Zukunftstrends im Einkauf Run Simple and Stay Relevant Die Beschaffungslogistik als Schlüsselrolle im Business Netzwerk

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1 Zukunftstrends im Einkauf Run Simple and Stay Relevant Die Beschaffungslogistik als Schlüsselrolle im Business Netzwerk Dr. Marcell Vollmer, CPO SAP SE April 21, 2015

2 Agenda 1 Disruptive Trends and SAP s Path to Future Trends and Innovations in Procurement 3 SAP s Evolution of Procurement from Service to Function 2

3 Changing business environment increases pressure on companies Increases Pressure on Companies Economic Volatility Volatility in markets Decreased stock valuation Slow economic growth High expense ratio Increasing Globalization Expansion into new markets Global process standardization International supply chains Increased off/near shoring Greater Risk Supply chain disruption Financial risk and fraud Commodity risk More Competition Pricing pressures New sources of competition Decreased budgets and spending Regulatory Changes Increasing disclosure requirements Country-specific regulations Industry-specific disclosures Accelerating Technological Change Changing business models Faster innovation cycles Expanding partnerships and channels Leveraging big data for decisions 3

4 Accelerating Technological Change Business landscape transformation 2020 is increasingly digital and networked 1 ScienceDaily. ScienceDaily, 22 May Technology Adoption Report: Business Networks, Ardent Partners, Internet of Things (IoT) 2013 to 2020 Market Analysis: Billions of Things, Trillions of Dollars, IDC, Statista,

5 2015 Outlook and Path to 2020 Run Simple, Simple Wins Fast cloud growth, growing highly predictable revenue and operating profit Across25 industries in 180 countries 253,000 customers 70+ million Cloud Users 40+ million On-premise users 74,400+ employees 17,6bn Revenue full year 2014 (IFRS) 2015 guidance 1.95bn to 2.05bn cc Cloud subs 8% to 10% cc Cloud & software 5.6 to 5.9bn cc operating profit ambition 3.5 to 3.6bn Cloud subs 21 to 22bn Total revenue 65% to 70% Support + Cloud subs share of revenue 6.3 to 7bn Operating profit 2020 ambition 7.5 to 8bn Cloud subs 26 to 28bn Total revenue 70% to 75% Support + Cloud subs share of revenue 8 to 9bn Operating profit Procurement and Shared Services with end-to-end process automation are key for SAP to support operating profit ambition 5

6 Agenda 1 Disruptive Trends and SAP s Path to Future Trends and Innovations in Procurement 3 SAP s Evolution of Procurement from Service to Function 6

7 Future Trends for Procurement Three Trends in the Market From Service to Function 1 Value Creation for supporting Business Functions Procurement as Business Value Enabler Value creation is more important than procurement savings, which are not hitting the bottom line. Focus on implementing new innovations to deliver business value and drive transition to source services instead of goods. 2 3 Networked Economy Business Networks to Revolutionize Sourcing for Procurement Use cloud networks to link various platforms and consolidate spend while achieving real time collaboration. Enable the function to harness the power of predictive analytics to be first to get competitive market insights and drive better business decisions. Leverage network and analytics to improve working capital and reduce transactional costs by end-to-end process automation incl. public cross-industry Procurement Catalog and Market Places. Leveraging Shared Services Concepts Sourcing Factory Intelligent managed service concepts to discover untapped spend (like for small countries) and to increase compliance incl. centralized category management. 7

8 Future Trends for Procurement Business Value Enabler Value Creation The role of a buyer will change significantly as Procurement transitions from Goods to Services. Buyers will be asked to provide solutions to the business and implement new (supplier) innovations that align with strategic objectives and deliver business value. Services Warehouses 3D Printing Services not Goods Automated Ordering Product Creation Value creation is more important than procurement savings, which are often not hitting the bottom line. A buyer role needs to advise the business and be a valued partner to focus on strategic sourcing decisions rather than ordering goods or services systems will connect to order automatically, monitor status and delivery will be fully automated 8

9 Future Trends for Procurement Three Trends in the Market From Service to Function 1 Value Creation for supporting Business Functions Procurement as Business Value Enabler Value creation is more important than procurement savings, which are not hitting the bottom line. Focus on implementing new innovations to deliver business value and drive transition to source services instead of goods. 2 3 Networked Economy Business Networks to Revolutionize Sourcing for Procurement Use cloud networks to link various platforms and consolidate spend while achieving real time collaboration. Enable the function to harness the power of predictive analytics to be first to get competitive market insights and drive better business decisions. Leverage network and analytics to improve working capital and reduce transactional costs by end-to-end process automation incl. public cross-industry Procurement Catalog and Market Places. Leveraging Shared Services Concepts Sourcing Factory Intelligent managed service concepts to discover untapped spend (like for small countries) and to increase compliance incl. centralized category management. 9

10 Evolution of Procurement towards a Strategic Function How to explain best Business Networks in a Networked Economy? Ariba Network will be THE B2B Network of the future Ariba Business Network Combines Business Network Spend Distribution The social media capabilities of like shopping market place Global capital and operational spending for the Global 2000 is distributed across different categories. SAP Business Networks can help companies address all of the spend categories 7% Travel & Expenses 26% Direct & Supply Chain End-to-end Automation for all transactions Source: Spend Categories for Global Top % Contingent Labor and Services 21% Indirect & MRO Transition to fully integrated and automated purchase-order to invoice process will be a must in the future to reduce transactional costs and free up resources to focus on value adding activities in the end-to-end process. 10

11 Evolution of Procurement towards a Strategic Function CPO and CFO Value Proposition on Ariba Network & Catalog of Catalogs CPO Value Spend Will be leveraged to a high extend to realize additional savings (Margin impact) PO Increase in overall productivity for procurement to automate purchase orders 100% Compliance and capturing of all information / knowledge on the Network Ariba Network provides benefits for both CPO to leverage purchasing power and reduce transactional costs CFO to reduce transactional costs by invoice automation SAP can sell to both! CPO and CFO Probably CFO can support getting budget for CPO as he benefits with real cost savings business case Ariba Cloud for Goods Fieldglass for Services Concur for Travel Transaction automation on the combined network of Ariba, Fieldglass and Concur CFO Value Automation Increase in invoice automation within short timeframe SAP: +50% in 12 months Productivity Increase in overall productivity for procurement SAP: +20% in 18 months Invoicing Reduction in procurement costs using cloud solutions from Ariba, an SAP company, and the Ariba Network (from 11.5 to 6.7 per invoice) Example: SAP 11

12 Example Purchase Order Invoice Automation and Run Simple Automation of Invoice to Pay Eliminate Manual, no Value Adding Tasks Transition to fully integrated and automated purchase-order to invoice process will be a must in the future to reduce transactional costs and free up resources to focus on value adding activities in the end-to-end process. Manual paper based process from Purchase Order to Invoice Purchase Order to Invoice fully automated on Ariba Network Invoice creation in a system Printing Mail Shipping Scanning Manual Data Entry Purchase Order creation / Invoice data Purchase Order data conversion in invoice Invoice management will change from a paper based invoice handling process with manual data entry on two screens to a networked automated invoice solution without manual process steps. Almost all invoices in today s time are getting created by a system (ERP, Word, Excel and others). Invoice gets printed, shipped as letter per mail before the receiving company has to open the envelop, scans the invoice and is either entering the data manually or tries to capture the information by an OCR system. 12

13 Future Trends for Procurement Three Trends in the Market From Service to Function 1 Value Creation for supporting Business Functions Procurement as Business Value Enabler Value creation is more important than procurement savings, which are not hitting the bottom line. Focus on implementing new innovations to deliver business value and drive transition to source services instead of goods. 2 3 Networked Economy Business Networks to Revolutionize Sourcing for Procurement Use cloud networks to link various platforms and consolidate spend while achieving real time collaboration. Enable the function to harness the power of predictive analytics to be first to get competitive market insights and drive better business decisions. Leverage network and analytics to improve working capital and reduce transactional costs by end-to-end process automation incl. public cross-industry Procurement Catalog and Market Places. Leveraging Shared Services Concepts Sourcing Factory Intelligent managed service concepts to discover untapped spend (like for small countries) and to increase compliance incl. centralized category management. 13

14 Sourcing Factory Leverage Organizational Capabilities Intelligent managed organizational concepts are required to manage untapped spend areas or serve very small countries in a compliant way. A sourcing factory model captive or as managed (outsourced) service will expand the reach of procurement organizations in the future. Problem: Strategic spend is managed by global categories or on regional level with strategic and/or preferred suppliers. Tail spend and spend for small countries (Tier 3 countries) are not or partly managed which leads to missed savings opportunity and non-compliance risk. Solution: Sourcing Factory model is an answer to better manage not globally/regionally covered spend Managed by Global Categories Spend to be shifted to preferred suppliers or into captive / managed service Option 1: Captive Shared Service or Center of Expertise concept Option 2: Oursourced / Managed Services High automation (spot buy, spot quote, esourcing) Sourcing on Business Networks or based on global supply database to ensure fast and compliant processing of non-strategic spend. 14

15 Agenda 1 Disruptive Trends and SAP s Path to Future Trends and Innovations in Procurement 3 SAP s Evolution of Procurement from Service to Function 15

16 Evolution of Procurement at SAP towards a Strategic Function The Transformation Journey towards Run Simple and Business Value Enabler Role Operational Tactical Strategic Partner Regional Purchasing Procurement Operations Global Categories Organization Globalization Category Managements Change Management People Development Business Partner Leadership People Development & Change Management SRM 5.0 SRM 7.02 Cloud Processes & Systems E2E P2P & Cloud Systems, Networks, Mobile Today 16

17 Process Organization SAP Implementation of a Globalized Category Management Organization Services Source-to-Purchase Strategic and Tactical Procurement Source-to-Pay Strategy Group CPO and Business Owner for Source-to-Pay IT Marketing Facility Mobility Procurement Solutions Excellence Team Purchase- Operational Procurement to-pay Accounts Payable and Travel & Expenses Leverage purchasing power and driving sustainable savings across all geographies Deliver best-in-class procurement processes and highest possible service levels to internal customers Mitigate risk to SAP >3.8 billion Spend FY 2014 >710,000 Annual invoices >970,000 Trips Be a fair partner to our suppliers 17

18 End-to-End Process and Automation Evolution from Accounts Payable to Procure to Pay From different process standards and scope Source-to-Purchase Purchase- to-pay Define and perform strategic souring planning and supplier management Perform Sourcing and Bidding Contract Management Perform Catalog Lifecycle Management Request, order and receive goods and services Perform Invoice Processing and Perform Payment Execute Closing and Reconciliation Execute pre trip, on trip and expense entry. Auditing Global Source to Pay Process 2004 to one end-to-end P2P process standard in Shared Services Define and perform strategic souring planning and supplier management Perform Sourcing and Bidding Contract Management Perform Catalog Lifecycle Management Request, order and receive goods and services Perform Invoice Processing and Perform Payment Execute Closing and Reconciliation Execute pre trip, on trip and expense entry. Auditing Global Source to Pay Process 2014 Local / regional Process Shared Services Process 18

19 Evolution of SAP s Source-to-Pay Systems One Global Source-to-Pay Processes with Hybrid System Cloud & On Premise Organization & People Globalization Category Managements Source-to-Purchase Strategic and Tactical Procurement Purchase- Operational Procurement to-pay Accounts Payable and Travel & Expenses Processes & Systems E2E P2P & Cloud Systems, Networks, Mobile Ariba for Goods, Fieldglass for Services and Concur for Travel 19

20 Delivering Total Workforce Management Companies for more than 25bn have been acquired in the last 8 years Fieldglass, SAP AG or an SAP Inc. affiliate All company. rights All rights reserved. 20

21 Run Simple Real Life Examples from SAP Ease of Use and Optimized User Interfaces for Procurement, Analytics and Travel Catalog Ordering with Spot Buy (ebay) live ebay like shopping New Fiori Approval Launchpad Live easy to use App Old SRM Catalog Old Workflows Tablet Access enabled Improve to Run Simple NEW Ariba Catalog with Spot Buy ebay integration (live in US since November) Tablet / Smartphone Access enabled SAP Fiori Launchpad: Approval App and Desktop Version available for all Workflows, like Shopping Cart, Shopping Cart Tracking, Access Fiori Launchpad Innovate NEW Ideas to Run Simple 21

22 Ariba Cloud Solutions Strategic & Tactical Procurement Source-to-Purchase (Strategic and tactical procurement) Ariba Spend Visibility Procurement Dashboards are key to manage the Procure-to- Pay Process and to define sourcing strategies Service Procurement Cloud-based technology to procure and manage the nonemployee workforce, incl. contingent workers and services such as Statement of Work (SOW) projects, offshore labor and independent contractors Ariba Supplier Management Leverage Supplier Management Program on Ariba (SIPM) and implement preferred supplier strategy to consolidate and optimize spend allocation Ariba Catalog New Catalog Google fast and ebay like shopping experience with Ariba Catalog Ariba e-sourcing Leverage purchasing power and use highly standardized and automated esourcing solution. Benefit from eauctions Ariba Contract Management Procurement integrated CMS solution to eliminate paper and ink from the creation, execution, and management of any type of contractual agreement. 22

23 Run Simple Real Life Examples from SAP Ease of Use and Optimized User Interfaces Spend Vis on HANA Before After PO and non-po Spend aggregated PO-Spend BW non PO-Spend ERP ERP SRM ERP ERP SRM 23

24 Achievements Source-to-Pay Business Network with high Automation and Global Shared Services Streamline entire Source-to-Pay Process Achievements: Facts & Figures Leverage economies of scale and control through shared services Cut costs through automated data extraction and process automation Create workforce efficiency through streamlined processes including mobile approvals Reduce errors at the source Improve working capital management through better visibility to cash requirements Optimize cash discount utilization including dynamic discounting 3 Months Implementation Time >4,000 Suppliers on ARIBA Network 268,000 Documents transmitted 50% Increase in Automation 20% Productivity gain <1.0bn Purchase Order value sourced 24

25 Key Takeaways on Transforming Source-to-Pay Run Simple and Get Linked are Key Success Factors for the Future Transform to Run Simple Get Linked to Stay Relevant Transform Organization to fit future needs Develop people and manage change Implement end-to-end processes and cloud systems to automate transactional processes Leverage the power of social, supplier, and business networks to get innovations and to deliver solutions to the lines of businesses 25

26 RUN BETTER WITH Many Thanks 26

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