With the evolving COVID-19 crisis, customers have to deal daily with emergency needs, for instance, to get fast access to the right suppliers, to identify risks and also look for alternative sources. They have the duty to prepare the ground for recovery and, of course, they must support economic activity and profitability as well. Regarding all these points, procurement is crucial to navigating these COVID-19 challenges.
Ariba overview
SAP Ariba is a cloud-based procurement solution that fully digitalizes, automates, and streamlines the procure-to-pay life cycle. It provides transparency and efficiency across the process. It helps buyers and suppliers to connect the world’s largest collaborative network of vendors and suppliers and do business on a single platform.
SAP Ariba Cloud is a suite of solutions such as:
- SAP Ariba Buying
- SAP Ariba Buying and Invoicing
- SAP Ariba Invoice Management
- SAP Ariba Sourcing
- SAP Ariba Contracts
- SAP Ariba Discount Management
- SAP Ariba Supplier Risk
- SAP Ariba Supplier Risk
- SAP Ariba Supplier Lifecycle and Performance
- SAP Ariba Spend Analysis
- SAP Ariba Supply Chain Collaboration for Buyers
- Ariba Network
- SAP Fieldglass Services Procurement
Why Ariba?
The SAP Ariba as a very powerful marketplace and trading platform connecting buyers and suppliers to provide the right environment to really focus on the strategic elements in procurement.
Next important element, that we see on a daily basis, is the automation. Automation is something that drives us every day, and the procurement function today is probably having strategic tasks, operational tasks, some tactical activities. What automation does, it is fairly simple: It is eliminating the operational, administrative task as well as some tactical tasks. And by that the procurement function might become a little bit smaller but very powerful. The most important part which Ariba focuses is the strategic side – by adding new functions like data architects or data scientists to the function and automating all the rest. The automation does not stop in the procurement function. It really goes further. It is the operational side of procurement, so the purchase order creation and the entire transactional process behind that. But it is also one thing more. It is really looking into the finance side. When the supplier receives a purchase order, sends it back with an invoice, it is only a file that gets sent back. And basically, it gets paid automatically as soon as a goods receipt is in the system. This is a very powerful information and automation.
Ariba provides a centralized, comprehensive platform for managing all procurement activity, from strategic sourcing to invoicing. It has the ability to easily onboard and engage with suppliers in the Ariba Network. Customizable approval workflows are designed in Ariba to reduce the risk of maverick spend. It helps in easy integration with software like Concur, Travel & Expense solutions.
Comparison between SAP ERP and Ariba
On an SAP ERP system, procurement ideally runs on a on-premises system with HANA in-memory database such as SRM. Procurement can also be independently run-on cloud solutions with Ariba with the main focus being connecting buyers and suppliers. And this is what differentiates Ariba with other procurement software. SAP Ariba can manage a very large contracts and a lot number of suppliers. The system can be accessed by users ranging both from a diverse variety of functions as well as roles in terms of need for looking up, editing, or executing contracts when compared to SAP ERP on-prem. Ariba systems are more user friendly than SAP as SAP ERP does not have all the interactive functionalities that Ariba has, such as the approval flows, easy screen navigation etc. It is also much easier to train users to use Ariba system than it is to use SAP. Ariba is also more affordable than the SAP licenses. The entire implementation timeline for Ariba is drastically reduced and is as little as 8 to 10 weeks which allows users to start working with the solution early on and tangible results can be seen immediately.
Transformation with SAP Ariba and S/4 HANA
Digital transformation of procurement can be successful when both the business processes and procurement processes goes hand-in hand. For the customers who are on S/4 HANA, SAP has provided integration options with Ariba and S/4 HANA both on premise and cloud systems. On premise integration is done using IDocs and BAPI calls and cloud integration using SAP Ariba Cloud integration Gateway. Since Ariba focuses on purchasing, and S/4 Hana connects entire supply chain, now the integration provides the combination of the one end-to-end experience of procurement. With this the supplier can have just one portal for all of his work he does with vendors, in an end tier. So, in a multi-tier delivery chain, this vendor portal manages all the complexity for the supplier. That’s adding not only to a customer a value, but it is also adding to the supplier, and it is then, ultimately adding to the business value. The integrated Ariba and S/4 HANA system allows customer to establish a central procurement organization, dealing with strategic tasks, whereas the operational tasks are executed locally, be it in the plants or be it in different regions. That is usually how a large procurement organization would like to set up their organization.
There are customers using SRM systems that are also connected to multiple ERP systems and also create central contracts and could distribute it to the back-end systems, and purchase requisitions that were residing in the ERP systems could be uploaded to SRM in order to be sourced. But looking the way forward, the SAP business suite has an end of maintenance, 2025.
Conclusion
It is very important for the procurement function and supply chain function to adapt fast to the latest innovations because this is what is the absolute key to be competitive and to be successful in the future.
New supply chain collaboration features should be used that extend Ariba Network beyond purchase order and invoice collaboration to supply chain processes. There are Supplier self-services processes in SAP SRM that are not only slow and costly but also paper-based and error prone processes which should be replaced by automating operational procurement with supplier collaboration over Ariba Network. Invoicing, payment, and discounting processes should be automated through Ariba Network. Thus, customers are recommended to transform their existing landscape into the new digital transformation landscape.