6 reasons to choose a Best-of-Suite procurement solution

6 reasons to choose a

Best-of-Suite procurement solution

Best-of-Breed versus Best-of-Suite

November 2020

PUBLIC

Table of contents

Introduction 3

Greater Efficiency and Increased User Adoption 6

Quicker Deployments & Simplified Maintenance 8

User Adoption leads to Improved Compliance 9

Greater Effectiveness due to Integrated Master Data 10

Rapid and Sustained ROI 13

Lower Total Cost of Ownership 14

The trend toward deploying

integrated suites is a hot topic in

procurement. The Hackett Group

reveals that organizations are

moving toward a single,

integrated suite for source-to-

pay functions.The Hackett Group, Integrated Suite vs.

Best of Breed, May 2018

Introduction The value of Integrated Intelligent Spend Management

The next evolution in procurement is to run

an Integrated Intelligent suite of

procurement capabilities supporting all

spend across the entire end-to-end process

from Source to Pay. While some

organizations choose to optimize a few

steps within the process with multiple,

individual applications (best-of-breed),

SAP’s goal is to optimize all processes

across source to pay, including supply

chain collaboration with suppliers,

subcontractors and contract manufacturers

(best-of-suite). Our benchmarks show that

top-quartile companies have successfully

deployed this strategy for Intelligent Spend

Management.

For many companies, the digital transformation

of procurement plays a critical role in remaining

competitive and prosperous. Software plays a

pivotal role in executing – and accelerating –

this transformation

It is therefore important to choose the right

software to meet current as well as future

functionality needs while fully understanding

the cost implications of each option.

Evaluating procurement solutions and deciding

which to entrust with your transformation is a

tremendous responsibility. After all, if done well,

the chosen solution can result in cost savings

and process improvements across the entire

value chain.

In a fast moving and agile world, efficient

management and a conscious choice between

best-of-breed and best-of-suite becomes

critical.

This document aims at explaining why

digitalizing source to pay with fully

integrated, end-to-end processes,

governance, and user experiences can

bring substantially more value to your

organization than a best-of-breed approach.

3 | ©2020 SAP SE or an SAP affiliate company. All rights reserved

The arguments for

moving to an

integrated suite

are compelling

The Hackett Group,

Understanding Integrated

Suites, May 2018

IntroductionTransformation Journey

Procurement Transformation

Integrated suites should be considered

within the broader context of how the

business will be affected by the

transformation associated with the

technology.

The role of procurement becomes more

strategic, and an integrated process results in

faster time to adopt to changing markets

conditions.

A simplified technical landscape just makes a

lot more sense when the goal is digital

transformation of procurement.

Changing role of Procurement

The role of procurement is moving beyond

transactional toward value creation through an

enterprise-wide alignment of business

processes and systems. Procurement

nowadays is involved from the early stages of

product design to client delivery. With SAP’s

integrated suite these end-to-end processes

are supported. On top of this SAP also

supports collaborative design over the Ariba

Network.

Procurement has an imperative to do more with

less, and therefore has to transform by

completely changing the output it’s delivering to

the business. The technology that best

supports this procurement transformation

should be easy-to-use, work consistently from

end-to-end, and not require additional effort to

implement across different skillsets or

technical, organizational, or change

management requirements.


“84% of Procurement leaders

consider digitalization important

to improve procurement

performance” SAP Ariba CPO Survey 2019

83% of respondents

believe digital

transformation will

be impactful but only

5% of respondents

have highly

automated processesSAP Ariba CPO Survey

IntroductionRealize the benefits of fully integrated processes

To achieve digital transformation, the role of procurement is changing, moving beyond

transactional toward value creation. It becomes more strategic, and an integrated

process results in faster time to adopt to changing markets conditions. A digital

source to pay transformation journey with fully integrated, end-to-end processes,

governance, and user experiences means your organization can achieve:

▪ Greater efficiency and increased user adoption: Since users engage with a standard

interface across all applications, they can more quickly adapt to change and execute day-

to-day tasks faster and with fewer errors resulting in greater user adoption.

▪ Quicker deployments and simplified maintenance: The native, prebuilt integration in

SAP solutions provides one of the fastest, most assured deployments with the least risk.

▪ User adoption leads to improved compliance: Easy-to-use software, having one

taxonomy and usage of the same KPI encourages greater user adoption and, in turn, more

control and compliance.

▪ Greater effectiveness due to integrated master data: True integration and optimized

data from one and the same data model deliver complete visibility, stronger collaboration,

and reliable KPI reporting across the source-to-pay process. The emergence of big data

and cognitive technologies such as AI and ML are helping to enhance this effectiveness.

▪ Rapid and sustained ROI: With built-in inter- and intra-suite integrations across the

source-to-pay process, you can see a fast return on your investment while significantly

reducing costs.

▪ Lower total cost of ownership: Savings are generated when you employ standard, native

integrations and avoid third-party integration, maintenance, upgrade, and middleware costs.


Greater Efficiency and Increased User Adoption


18% lower

Procurement Cost for

organizations where

the procure-to-pay

process is managed

end-to-end with a

single point of

accountabilitySAP Performance

benchmarking 2020

Change ManagementDifferent approaches to end-user training

and support as well as supplier

communication and enablement can

greatly influence the adoption. A coherent

change management approach is key and

easier to execute in a best-of-suite

approach.

Supplier adoption

With SAP suppliers have one way of

collaborating with all trading parties (one-to-

many) over the Ariba Network. This leads to

high supplier adoption and greater efficiency

compared to having one-to-one EDI

connections for example.

User experienceIntuitive user experience and best practices

leads to better adoption and improved

results.

An efficient working environment where the

integrated functionality is robust, leads to

greater productivity and in turn satisfied users,

suppliers and partners. The next page

describes in more detail how best-of-suite

facilitates efficient source-to-pay processes.

These functionalities can only exist in a best-of

suite approach and are absent in a best-of-

breed approach.

Adoption risk

User adoption is more difficult when you have

multiple systems and different levels of

integration. Especially if you’re rolling out the

technology in multiple locations globally or

even nationally.

Since users engage with a

standard interface across all

applications, they can more

quickly adapt to change and

execute day-to-day tasks faster

and with fewer errors.

How best-of-suite facilitates efficient Source-to-Pay processes

• Requirements definition: Integrated suites

can improve access to internal supply and

third-party market analytics (e.g., category-

specific data sets, index data) to profile

current demand as part of spend and supply

base analysis.

• Supplier identification: Integrated suites

can provide supplier discovery capabilities

for identifying new and potentially untapped

supplier sources to meet business requests

or other corporate requirements (e.g., small

business, supplier diversity, risk or

sustainability).

• Supplier certification: Integrated suites

with supplier lifecycle management can

improve coordination of program-managed

supplier certification, risk and qualification

activities for key stakeholders, whether

performed before or after sourcing execution

process or downstream as a part of

purchase-to-pay.

• Contract creation: Expanding capabilities in

contract creation (to accommodate contract

and compliance management that includes

full creation of greenfield contract language)

allows for significant negotiations and

modifications in contract language, and

management against government and

regulatory oversight.

• Advance notice of certifications or

requirements that may expire prior to a

sourcing event.

• Establishing sourcing award criteria such

as supplier bidding details and supporting

documentation that integrates and is linked

to contract information in the system during

contract creation.


Source: The Hackett Group, Understanding Integrated Suites

0,3 days Requisition-

to-order cycle time

for top quartile

organizations because

efficiency increase the

speed of transactionsSAP Ariba’s Benchmark

Program, 2020

Quicker Deployments & Simplified Maintenance


Is it easier to deploy, manage, and

maintain multiple systems from

different vendors with different

contract terms, or just one system?

Only 38% of

companies globally

somehow use

Business Network

today CPO Rising

Self-service suppliersQuicker deployment is also enabled by

SAP’s supplier enablement process. SAP

has a global team dedicated to supplier

enablement which is included in the

services.

The goal is to make digital collaboration with

suppliers fast, simple and business relevant.

Suppliers can choose to interact with you in

the way that best fits their need. This self-

service model for suppliers makes it possible

to interact with all your suppliers from day

one.

Deployment RiskA best-of-suite procurement solution simplifies

software deployment, maintenance and

management. Obviously, having multiple

applications is adding complexity which needs

to be managed and maintained by different

vendors.

Deployment or implementation risk is a

principal area to consider in the best-of- suite

versus best-of breed discussion. To determine

deployment risk, consider if one or more of the

providers you are considering will increase the

potential for the implementation to run into

difficulty or need to be repeated. One example

would be with a fragmented approach where

the software, the implementation, and related

support services are all sourced from different

providers.

The native, prebuilt integration in SAP

solutions provides one of the fastest, most

assured deployments with the least risk.

User Adoption leads to Improved Compliance

User Compliance

Easy-to-use software encourages greater

user adoption and, in turn, more control

and compliance. SAP’s integrated source-

to-pay suite helps ensure user, contract and

supplier compliance.

The key is to make the procurement system so

accessible and user-friendly to end users that

they will comply. Give users one system to use

that enables them to get what they need when

they need it, and they’ll use it. On the contrary,

a multi-tool application relinquishes centralized

command and control, and in fact runs the risk

of system proliferation because users can

choose

User, contract and policy compliance

Internal compliance with preferred supplier

contracts through an easy-to-use, prescriptive,

and well-aligned source-to-pay process

supported by policy.

User compliance is also enforced by showing

the same screen types to users, having one

taxonomy and the same KPI”s in place

because users do not need to switch from one

application to another.

Supplier compliance

Supplier compliance is derived from eliminating

invoice errors that would otherwise result in

paying more for goods or services than

specified in the PO or contract. Smart Invoicing

from SAP requires suppliers to correct invoice

exceptions (defined by your organization) prior

to transmitting to your AP team.

The Ariba Network will act as a firewall to drive

supplier compliance to negotiated terms and

stop erroneous invoices.


89% of top quartile

organizations manage

supplier compliance

through contracts

and catalogs based

invoicesSAP Ariba’s Benchmark

Program, 2020

Greater Effectiveness due to Integrated Master Data

Operational and transactional

data should compose one and

the same source

True integration and optimized data deliver

complete visibility, stronger collaboration,

and reliable KPI reporting across the

source-to-pay process.

With the more influential role of procurement,

many more contact points have been created

along the value chain, one of the results of

which is the creation, collection, and analysis of

a wide range of data. By leveraging data from

throughout the enterprise - from spend to

supplier contracts - procurement is providing

deeper insights that are driving critical business

decisions.

Procurement has struggled for decades trying

to make sense of data that is divided among

different systems. Does it make sense to have

your operational data and your transactional

data in different places? That’s essentially what

a best-of-breed approach guarantees.

Integrated master data across

systems

The key to getting the most value from (big)

data is ensuring data uniformity; that is, having

all the data in one place. Multiple coexisting

software applications cannot achieve this - at

least, not easily. After all, what is more likely to

give you access to the intelligence buried in the

data - a single data environment, or a whole

series of different, disconnected technologies

you then need to pull together to get some kind

of central data system?

Having a single, unified system that can

capture and analyze data is important. The

technology should provide the ability to

process, link, and manage complex sets of

data from all sources, while pulling out

business-critical intelligence to help drive

decision-making. Using multiple tools to pull

and analyze only multiplies the number of

software issues that can arise.


31% lower time to

create new reports

for organizations

where business and

operational analysis is

based on a single

source (integrated

data model).SAP Performance

benchmarking 2020

Best-of-Suite use case example of Sourcing Intelligence

The emergence of big data and cognitive technologies such as Artificial Intelligence (AI) and Machine Learning (ML) are helping

to enhance the procurement process, and are becoming central to how procurement is defining itself. Here are two examples of

how AI and ML drive Sourcing and Catalog Intelligence.

Use case 1. Sourcing intelligence: provide buyers with the knowledge and insights to structure & execute the right

sourcing event at the right time with the right suppliers, for the right duration


Best-of-Suite use case example of Catalog Normalization

Use case 2. Catalog Normalization: content/attribute normalization for better search results and richer content. Exploring

additional areas such as item normalization (for recommendations), visual recognition, etc.


SAP Product Catalog Normalization

Challenge

• Supplier catalogs on the Ariba network specific to each

buyer has resulted in a highly de-normalized dataset

• Lack of high quality attributes leads to a sub-optimal

buying experience.

• Enforcing suppliers to enrich data with more attribute

information would negatively impact the attractiveness

of using Ariba for selling good & services

Solution

• Identify high quality attributes using the information

uploaded by suppliers as a part of the supplier catalog

• Consolidate “similar” attributes for products to improve

the product search and drilldown capabilities

• Automate 80% of the attribute mapping for data

normalization with 20% manual intervention if required

Audience

• Buyers purchasing goods using the Ariba network

• Suppliers uploading catalogs on the Ariba network

Benefits

• Increased buyer spend visibility per category

• Enable the combination of the SpotBuy and catalog

buying solutions within Ariba

• Simplifies the catalog uploading experience for the

suppliers

• Reduce manual input to map the attributes of

products by automating the catalog normalization

process

Unique value proposition

• Significantly improve the buying experience on Ariba

• End state goal is to be the “Amazon” for B2B in

terms of the buying experience

• Ariba is responsible for the quality of the catalog and

the product attributes uploaded on the Ariba network

Rapid and Sustained ROI

No Delayed Realization of

benefits

While not a cost in the traditional sense, a

delay in realizing the positive outcomes of

digital transformation can absolutely impact the

bottom line. When your implementation is

delayed, that time is gone – and so are the

potential savings. Every month that your

system is not yet live is a month that you are

not gaining the anticipated savings, which

justifies your company’s investment.

Integrated suites take less time to implement

and result in a rapid return on investment

compared to a greater chance of delayed

benefits with a best-of-breed solution.

Integration leads to rapid and

sustained ROI

With built-in integrations across the source-to-

pay process, you can see a fast return on your

investment while significantly reducing costs.

This is not a one time benefit, SAP sustains

that ROI over the years of usage.

To sustain the savings over the years and drive

savings beyond cost reduction, organizations

should identify additional value drivers that

matter to the organization and stakeholders

beyond sourcing savings. This may include:

stakeholder satisfaction survey and ratings,

involving procurement in new product

development, measuring cost avoidance or

additional operational cost benefits (inventory

reduction, etc.)Not all costs are obvious. What

benefits or potential gains will you

miss out on if you choose one

option over another?


Top quartile

organizations achieve

13% sourcing

savings a year by

conducting more

competitive sourcing

events

SAP Ariba’s Benchmark

Program, 2020

Lower Total Cost of Ownership

Total Costs

Savings are generated when you employ

standard, native integrations and avoid third-

party integration, maintenance, upgrade, and

middleware costs. Also, organizations need to

dedicate a lot less in terms of change

management, IT resources, and training if they

choose a connected solution from a single

provider.

It may seem cheaper to choose multiple

individual applications, but keep in mind the

costs of switching, implementation, training,

and maintenance, all of which are unique to

each application at best, definitely

unpredictable.

The biggest contributor of the total cost of

ownership is the cost of integration, both

directly and indirectly, and how large an impact

it can have on your ability to drive bottom line

benefits.

Native integration and TCO

Native integration provides faster time to value

by removing the need for after-the-fact

connections and related costs.

The graphic on the next page illustrates why

integration can be so important and why it is an

essential part of the TCO calculation.

There will always be some cost to integration.

When we look at the biggest contributors to

that cost, however, we see that eliminating

paid middleware, reducing complexity and

resource requirements, speeding up

benefits realization, and minimizing

ongoing integration maintenance can yield

huge TCO benefits.

.


27% lower

Procurement Cost

for organizations that

use an integrated

platform for direct,

indirect and services

procurement

SAP Performance

Benchmarking, 2020

Total Cost Example of Third-Party Procurement Integration

* Source: SAP Best Practices and data based on customer discussions, 2020

When the spend process integration

bill comes in, will it add up?

OR

Typical third-party integration cost

drivers:

• Implementation of third party

integration

• Maintenance of third party integration

• Middleware cost

• Delayed business benefits due to third

party integration


Will you be paying for

hidden costs over time?

Will your subscription

set you up for success

from day one?

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Documents

6 reasons to choose a Best-of-Suite procurement solution