 3.7

Maverick Spend(in %) 0.1 – 1.0

89.074.769.0

Bot 25% Average Top 25%

68.9

15.8 7.2 6.4 1.2


1.5 0.63.0


1.1


5.03.3 5.82.0

Benefit of Closing Gap to Top 25%Benefit of Closing Gap to Average

Industry Specific Benchmarks Available:Example Spend Managed Strategically (Indirect)

Top 25%Average

© SAP 2010 /

Key Take Aways

The pace of change continues to increase in allsolutions areas and particularly with respect toon-demand

© SAP 2010 /

The SAP sourcing and procurement platformprovides the best opportunity to drive increasedspeed of productivity across your organization -no matter how diverse

Increasing importance of managing all aspects ofyour source-to-pay process to obtain realized costsavings

In today’s market, you need to drive incremental,as well as quick wins through flexible deploymentoptions – on premise, hosted or on-demand

Join us October 20th – to hear from some ofour customers.......to registerwww.sapevent.co.uk/procurement

© SAP 2007 /

Cathy DawProcurement Specialist

http://www.sapevent.co.uk/procurement

SAP’s Approach to Sourcing andProcurement Strategies inToday’s Economy;

Cathy DawProcurement SpecialistSAP UK Ltd

September 29th 2010

© SAP 2010/

Copyright © 2010 SAP AGAll rights reserved

No part of this publication may be reproduced or transmitted in any form or for any purpose without the express permissionof SAP AG. The information contained herein may be changed without prior notice.

Some software products marketed by SAP AG and its distributors contain proprietary software components of othersoftware vendors.

SAP, R/3, xApps, xApp, SAP NetWeaver, Duet, SAP Business ByDesign, ByDesign, PartnerEdge and other SAP productsand services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG inGermany and in several other countries all over the world. All other product and service names mentioned and associatedlogos displayed are the trademarks of their respective companies. Data contained in this document serves informationalpurposes only. National product specifications may vary.

The information in this document is proprietary to SAP. This document is a preliminary version and not subject to yourlicense agreement or any other agreement with SAP. This document contains only intended strategies, developments, andfunctionalities of the SAP® product and is not intended to be binding upon SAP to any particular course of business,product strategy, and/or development. SAP assumes no responsibility for errors or omissions in this document. SAP doesnot warrant the accuracy or completeness of the information, text, graphics, links, or other items contained within thismaterial. This document is provided without a warranty of any kind, either express or implied, including but not limited to theimplied warranties of merchantability, fitness for a particular purpose, or non-infringement.

SAP shall have no liability for damages of any kind including without limitation direct, special, indirect, or consequentialdamages that may result from the use of these materials. This limitation shall not apply in cases of intent or grossnegligence.

The statutory liability for personal injury and defective products is not affected. SAP has no control over the information thatyou may access through the use of hot links contained in these materials and does not endorse your use of third-party Webpages nor provide any warranty whatsoever relating to third-party Web pages

© SAP 2010/

sap’s approach to sourcing and procurement strategies in today’s economy

Business

sap procurement portfolio

sap procurement solutions

erpengagement sap

vendor sap

sap outsourcing bpo

drive improvements sap

key solution areas procurement

time source