Integrating SAP Procurement On-Premise & On-Demand (SRM & Ariba)
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SAP has acquired Ariba for approximately $4.3 billion to enhance its cloud presence and create a new business network for procurement solutions. The acquisition aims to integrate Ariba’s e-procurement capabilities with SAP’s extensive customer base, addressing gaps in SAP's product offerings and providing a hybrid solution for both on-premise and cloud-based models. The document discusses the pros and cons of both procurement options, provides a recommendation for businesses considering their implementation strategies, and outlines the expected benefits of the integration.
Integrating SAP Procurement On-Premise & On-Demand (SRM & Ariba)
- 1. Integrating SAP Procurement On-Premise & On-Demand (SRM & Ariba)
- 2. Agenda • Demystifying the Ariba Acquisition • On-Premise vs. On-Demand (Pros and Cons) • The Hybrid Solution Option • The Hybrid Solution Demo • IBM’s Value Proposition • Questions • Contacts
- 3. SAP’s Acquisition of Ariba (Game Changer) SAP to Expand Cloud Presence with Acquisition of Ariba Tue, May 22 The Combination Creates the Business Network of the Future; Provides Open Business Commerce Community and Procurement Solutions in the Cloud; Network to Benefit from SAP's Flagship In-Memory Platform, SAP HANA WALLDORF, Germany and SUNNYVALE, California - May 22, 2012 - SAP AG (NYSE: SAP) and Ariba, Inc. (Nasdaq: ARBA) today announced that SAP’s subsidiary, SAP America, Inc., has entered into an agreement to acquire Ariba, the leading cloud-based business commerce network, for $45.00 per share, representing an enterprise value of approximately $4.3 billion. The acquisition will combine Ariba’s successful buyer-seller collaboration network with SAP’s broad customer base and deep business process expertise to create new models for business-to-business collaboration in the cloud. The Ariba board of directors has unanimously approved the transaction. The per share purchase price represents a 20% premium over the May 21 closing price and a 19% premium over the one month volume weighted average price per share. The transaction will be funded from SAP’s free cash and a €2.4 billion term loan facility. The transaction is expected to close in the third quarter of calendar year 2012, subject to Ariba stockholder approval, clearances by relevant regulatory authorities and other customary closing conditions. The transaction is expected to be accretive to SAP’s non-IFRS earnings per share in 2013.
- 4. SAP’s Strategic Vision The Ariba acquisition supports SAP’s strategic vision to grow into new markets – cloud, database, mobile -- and double addressable markets.
- 5. IBM’s Point of View on SAP’s Acquisition of Ariba Gaps in SAP Solution Footprint How Ariba fills SAP Solution Footprint Gaps Supplier Collaboration / Marketplace – SAP has had to rely on the partnering model (Hubwoo and Quadrem (acquired by Ariba in 2010) to facilitate supplier and buyer collaboration (requisition / purchase order / invoice, and real time bidding). Ariba Supplier Network – the largest eProcurement buyer / supplier marketplace in terms of total dollars transacted and number of active suppliers. Transaction Hub – Transactional solutions for Cash Management. Ariba Supplier Network – the largest eProcurement transactional hub Cloud (SaaS) Solution – Very limited cloud and SaaS presence. Ariba continues to grow in the SaaS (“On Demand”) space and continues to convert On Premise clients to their On Demand model -- providing a smooth revenue stream versus license renewals (which tend to be “choppy”). Electronic Invoice Presentment & Payment – SAP relies upon OpenText for their EIPP solution relying on a partnering model for the solution and marketplace. Ariba has an integrated EIPP solution, often considered one of the leaders in this space, integrated through the Ariba Supplier Network Professional Services – SAP has failed to build a credible module to manage both contingent and professional services spend, often times with companies choosing Ariba and other niche providers. Ariba Services Procurement – considered a mid tier player, but better than what SAP and Oracle offer today. Contract Management (Buy and Sell Side) – This is a growing space in which clients have often looked to best of breed versus EA providers. Ariba Contract Management – Capability to author, collaborate on and operationalize contracts in an integrated tool. Spend Analytics – This is a growing space in which clients have often looked to best of breed versus EA providers. Spend Analytics Capabilities – Opportunity to leverage and integrate key spend analytics measures inherent within Ariba Analysis into the more robust SAP reporting tools.
- 6. Agenda • Demystifying the Ariba Acquisition • On-Premise vs. On-Demand (Pros and Cons) • The Hybrid Solution Option • The Hybrid Solution Demo • IBM’s Value Proposition • Questions • Contacts
- 8. SAP has now acquired Ariba and many of SAP customers are asking the following: • Should I halt my existing SAP On-Premise procurement implementation? • I was planning to implement SAP On-Premise procurement, should I now switch to Ariba? • Will SAP continue to support its SAP its On- Premise procurement suite? • What is SAP’s plans regarding the overlapping functionality between On-Premise and On- Demand? • How does Ariba compare to SRM? • Is my investment in SAP SRM, Sourcing or SPM lost?
- 9. To answer these questions we must look at: • The status of the current implementation if one exist • The nature of the business case • The procurement categories under consideration • The industry of the implementing organization • Security requirements • The required customization • The deployment timeframe • The IT capabilities of the implementing organization • The geographic footprint
- 10. Pros and Cons of On-Premise vs. On-Demand Pros SRM •Tight integration with ECC •Direct procurement functionality •Ability to enhance functionality (BAdIs) •Flexible security options •Standard Netweaver platform Cons SRM •High implementation cost •Inflexible user interface •Limited supplier network •Infrequent updates •High learning curve Pros Ariba • Fast implementation timeline • ‘Best of Breed’ application • Extensive network • Covers the full procurement lifecycle • Frequent updates Cons Ariba • Complex integration to ECC • Focused primarily on indirect spend • Limited ability to enhance functionality
- 11. IBM’s Recommendation Stay with SRM if… •Your implementation is recent and achieving the business case •You need a procurement tool that supports direct spend categories •You have invested in SAP ECC-MM and need tight integration with your e-Procurement tool •You are a public sector organization (SRM PPS) •You require functionality not available as standard in SRM or Ariba •Your strategic direction does not support a cloud- based solution Investigate Ariba if… • You are just starting your procurement transformation journey • You want a solution that can be deployed quickly • You want the best application available • You are only concerned with indirect spend • You want a fully integrated solution across the entire procurement life-cycle (source to settle) • You user base will primarily consist of casual users • You do not have a ECC backend
- 12. Agenda • Demystifying the Ariba Acquisition • On-Premise vs. On-Demand (Pros and Cons) • The Hybrid Solution Option • The Hybrid Solution Demo • IBM’s Value Proposition • Questions • Contacts
- 13. IBM’s Recommendation... “have you considered” A Hybrid Solution works best when you are happy with SRM but… •you have reached the limits of SUS’s capabilities •your supplier on-boarding process is not robust •your internal catalog solution is no longer scalable •your catalog maintenance is excessive (internal and punch-out) •you would like to pilot cloud-based procurement tools •you require a robust e-invoicing solution SAP SRM/Ariba Hybrid Solution
- 14. Agenda • Demystifying the Ariba Acquisition • On-Premise vs. On-Demand (Pros and Cons) • The Hybrid Solution Option • The Hybrid Solution Demo • IBM’s Value Proposition • Questions • Contacts
- 15. Ariba/SRM Hybrid Solution Demo 11 Initiate Shopping Cart in SRM & Punch Out to Ariba 33 Confirm Receipt in SRM 22 Acknowledge the PO in Ariba 44 Supplier Invoices through Ariba
- 16. Agenda • Demystifying the Ariba Acquisition • On-Premise vs. On-Demand (Pros and Cons) • The Hybrid Solution Option • The Hybrid Solution Demo • IBM’s Value Proposition • Questions • Contacts
- 17. IBM’s Value Proposition Ariba /SRM Implementation Leader • IBM brings market-leading capabilities in procurement and global SRM and Ariba implementations to help drive success. We have accelerators, worldwide methodologies, highly experienced staff, deep vendor relationships and recognized capability that we will employ to accomplish our client’s goals. • IBM has implemented and supported Ariba solutions at over 60 global clients across 19 industries • Managed the first Ariba On Demand implementation consisting of all upstream and downstream modules • Ariba solution roll-outs in 65 countries across all geographies Our SAP Consulting Practice • Has relationships with Ariba and SAP that are positioned at the highest levels of each organization • Recognized by SAP CEO as consulting market share leader with 25% of the market • Over 5,000 successful projects at over 9,000 sites • Only partner to win the Award of Excellence in the U.S. every year it has been given Our Own Transformation Experience • IBM has embarked on its own procurement transformation journey and can share real-life experiences from our executives regarding how to drive complex changes in a diverse and geographically dispersed organization • This sort of practitioner guidance goes well beyond the theory that a pure consultant can bring to the table.
- 18. Agenda • Demystifying the Ariba Acquisition • On-Premise vs. On-Demand (Pros and Cons) • The Hybrid Solution Option • The Hybrid Solution Demo • IBM’s Value Proposition • Questions • Contacts
- 19. Questions
- 20. Agenda • Demystifying the Ariba Acquisition • On-Premise vs. On-Demand (Pros and Cons) • The Hybrid Solution Option • The Hybrid Solution Demo • IBM’s Value Proposition • Questions • Contacts
- 21. Contacts Michael Cheatham 8888 Keystone Crossing Associate Partner Indianapolis, IN 46240 Global Business Services Tel 317 249-9618 Mobile 317 409-6061 mcheatham@us.ibm.com
- 22. Appendix • Hybrid Solution Detail
- 23. Optimal Hybrid Solution Components Component Description Req? Comments SRM 7.0 SAP’s SRM Platform Yes EHP 2 provides a optional UI, EHP 3 optimizes for HANA SRM New UI Streamlined user interface No Enhanced cross-catalog search capability Ariba Procurement Content Ariba catalog application Yes Robust end-user search and content maintenance capabilities Ariba Network Cloud-based supplier portal Yes Facilitates document exchange and eInvoicing SAP Netweaver PI Integration middleware Yes * * A connection tool is required but there are third-party tools available
- 24. Hybrid Solution Option – SRM New UI Features •Web-like interface – dynamic screens •Web-like search – search and field help •Comprehensive catalog content •Process multiple line items efficiently •User guidance •Customizable Search •Enterprise search - search across all fields in the catalog item. The search attributes are customizable using enterprise search tool •Fuzzy search can be enabled •User Settings – change the user default settings such as cost assignment, product category, and delivery information for an order Optional
- 25. Hybrid Model - High Level Process Overview Suppliers Catalog Suppliers Non-Catalog Suppliers Buyers SAP ERP FI/CO/MM World Wide Web OCI MDM Catalog Free Text Order SAP SRM Reservation
- 26. Hybrid Solution Architecture Overview • Purchase Order • Order Acknowledgement • Invoice • Purchase Order • Order Acknowledgement • Invoice Process Orchestration Product CatalogProduct Catalog Purchase Orders, Invoice StatusPurchase Orders, Invoice Status Ord. Ack, ASN, InvoiceOrd. Ack, ASN, Invoice • Ariba Procurement Content (Catalogs) • Purchase Order and Invoice Automation • Ariba Procurement Content (Catalogs) • Purchase Order and Invoice Automation Trading Partners
- 27. Hybrid Solution Detail – Document Exchange Purchase Orders Purchase Orders InvoicesInvoices InvoicesInvoices Ariba NW Adapter Ariba NW Adapter Purchase OrdersPurchase Orders Invoice StatusInvoice Status Invoices / Credit Memos (PO & Non PO)Invoices / Credit Memos (PO & Non PO) IDOC ORDERS05 IDOC ORDERS05 DocSetDocSet Purchase Orders Purchase Orders InvoicesInvoices InvoicesInvoices cXMLcXML cXMLcXML Business Impact •Reduction of efforts on Accounts Payable with regards to incoming invoice processing, i.e. “touchless postings”, based on defined business rules for invoice validation •Simplicity & Transparency: Self- service supplier portal for real-time invoice / payment status •Elimination of business risk and delays with maximum degree of process automation •Reduction of paper through fully electronic documentation, including e-invoicing •Fully integration with SAP SRM, ensuring document traceability
- 28. Hybrid Solution Detail – Catalog Integration Business Impact •OCI 5.0 Compliant •Casual Users: o Enhanced search w/fuzzy logic o Flexible navigation o Results filtering o Comparison of items •Multi-catalog environment •Elimination of business risk and delays with maximum degree of process automation •Harmonized administration of supplier catalogs •Integration to the Ariba Network • Create Shopping Cart • Confirm Goods / Services • Invoice Verification • Create Shopping Cart • Confirm Goods / Services • Invoice Verification • Catalog Content • Catalog maintenance • Catalog Content • Catalog maintenance OCI 5.0OCI 5.0
- 29. SRM / Ariba Hybrid Scenario Procure-to-Pay Scenario between SAP Enterprise Central Component and SAP Supplier Relationship Management and the Ariba Network •The procure-to-pay business integration scenario between SAP Enterprise Central Component (ECC) and SAP Supplier Relationship Management (SRM) and the Ariba Network enables you to drive compliant, automated purchasing and collaboration activities with trading partners, by which all parties achieve process efficiencies and effective cost management. •The procure-to-pay scenario covers the end-to-end process beginning with the creation of the shopping cart or purchase requisition, which triggers the purchase order creation activities. It supports the approval processes required to issue a purchase order towards the participating suppliers of the Ariba Business Network and in return the processing of advanced shipping notifications and invoices. •The release of the outgoing payment concludes the process. The integration scenario provides full transparency on the status of the transaction by supporting change requests and adjustments required by the business. The integration of purchasing catalogs is an option and offers the advantage of a structured buying process. Casual User
- 30. The Hybrid Solution - How does it work? Ariba Network Integration for SAP Business Suite rapid-deployment solution covers: •Purchase Order and Invoice Automation •Discount Management and Discount Professional •Catalogs such as Ariba Procurement Content •The procure-to-pay business scenario integration is message based which means it can run fully automated between your on-premise SAP ECC and the Ariba Network. Documents exchanged support the entire procure-to-pay business integration scenario including ten document types, such as, for example: create purchase order, change purchase order, order response to invoice and remittance advice •Integration between on-premise ECC or SRM and Ariba Network for purchase orders and invoice automation is based on IDOCS and cXML messages and has three options described below •Integration between on-premise SAP Business Suite and Ariba Discount Professional Solution is based on IDOCs and BAPIs using SAP NetWeaver PI middleware •Configuration settings to enable the requisition process and ensure data transmission across the solution •Integration between SAP ERP MM or SAP SRM and Ariba Procurement Content is based on the SAP Open Catalog Interface (OCI). This can be combined with the other integration options Professional User
- 31. Technology Functionality Matrix Integration for Purchase Order and Invoice Automation •You can choose from different integration technology options based on your needs and current investments: •The new SAP Business Suite Add-on for Ariba Network Integration offers a more enhanced two-way integration which utilizes a web services framework. This enables SAP SRM/ECC to create cXML messages that can be directly consumed by the Ariba Network and vice versa. With this new approach you can connect your on-premise SAP SRM/ECC system with the Ariba Network in the cloud without any middleware and without the need to “translate” the messages. •If you are already using SAP NetWeaver PI, the existing infrastructure can be used to implement this hybrid integration using IDOCs and cXML messages. •Ariba Adapter connectivity is your third option which is based on IDOCs and BAPIs. Integration of Ariba Procurement Content •Integration between SAP ERP MM or SAP SRM and Ariba Procurement Content is based on the SAP Open Catalog Interface (OCI).