“The Future of Procurement – how organizations are transforming today”
Nilgun Atasoy, Head of SAP Ariba in Austria and Central & Eastern Europe
You work with many companies all over the world. Could you please share with us some of the trends you see in Digital Supply Chain and Procurement for 2018?
Ten years ago, procurement was a tactical, manual process. Today, it is a strategic, digital function that is driving business transformation.
Gone are the days when procurement is a dreaded, complicated process involving lots of paper, time and frustration. Today, thanks to technology, buying things at work is as simple as buying them at home.
According to a recent survey of over 600 companies, 52 percent of the average procurement organization’s time is spent on transactional activities such as managing purchasing orders (POs), sourcing events and contracts, reconciling invoices and tracking payments. Most organizations have automated at least some of these core transactional activities. But many are now tapping into new technologies to take things to the next level.
Intelligent technologies such as machine learning, artificial intelligence and cognitive capabilities have the potential to make procurement smarter and easier than ever. In embracing them, procurement organizations can perform transactional activities at much greater speed, lower cost, and higher accuracy. More importantly, they can make smarter, more informed decisions and operate in more efficient, collaborative and datadriven ways that deliver value to the business beyond just cost savings.
Leveraging intelligent technologies – think SAP Leonardo and IBM Watson – companies can combine insights from procurement data and unstructured information to predict and respond more effectively to customer and market demands. They can also open new approaches to connecting people and information – all of which will fundamentally change how buying and selling get done.
A digital procurement assistant combined with machine learning, for instance, can completely transform sourcing events by helping with tasks such as defining the correct Request for Proposal type, identifying appropriate suppliers to participate based on commodity category, region or industry and delivering intelligence on market signals and pricing pressures to optimize results.
Contracting can also become smarter and more comprehensive with applications that automatically identify relevant terms and conditions matched to legal library and taxonomy, uncover similar contract terms for a specific commodity by industry or region based on benchmarking data and suggest optimal prices to target based on expected volume and contractual discounts.
The road to intelligent procurement has been paved and companies that get on can drive real value. But doing so will require change. Procurement will fundamentally need to rethink what it does and how it does it. Procurement professionals will need to more closely align with business teams, and their work will draw heavily on analytical insights. All of this will require newer skills in data science and analytics, risk management, and collaboration.
What is SAP Ariba in a nutshell and why is it a market leader?
In a nutshell, SAP Ariba is how companies connect to get business done. It is the marketplace for digital business, creating simple, intelligent exchanges between millions of buyers and suppliers.
To elaborate, more businesses are connected on the Ariba Network than any other network on the planet. In fact, more than three million companies in 180 countries use SAP Ariba to connect and collaborate around nearly $1 trillion USD in commerce annually. Our market-leading solutions enable companies to simplify collaboration with their trading partners, make smarter business decisions and extend their collaborative business processes with an open technology platform.
Through our business network and comprehensive source-to-pay applications, companies can redefine the source-to-pay process and transform their business. Buyers can efficiently create intelligent connections with millions of suppliers and build a dynamic, healthy supply chain. Sellers can create profitable connections with buyers who are ready to buy and efficiently manage both their sales cycle and cash flow.
Think of us as the Facebook and Ebay for business. Every day, billions of consumers around the world use the site to manage their personal connections, to buy, sell and pay. The very same things a company can do on the Ariba Network: manage relationships, offer good’s and services, buy goods and services and pay. You can even do auctions, just like on Ebay. Millions of companies do this already. You can also rate your business partner and in the future trace and track the goods you ordered or sold. Everything a business needs on a single, integrated platform.
Give us 3 key takeaways how SAP Ariba would transform the
operations of a Czech company.
The journey to digital procurement is different for every company. But it all starts with process automation. Three key takeaways:
1. Start by digitizing things like sourcing, ordering and invoicing. This can drive between 10 percent and 15 percent savings on average.
2. Move to leveraging intelligent technologies that enable companies to dissect their data and make more informed decisions. Another 5 percent to 15 percent in savings becomes possible.
3. When you factor in the efficiency and effectiveness that digitization brings, these numbers become even higher.
Is SAP Ariba applicable to the Czech market, then?
Yes, of course. SAP Ariba is the business network of choice for companies all around the world. Any company in any country can benefit from digitizing procurement and connecting to the largest business network on the planet.
The benefits to buyers and sellers include:
• Lower costs – 1% – 8% reduction in supply chain costs and a 60% reduction in operating costs, on average.
• Greater efficiency – 50% – 75% faster transaction cycles, with many customers achieving >90% fully automated (“touchless”) transaction processing.
• Real-time process transparency and greater data accuracy – 60% improvements in order accuracy, reducing risks for stockouts or the need to stockpile excess inventory.
• Improved working capital performance — 50% improvements in discount capture with suppliers and 20% faster payment cycles with customers.
• Increased sales – 5%-20% revenue increase with new customers and 30%+ greater share of wallet with existing customers.
• Better customer retention –15% improvements in customer retention rates.
Are there any Czech customers of SAP Ariba?
Yes, in fact numerous Czech companies are already connected to Ariba network, and we hope to see this number grow as businesses in Czech Republic are starting to recognize the strategic importance of digitizing procurement.
You have some local competitors. How do you differentiate SAP
Ariba from your competitors?
The Ariba Network is the world’s largest, most global business-to-business network connecting more buyers and sellers around more commerce than any other network on the planet. More than 3 million companies are connected to the Ariba Network and use it to transact over $1 trillion USD in commerce annually. That’s more than eBay, Amazon and Alibaba combined. In addition, unlike many providers who deliver point applications that address pieces of the procurement process, we deliver a single, unified platform from which companies can manage their entire source-to-settle process across all categories of spend from end to end. And perhaps most important, our cloud-based applications connect seamlessly to SAP and other ERP systems so that companies can maximize their investments and extend the value that they deliver.
What is next for SAP Ariba?
In 2017, SAP Ariba announced a partnership with IBM to deliver cognitive procurement solutions that will redefine the source-to-settle process. Leveraging SAP Leonardo, IBM Watson technologies and SAP Ariba, the solutions will bring intelligence from procurement data together with predictive insights from unstructured information to enable improved decision making across supplier management, contracts and sourcing activities. Look for these in 2018. SAP Ariba will also be introducing new Artificial Intelligence and Machine Learning capabilities within its sourceto-settle applications in the first half of the year.
This spring we will host SAP Ariba Live in Amsterdam, the premier gathering of procurement professionals from across the EMEA region. The event takes place on April 23-25 2018 at the RAI Convention Center. To register, please visit www.aribalive.com