SAP Ariba driving value in the digital economy
A cloud-based marketplace for modern business, SAP Ariba enables simple yet intelligent exchanges between millions of buyers and suppliers. But it’s much more than sourcing and procurement software: as a platform that drives value as its core function, SAP Ariba aims to transform businesses for the digital economy.
Every day, millions of companies use the SAP Ariba Network to manage their business relationships and allow their customers to shop, share and save.
As a cloud-based business network, SAP Ariba enables users to discover, connect and collaborate around more than $1 trillion in commerce every year and build, manage and deepen their B2B relationships. Or more accurately, as SAP’s Lorraine Longato explains, “We don't sell software, we deliver business outcomes.”
As the Value Engineering Director – Procurement & Business Networks in ANZ at SAP Ariba, Lorraine is part of a team that delivers strategic advice to their major customers, with an overall goal of streamlining business analytics, improving procurement processes and engaging with the digital economy at an optimal level.
“We have a structured methodology that we follow, which is centred around value with the customer at the core,” Lorraine explains.
“The organisations we work with are all at different stages of their digital transformation. Some are small and nimble and can change quickly. Others are undergoing a huge transformation by working through a multiyear program of change; if you’re a big Fortune 500 company, then it’s important to plan for longevity.”
Lorraine, who began her career in engineering, takes her role as a trusted professional procurement practitioner very seriously, as she knows precisely what is possible with optimal systems and technology-driven strategies in place.
“We become strategic, trusted advisers, helping our clients by guiding, advising and collaborating with them to streamline their analytics and procurement process,” she says.
Take the example of Malaysia-based Alphamatic Systems Sdn BhD. As a largely manual, paper-based business, they realised their old-school procedures and systems were hampering their growth and moved to digitise their operations by joining the Ariba Network.
The company started by collaborating on purchase orders and invoices electronically with its customers, and soon set up an online catalogue showcasing its products and services. As a result of its efforts, Alphamatic has seen revenue from its largest customer increase by 40 percent, while its payment cycles cut in half.
Closer to home, a SAP Ariba/Deloitte collaboration was recently successful in combining both a leading cloud-based software solution with deep procure to pay industry knowledge and experience, resulting in two significant joint engagements with a large Australian health insurance provider and public sector transportation organisation.
Meanwhile in the utilities sector, SAP has worked with many providers such as Ausnet Services, AusGrid and Synergy.
Ausnet Services operates an electricity and gas energy network in “a dynamic environment that is characterised by regulatory changes, technology advancements and shifting customer behaviours and values relating to their energy usage”, says Cor Van Der Scheer, Procurement Processes & Systems Manager.
“Ausnet worked closely with SAP Ariba as we implemented our new ERP platform with a view to achieve transactional efficiencies, while greatly enhancing the way we manage the energy network asset base,” Cor says.
“The most significant contributor to achieving that goal was our opportunity to leverage the Ariba Network integration with both our Plant Management (PS) and Project Management (PM) modules in SAP and our significant key suppliers. The combination of work order to purchase order automation in SAP, generated from the work orders, transmitted to suppliers through the Ariba Network as well as receiving Service Entry Sheets from suppliers through the same medium. This automatically integrated into SAP natively and created both an efficient and effective end-to-end process management enhancement. This type of system integration use is amongst the very first instances in the world, enabling us to stay ahead of the game on a technology platform to harness benefits back into the business.”
She adds, “The innovation delivered through the cloud and improved integration into SAP ERP coupled with the desire to assist their customers realise value from their investment make SAP Ariba the leader in its field.”
Undoubtedly, superior technology equals greater efficiency and in the utilities sector in particular, it’s imperative to turn to an optimised and efficient digital platform, Lorraine says.
“The Australian Chamber of Commerce recently released a report about which sectors are growing, and utilities and professional services are the last two on the list. There is no forecast of growth. So by helping them to define value and simplify the way they do business, we can help them leverage what they have to improve their overall operations,” she explains.
The SAP Ariba team is passionate and proactive about transforming businesses to maximise returns in a digital economy, Lorraine adds, that they are currently “releasing an innovation every quarter to scale and grow in this environment”.
“Our goal is to understand how we can improve our clients’ processes and programs, to minimise their cost to transact and to do business more efficiently. That way, they are able to deliver more to their bottom line, saving funds for the public sector that can be better deployed to front line services that make a real difference or in private sector return savings that directly translate to P&L benefits and in turn shareholder value and/or dividends. It’s a compelling position,” she says.
“When I think of how procurement has changed over time, it’s interesting – we have actually challenged most of the people in our team to stop using the word procurement, as we’re fundamentally involved in a company’s total financials. It’s commerce across the board, and our toolset with a collaboratively established sustainable business case offers a quick way to find and drive value.”
Leveraging Ariba’s technology is not just about driving efficiencies and improving productivity, however; it’s also about creating transparency and building organisational reputation. This is achieved through a commitment to sustainable procurement, finance and business practices. Every C-level executive and or shareholder has a vested interest in transparency, governance and value, delivering on all these key criteria with a simplified user experience ensures business integrity and continuity. In a digital world where the rate of change is constant, fraud and cyber security risks prevail it is imperative to have a business benefits plan, an implementation road map, change management process defined and a collaborative environment where these benefits can be maintained and sustained over time.
Interestingly, Lorraine was head of sustainability in one of her previous roles. By applying her end-to-end operational engineering with her sustainable procurement experience, Lorraine is able to get right to the heart of the matter, which centres on the fact that technology and sustainability essentially go hand-in-hand.
“We have a lot of sustainability initiatives, not just around our environment but also around people and programs. One is our One Billion Lives initiative, which involves combining SAP, our products, our people, our passion and our time to engage with NGOs, government agencies and our ecosystem to deliver social outcomes in various areas, including health, education, and disaster and emergency management,” Lorraine says.
One major project commenced in March 2016, when the SAP India team pitched their One Billion Lives Cancer Research Project. Dr. Ramesh, a seasoned oncologist, highlighted the need for a solution to consolidate cancer patient data, in order to prescribe the best treatment and medication for each cancer patient in India.
“As a survivor of cancer, not once but twice, it’s important to me to be associated to an organisation that aligns with my personal values and beliefs. Of which finding a cure for cancer resonates,” she says.
The project is data collation, analytics and insights. To date, SAP have built a Proof of Concept and it’s now in testing phase – putting the project well on track to reach the initiative’s overall goal to change one billion lives, this is only one amongst many to really impact lives and make a real difference.
Taking the concept of sustainability one step further, Lorraine says it’s crucial to also consider brand longevity.
“You have to think about every aspect of your procurement journey because these days, people are very savvy. People are on devices 24/7 and they know everything about your business. They demand transparency and if you don’t align with these growing winds of change, you are isolating yourself,” she says.
“The world is a fast-moving place and reputational risk is now first and foremost a priority as part of the procurement function. There are a number of supply chain risks, such as slave labour in the supply chain or fraudulent behaviour. The information is out there, we can source it for you in one place - Ariba. There are no excuses for not knowing what’s going on with your supply chain and there should be no knowledge debts, because technology has enabled us to understand every link in the chain.”
Embarking on a digital transformation journey requires you to know of these trends, Hyper-connectivity, Big Data, Cloud, Smart Devices and an awareness of Cyber Security risks enables us to map together with our clients their capacity and capability gaps. This enables us to collaborate to define their road map towards benefits that will optimally leverage technology within their own organisation. It needn’t be as drastic or confronting as you may expect it to be, Lorraine adds.
“From our perspective, it’s about enhancing what you’ve got, rather than ripping everything out and replacing it. We start by asking: Why, then Where do you want to be, and where are you now? Our job is to work with you to get from here to there and that conversation is always based on value delivery,” she says.
“What we do as a value engineering function is to define value in what we call the four value levers: price reduction, compliance, process savings and cash position. We also have a value realisation team, they have a process around full life cycle analysis to deliver maximum value constantly. As we said previously, you don’t buy our software ¬– you buy a business outcome.”
[boxout] SAP Ariba and EY: The powerful joint venture driving digital value
EY and SAP Ariba have come together to advance our clients’ digital strategies,.. In collaboration, we have been experiencing regional and global success by coming together early in engagements, thus harnessing benefits and fostering transparency with customers.
EY’s unique offering is its business integration approach, which takes a functional view of capability, rather than just a systems view. A business integration approach considers the required business outcomes and improvements to enable a better way of doing things, now. In the future, this approach will provide a platform for organisations to adopt continued automation and digitisation as it evolves.
EY and SAP Ariba have commenced work with a global consumer products company to provide its digital support journey. As a direct result, the company saw considerable improvements across productivity of the source-to-settle cycle, and it made their journey “Run Simple”.
It is not just about introducing a more streamlined way of buying things. It’s also about planning for future automation and providing a new way to collaborate with suppliers, all powered by the SAP cloud. The power of having the business advisor and software solution provider working together can help our clients to get real value and results from their investment.
- Catherine McCourt – Partner, Advisory at EY