Orange County Convention Center Orlando, Florida June 3-5, 2014 Ensuring Contract Compliance through integration of Ariba Contracts and SAP ECC Michael Chavez and Sean Rhoades, Deloitte Consulting LLP
Learning Points An overview of contract compliance leading practices to ensure negotiated savings are realized Gain a comparative understanding of the functionality and limitations between SAP and Ariba Sourcing and Contracting applications How to leverage Ariba Contracts to sustain contract compliance Develop an understanding of the required development to create an integrated contract compliance solution via Ariba Contracts and SAP ECC This presentation should not be interpreted as a representation about or endorsement of any third party products, including SAP software.
Client Challenges Manual and inefficient contract replication and maintenance processes Manual contract management process is labor intensive and demands multiple iterations Templates vary and are not centralized Little to no automation Multiple contract repositories Contracts management repositories and practices vary across sites and functional areas Minimal visibility into international contracts Business users are unable to view the status of contract in the lifecycle Lack of process harmonization Contract process is dispersant across businesses and geographies Landscape challenges Current contract tool is stand-alone and requires manual process to create Outline Agreement Ariba Contracts is the central contract repository, while transactional system is SAP ECC
Benefits of Contract Compliance Effective contract compliance can: Standardize compliance to contracts pricing terms & conditions Reduce cycle-times of the purchasing and invoicing process Minimize rogue contracting through efficient management and tracking of contracts through a central repository Reduce maverick / off-contract spending Match spend data to contracts and maximizing contract value and cost reductions by leveraging global agreements Improve supplier performance and customer relationships
Leading Practices in Contracting Define, communicate and monitor to specified contract metrics Release automatic purchase orders based on contract pricing and terms Capture global contract spend Create a standardized process for collaborative authoring and negotiation of contracts Set a system of alerts and notifications Track and measure compliance and savings accrued from contracts Leverage contract templates and clause library Maintain all supplier contracts in a central database Generate systemically legal procurement contracts in operational state
Leveraging Ariba Contracts Cloud solution with minimal client infrastructure management Flexible master data management Broad repository, search, and alerts Integrated sourcing and contract management workspaces Management of standard agreements and clause library Document redlining, negotiation capability and electronic signature functionality Automated and controlled contract development workflow Customizable reports and analytics Terms & Conditions compliance management (business term variables)
Technology Comparison Contract Management Application Comparison Integration Ariba Contract SAP Contract Lifecycle Management Material Master Direct Replication from Sourcing Project to Contract Workspace ECC Outline Agreement Creation Contract Unitization Reporting Contract Terms & Clause Library Configurable Document Approval Processing Integrated Electronic Signature No current Material Master functionality in Ariba Contract No interface for contract to Outline Agreement replication No interface to return contract aggregation Standard replication functionally Standard replication functionally Contract aggregation standard with SRM central contracts and CLM to ECC contract integration
Integration Business Drivers The operationalizing of Ariba contracts in SAP ECC by creating Outline Agreements and catalogs Improved realization of savings by tracking usage and driving compliance Single source of truth for updates and renewals Consistency of contract data across Ariba and ECC Reduction of administrative demand and contract inconsistency between applications Real time automation of contracts replication across ECC Greater visibility of contract throughout the life cycle
Building the Integration
Building the Integration (cont.) Using the push vs. pull approach with Ariba Web Services for timely replication Determining the appropriate frequency for Contract Replication to SAP ECC Ensuring systematic change control of contract information across Ariba and SAP ECC Using Ariba Contracts as a vehicle for contract replication and source list automation Building Ariba contract terms with flexible SAP ECC meta data Defining clear protocol around contract replication and procurement content usage
Lessons learned Focus on Internal Buy-In / Change Management Improve the Analytical Reporting Ensure manual steps are built into the process Understand the business requirements to build Outline Agreements Detail planning for contract conversion to ensure contracts are not duplicated Comprehensive interim business procedures for large SAP/Ariba deployments Broad reconciliation reporting to ensure data harmonization across SAP ECC and Ariba Contracts Built in replication failure mechanisms that enforce corrective action
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