These are indeed unusual times. Yesterday’s Ariba Live annual conference, originally scheduled for Las Vegas, inevitably ran as a virtual event due to the ongoing coronavirus pandemic. But what was remarkable was that it took place against a background of widespread recognition of the importance of orderly supply chains in our daily lives. Suddenly, people have realized that procurement is mission critical. As Chris Haydon, President of the SAP Procurement Solution Area, told me when we caught up via Skype yesterday:
The reality is, procurement is the function that keeps the world going …
Obviously the supply chain and the procurement professional get that, but I think the larger business and we in our day-to-day lives are really now seeing it. When you go to a grocery store and there’s a lot more empty than full, it shows what you’ve taken for granted.
So instead of being tasked with delivering lower costs, procurement is now recognized as a strategic business partner in managing supply chain risk and compliance. How can SAP help through its spend management product set of Ariba source-to-pay, SAP S/4 HANA operational procurement and Fieldglass contingent worker vendor management, all of which now fall under Haydon’s newly created remit?
Supplier risk management
The traditional answer would have been to modernize operations by rolling out the SAP solution — and there was plenty of that in the sessions available to watch yesterday or on replay. But while that’s typically a 12- to 24-month project, there was also emphasis on short-term actions that companies can quickly implement, in particular around supplier risk management. Haydon tells me:
Our risk business, certainly in our application suite, is one of the fastest growing for us … We’ve weaved risk across the whole source-to-pay process where it makes sense.
One keynote product demo showed off the new trading partner directory and supplier portal, highlighting integration of core procurement applications from SAP or other vendors with the Ariba network. This means buyers can see alternatives to their regular suppliers from within the ERP system, and drill down to evaluate factors such as supplier risk and sustainability ratings alongside price and availability.
Ariba is keen to talk up how it can tap into community intelligence across its network to analyze supplier risk, although a lot of its supplier evaluation at the moment seems to be based on third-party sources. The aim is to tap into shared data across the network to inform buyers, says Haydon.
At the right level of anonymization and aggregation, we can still see risks in the supply chain either in volumes or transactions or spend or lead times or hotspots, and actually start working with select customers on helping them identify where they might have some risk in coverage of their purchase orders because of the supplier data …
Obviously, every business needs to make their own determination based on their own processes and the veracity of the inputs. But we provide that community view and we think that’s pretty powerful.
In response to the current disruption caused by the reaction to coronavirus, Ariba last week opened up its Discovery tool free-of-charge to new and existing customers and suppliers. Any buyer can post a requirement and suppliers can respond with proposals for them to evaluate. This capability obviously has a lot more value when coupled with the supplier risk evaluation Haydon describes.
Process automation to drive outcomes
For those looking to modernize their systems, another big theme was to harness automation to streamline processes. One message Haydon repeated several times during the proceedings was that “user experience is not just about the UI, it’s about driving outcomes.” In other words, SAP wants to focus on automating away processes so that users don’t have to spend their time navigating screens, irrespective of the look and feel. Haydon explains:
It’s not saying that a beautiful consumer-style interaction is not valuable. In fact, it’s always valuable. But solely optimizing the UI is not going to get customers where they really want to be.
Whereas legacy systems have had very complex screens that gather a lot of information, modern systems can do a lot of that work behind the scenes and reduce or even eliminate the time that users need to spend filling in information. That translates into big productivity gains, he says.
In the req-to-order process, depending on the persona and depending on the industry, we think we can eliminate 80% of that cycle time. In the source-to-pay process, when you’re doing the contracting and the auctioning and the RFQs, in some categories, we think there’s an opportunity to get rid of 60% of that.
That changes the notion of what we’re trying to do a little bit. That’s the real outcome that we want to get to — while balancing making it intuitive to use.
Data aggregation and connected processes
Of course a lot of this requires integration across products that traditionally have been separate silos of operation. That’s still a work in progress, but SAP is working towards what it calls the Intelligent Enterprise (IE), with standardized APIs and metadata to ease data aggregation and connected processes across its products. Haydon explains:
That interconnectedness between core S/4 and our procurement assets — Fieldglass, Ariba, Concur, for example, or spend assets — is front of mind …
Our customers, obviously, are increasingly talking about outcomes and processes and not products. That’s also part of IE, what’s your core digital core of your business? How do you have these assets that can help you manage spend, or help you manage people, or help you manage the digital supply chain, in conjunction with the digital core, is a big focus of ours.
While Haydon owns the sales motion around three core products, the engineering also encompasses Concur travel and expense management and SuccessFactors people management. That all comes under the engineering leadership of Michael Weingartner, President of People and Spend Management. he explains:
Michael Weingartner owns Ariba, he owns Concur, he owns S/4 Operational Procurement he owns Fieldglass. He also owns SuccessFactors cloud engineering. So we’ve brought together our core engineering resources for the promise and for the scale, across not just intelligent spend management, but also total workforce management … you will see is a consolidated intelligent spend roadmap — the travel and expense portion and the procurement portion under the umbrella of intelligent spend management, all run by a single engineering group.
That engineering effort will help consolidate spend data across the various products for better insights, for example bringing Concur data into analytics that allows a procurement manager to identify opportunities to source more effectively. “That’s an opportunity across the dataset that historically we have not had,” comments Weingartner.
My take
SAP is starting to take steps towards rationalizing its spend management story, but there’s still a ways to go. At least the company recognizes the direction of travel it must follow. But these are times that demand rapid answers and the pace needs to quicken.
I wasn’t enthralled by the virtual event dynamics of Ariba Live. The event organizers opted to go for pre-recorded presentations which were heavily edited and thus lacked authenticity and spontaneity. But it’s early days for the whole concept of virtual events and everyone is still learning the ropes.
Probably the most captivating session was a roundtable discussion with guest speaker Ian Bremmer, President and Founder of Eurasia Group and GZERO Media. I had two memorable takeaways from his comments. The first was a comment on how supply chains need to be reshaped in the light of current disruptions:
You need to have a lot more ‘what if’ capacity — not just-in-time, but in case. You need just-in-case supply chain.
The second was on his notion of “geo-political recession,” which is a recession that, rather than being merely economic, is driven by a reshaping of the world order and the collapse of prevailing consensus between nations:
The last time we saw the world order truly implode was WW2. What we have is an unwind of the old US-led global order …
The international community of nations and the international architecture that sits upon it that represents a series of norms and rules all of those countries adhere to — all of those unwind. Suddenly when you have a crisis, the politics don’t respond.
That sounds like as good a summary of where we stand right now as any I’ve heard, and suggests that resolution of our current challenges won’t be easy or quick.
