Medibank Centers on Spend Analytics with SAP Ariba

The spend analytics market size is expected to grow from USD
1.33 Billion in 2017 to USD 3.01 Billion by 2022 according to Markets and
Markets, a market research firm that provides quantified B2B research.

Medibank continues to pursue its IT transformation by expanding the use of SAP Ariba on improving spend analytics and one-off sourcing as shared by Medibank’s Head of Procurement Operations Elaine Doheny during the SAP Ariba Live in Sydney held earlier in September. 

Medibank has undergone an enterprise resource planning (ERP) transformation leveraging SAP’s S4/HANA for finance, Ariba for procurement and SuccessFactors for HR/payroll through Project Springboard, which has brought Ariba into the Medibank ecosystem.

Doheny shared that the insurer’s Chief Procurement Officer David Fittler led the company’s move to Ariba. Fittler has been with the company since 2016. 

 “We had a new CPO join, David Fittler, and he asked for a contract expiry list, and there were crickets – silence – for weeks,” said Doheny

This made them realise that the organisation didn’t have any
central storage or repository for contracts. She added:

 “We had no system for any procurement transactions at all, and all of our invoices were sent to … a generic mailbox with “pay this urgently please”: no cost centre, no approver, nothing. So we’ve been on a rapid, wonderful journey [to change that] over the last three years.”

Doheny said the business case for Ariba was rooted in
“governance, transparency and visibility” of Medibank’s spending. She explained
that it was about understanding their users and the products they are buying. 

 “Now, we are really proud to say that we’ve got 90 percent of our spend linked to contracts. We are comfortably and confidently able to say that we’ve 95 percent of the payment to our suppliers on time, and for us, that drives productivity because now our suppliers want to work with us. They’re not chasing us for payment. They trust us,” she exclaimed.

The Medibank Procurement Operations head also shared that it has
recently reviewed its original three-year roadmap with three key horizons with
SAP Ariba. She explained:

“The first was to stabilise what we had implemented, the second was to transform and get the value from what we had gone through, and the last phase was actually to optimise and continually improve and grow from there.”

The Medibank executive further stated that bringing external
intelligence to match with [internal] data is part of the company’s
optimization efforts. The initiative aims to influence budget holders to
strategise about their spend anticipating the possible market disruptors.

Medibank’s Ariba Outlook

Medibank is looking into Ariba Spend Visibility and Ariba Spot Buy to utilise soon.

Ariba Spend Visibility, a cloud- based spend analytics tool
provides the foundation for procurement organizations to make informed sourcing
decisions to improve ROI. The solution can be used in negotiating better supply
contracts and identifying instances of “leakage” or of “Maverick spend”.

Ariba Spot Buy, a custom B2B marketplace that provides a simple,
trusted, and controlled way to find and buy from approved suppliers, benefits
both the suppliers and the buyers. It also benefits the suppliers by providing
a sales channel to boost sales to existing customers, generate new sales, and
gain additional market share. 

According to Doheny, Medibank had achieved a level of maturity in its implementation and use of Ariba. She shared that the key for Medibank to see positive movement in its operational numbers came from a mindset shift.

From implementation projects wherein the company went through a
period of hypercare, the period immediately following system launch, to
recognising Ariba as a partner and enabler. She expressed:

“I think you know that the technology that you bring into your organization is an enabler, it will help you, but it’s not the answer, and you really need the people behind the technology and in your team to start owning it and own the process, the intelligence and what they bring to it.”

Doheny added:

“So for us, switching out of that mindset and moving into
operational excellence was a key turning point. And I think that’s when we
started seeing our metrics move as well.”