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So what is so ‘Disruptive’ about this new innovation?

 

Talking about adopting Disruptive Innovation, a significant Facilities Management

(FM) company in Australia has recently implemented a transformational change across both

the Marketing and Procurement functions.

 

While relatively new to SAP Ariba, they have been a strong SAP run business for many years.  In

fact, the Facilities Management (FM) company are now live with SAP Ariba Strategic

Sourcing, SAP Ariba Supplier Lifecycle & Performance and SAP Ariba Contracts.

 

They are soon to be live with full end–to–end SAP Ariba Procurement.

 

 

What’s so ‘Disruptive’ I hear you ask? Well I failed to mention that (FM) are also an

Integrated Supplier with a large entity who are pushing significant Purchase Orders

over the SAP Ariba Network, straight into the (FM)’s ERP.

 

So guess what…(FM) are able to covert the Large Entities Inbound Sales Order into

an Outbound Purchase Order using, wait for it…insert drum roll here… you guessed

it, SAP Ariba Procurement.

 

Let’s unpack what the “AS-IS” and “TO-BE” will look like once they are live…

 

 

The history…

 

“AS-IS” – The Large Entity historically emailed (FM) Sales Orders after multiple rounds of

Contract / RFP type negotiations to uncover the best price and then award the

business.  (FM) had multiple Sales Professionals available to receive and tender for

the opportunity to perform the work required.  (FM) then received the Sales Orders,

keyed them into the ERP and created multiple Purchase Orders to the various 3rd

Parties involved in delivering the work.

 

 

The future (which starts now)…

 

“TO-BE” – The Large Entity has now integrated into the (FM) ERP via the SAP Ariba

Network after negotiating a multi-year Contract to deliver Goods and Services

(based on predefined win-win terms and conditions).

 

(FM) has connected their ERP to the Large Entities ERP and now receive the Sales

Orders directly into the system, without having to re-key the request.

 

Pre-defined prices, quantities and scopes or work save any manual intervention.

 

(FM) now take the Large Entity’s Sales Order and convert it into a new Purchase

Order (based on predefined win-win terms and conditions) and transacts with their

Suppliers via the SAP Ariba Network.  (see Diagram insert below)

The Suppliers are delivering the Goods and executing the Services which are recorded via a Goods Receipt and/or Service Entry Sheet.

 

So the end-to-end Sales to Procurement to Pay cycle is occurring with the SAP Ariba as the Enabler.

 

If you would like to know more, please engage with your CEx.

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  1. Darrow Weiss

    Mr Hunt’s brilliant example of an integrated buyer/seller concept is one that SAP Ariba should be exploring and exploiting further—especially with all their recently announced solution innovations for services, direct materials, supplier collaboration, open API’s, ConnectOne, etc.

    In other words, the opportunity for SAP Ariba here is to stop banging their collective heads against the same wall of selling Ariba and the Ariba Network almost exclusively to buyers and not to suppliers. In reality, it’s the suppliers Whot are paying the majority of the network fees, not the buyers. So, why are there thousands of resources focused on supporting buyers and only scores of resources on supporting the sellers? Probably because that’s how the incentive model works today. Well, maybe it’s time for a change or at least a variation of that tired model.

    Moreover, buyers’ budgets are very constrained since procurement is seen as a operational cost center. In contrast, sellers/suppliers have large discretionary budgets today designed to attract more new customers and commodities through marketing, advertising, entertainment, etc. SAP Ariba should be working more and directly with these suppliers to allocate a percentage of their sales & marketing budgets to fund an Ariba Network-based consortium of buyers and suppliers using Ariba (supplier) Discovery that links previously unrelated B2B trading partners already on the Ariba Network. This Ariba-based and -led consortium would act as an interface, so buyers and sellers can concentrate on their core competencies, products, and services—and leave the more mundane sales and procurement activities (catalog management, RFP and quote responses, order management, etc.) to the experts at Ariba vis a vis the Ariba Network and SAP Ariba’s best of breed software applications. If antitrust concerns can be overcome, this could be a veritable win-win-win model for buyers, sellers, and SAP Ariba. SAP Ariba should at least test this model operationally with a few medium sized sellers and a handful of medium sized buyers of a few competitive commodities or services as a proof of concept. I’d put money on it that all parties involved would generate more sales, savings, transactions, and efficiencies, in less time and effort, with fewer errors than today’s practices.

    How “disruptive” do you think this concept is?

    (1) 

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