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Author's profile photo Amit Hundekari

SAP Service Procurement – Transforming from Complex to Collaborative user experience

-updated 21st October 2022 for S/4HANA 2022 Private Cloud(on-prem) release

Procurement of services is a complex business process. Comparing it with procurement of goods , professional buyers would attribute several factors contributing to the complexity as below,

– The nature of service demand, especially unplanned, e.g breakdown services

– Challenges in specifying, quantifying and itemising the services for example due to unavailable information or lack of subject matter expertise

–  Sequence of logically dependent services steps required,

– Difference in planned vs actual service outcome and cost variances,

– High collaboration efforts between planners and providers during service execution and acceptance.

With these challenges in center,  we have taken up to transform the external services procurement.  From the existing complex way of managing it, to a collaborative one.  We have transformed it from a mere buyer and supplier centric persona to a more engaging and holistic services supplier relationship management.

In the product equation , the SAP S/4HANA (both Public Cloud and S/4HANA Release 2022 Private Cloud is supported)  , focuses on sourcing, planning and ordering of services.  The business networks with Ariba Network and SAP Fieldglass, focuses on the building the business collaboration aspects of end to end service procurement process.

This blog is structured from the SAP solution perspective into two parts. Customers moving from ECC can structure their landscape transformation  to S/4HANA in these two distinct parts as well.

Part 1:  Service Procurement using SAP S/4HANA 

In SAP S/4HANA we have redesigned the services procurement by bringing a completely new buying experience, a harmonised product master, new architecture of business documents, as well as a total spend management analytics and reporting tool to the service buyers. We believe these features would take the complexity out of the user’s services buying experience and offer a transparency the service procurement process needs as compared to the previous release of service procurement ( ECC MM-SRV)

At the architectural level, since SAP S/4HANA 1708 Cloud Release, both material and services procurement is harmonised by sharing the same set of master as well as transactional data.

The new service procurement in S/4HANA is named “Lean Services Procurement ” to distinguish itself from the ECC classic service procurement (MM-SRV) . The architecture of “Lean Services Procurement ” differs significantly from the MM-SRV based services procurement.

The Terms “Lean” signifies that the new Service Procurement focuses on the concepts of lean management principles thereby avoiding waste and in-efficient way of data processing , and bring the value to customers.

With the 2022 Release of SAP S/4HANA , we support

  • Lean Service Items with Free Text or with Service Product Master
  • Lean Enhanced Limits (for material and service both)
  • Lean Service Performer
  • Lean Service Start and End Dates
  • Lean Item Hierarchy with upto 5 levels of  item hierarchies in business objects , model product specification ,  purchasing contracts, purchase requisition and Purchase Order . A Item hierarchy  is a hierarchical view of items in all the above documents . A hierarchy list can contain item sets and functional items arranged in a structured way.  A functional item can be a stock /non-stock material , a spare part, a service product or even material / service free text.
  • Lean Service item and Lean Service Limit item integration with Enterprise Asset Management Work order (e.g  scope items 4HH)

Details about how item hierarchies are supported in purchase contracts , please see the product blog Item Hierarchies in Purchase Contracts.

SAP ECC customers in asset intensive, maintenance and construction industries , had been using the SAP ECC MM-SRV based Service Hierarchies . These SAP ECC customers transforming to SAP S/4HANA can use the new item hierarchies.

For example , purchasers can create now purchasing contracts with up to 5 levels of item hierarchies. Also a migration of SAP ECC MM-SRV Contracts into new SAP S/4HANA Contracts with item hierarchies is supported. Migration Cockpit for MM-Purchasing contracts.

Here an example with two level item hierarchy.

After creation of contracts , users can send it for approval . Once contracts are approved and released , buyers can create call-offs.

One of the popular process has been procurement of unplanned services .Buyers typically have a dedicated supplier with contracts. Buyers define the budget they would like to spend on the services. Rest the supplier is well versed with what needs to be done.

Here  service requisitioners can create an “Lean Service Enhanced Limit Item” in a purchase requisition, and assign to the limit item a contract . This contract has now the item hierarchies with several services , spare parts logically grouped into it ready for consumption/call offs.

Once approved, the purchase requisition can be converted to purchase order and sent to the supplier.

The purchaser persona can now add Items from Item Hierarchies in Purchase Contracts in Manage Service Entry Sheets. Documentation

Following popup is displayed with the contract items in form of item hierarchies.

On pressing the add button, the functional contract items are added to the service entry sheet where the date and service performance hours can be added to submit the service entry sheet.

On approval of service entry sheet the invoice can be posted.

Further Business Process Integration points with other demand documents or casual requisitioning out of Catalogs and S/4HANA Lean Service Procurement can be found in following help documentation links.

  1. Ariba Guided Buying
  2. Asset Management
  3. Enterprise Portfolio and Project Management

Part 2 : Order Collaboration with Services Supplier.

For a precise specification and ordering of services,  communication with the services supplier is of prime importance. This demands for a seamless orchestration of IT tools used by all stakeholders along the service procurement process. For example , buyers, purchasers as well as supplier side service coordinators and service technicians all need to have access to a single source of truth.

With SAP ECC MM-SRV as central component for master and transaction data, little over the last two decades, customers have enriched their landscapes with partner or homegrown collaborative IT tools. These tools come in all shapes and sizes , from sharing order details with simple spreadsheets, PDF data and e-mail attachments all the way to Fax, EDI and custom made supplier portals for time sheets submission.

These tools did perform the expected tasks,  but they brought a break in the data flow and format of information, thereby  needing custom tools to integrate. Different tools bring with it for the end users a  visual as well as a structural break when exchanged between architecturally heterogeneous, custom developed IT tools. These custom tools also impacted the maintainability and upgradability of the whole landscape.

Research has shown that with every break in the buying experience user interface or custom integration in data, leads to a drop of upto 40% in user efficiency.

To address the above integration gap, and to provide an efficient flow of data across the E2E  business process , we provide now an out of box integration between the SAP Business Networks, Ariba and SAP Fieldglass, and SAP S/4HANA . For more details, please refer to the documentation below.

Service Procurement with Ariba Network and SAP Fieldglass (4R2)

One more important feature in contrast to SAP ECC MM-SRV is that the productisation of services described in part 1 above, now enables purchasing documents  to have a mix of goods, materials and services , with their expected where to deliver information  or service start dates. These purchase orders with SAP out of box integration , are seamlessly sent to goods and services suppliers as statement of work.

With statement of work representing all the order execution data at one place, service technicians can plan the execution of services and submit their timesheets and invoices requiring minimal to no out of tool communications with their buyers.

For customers/partners seeking guidance on whether to use MM-SRV in S/4HANA On-Prem or plan their move to new Lean Services Procurement and its Integration , here an important SAP Note to read the SAP guidance Note 3132075

Kindly share your feedback and thoughts regarding this post in the comments section below. If you have any questions, you can submit them here and follow the respective tag. You can also get in touch via the Community Page for SAP S/4HANA Sourcing and Procurement or the Influence Portal.

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      3 Comments
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      Author's profile photo Harsh Vardhan Satsangi
      Harsh Vardhan Satsangi

      good overview of how the services procurement is transforming in SAP

      Author's profile photo Ganesh Ramachandran
      Ganesh Ramachandran

      Great Amit. Thanks for the blog providing good overview of Services procurement. Services procurement together with SAP Business Networks, Ariba and SAP Fieldglass makes it more  powerful.

      Author's profile photo Franck DUPAS
      Franck DUPAS

      It's a great pleasure to see the advent of these innovations on which we have worked together these past years.

      Thank you for this great article.