Paths to digital purchasing

The huge impact of digitization is evidenced by the triumph of smartphones: Within just a few years, the ability to communicate on the move has transformed all areas of users' lives - whether it's talking to friends or banking, consuming the news or Christmas shopping.

A similar situation can now be expected in the business world: here, it is primarily cloud solutions that are driving the digital transformation.

"Companies need to adapt by realigning their products, services, processes and business models, and putting existing IT systems and architectures to the test"

demands Jean-Paul Wehrens, who is responsible for strategic purchasing processes as Senior Partner at the IT consulting firm Apsolut and is a member of the Executive Board.

"Associated with this is the task of preparing employees and business partners for their future roles and responsibilities and making the corporate culture fit for the digital transformation."

IT becomes an impulse generator

Digitalization also requires a reorientation of purchasing. Among other things, this concerns the interaction with the IT department, as Wehrens emphasizes:

"With the advent of new technologies, the overall role of IT is changing - moving away from being a mere implementer to being an active idea generator, innovator and co-creator of the digital purchasing strategy."

This requires much more intensive collaboration between buyers and the IT department, which must be established through joint project groups or newly created positions.

Cloud services are increasingly coming into play here because they enable fast, flexible and cost-effective implementation of new purchasing solutions and are thus an important building block of the digital transformation.

In order for them to develop their full innovation potential, it is advisable to gradually integrate the cloud services into the existing procurement applications and combine them with modern on-premise solutions in hybrid scenarios until the legacy systems can be switched off completely.

In the SAP-based purchasing environment, it is primarily the cloud services of the new real-time ERP suite S/4 Hana and Ariba that are seen as the signposts for digitization (S/4 Hana is of course also available on premise).

How and when the new cloud-based purchasing solutions are introduced should be clarified by each company as part of a digital roadmap that is aligned with the corporate and purchasing strategy. Several organizational and technological aspects need to be considered.

Deadline 2025

With the end of maintenance for the releases of the core applications of SAP Business Suite 7 announced for 2025, the hour also strikes for SAP Supplier Relationship Management 7.0 (SRM).

From then on, users will no longer be provided with regular enhancement packages and security updates. They should therefore develop a concept in good time as to which operational and strategic purchasing processes will be handled in the future with which S/4 Hana or Ariba solution and when the individual transformation projects should be started.

This applies all the more in view of the rapid pace at which S/4 Hana and Ariba are currently being further developed: Those who do not face up to the digital transformation in good time will be left behind in a short time.

More performance, less costs

In this context, both the real-time ERP suite S/4 Hana and Ariba offer purchasing organizations a number of benefits. At the heart of S/4 Hana, the in-memory Hana platform greatly simplifies access to data structures, resulting in significant performance increases as well as better opportunities for ad-hoc reporting, analysis and simulation.

In turn, when using the cloud-based Ariba network, companies benefit from being able to collaborate with their suppliers more efficiently and effectively in the processing of quotes, contracts, orders, invoices and payments.

With more than two million participants, Ariba is the world's largest business and supplier network and provides purchasing organizations with a range of services via standard interfaces to digitize the entire purchasing process, saving time, money and resources.

User experiences like in the consumer world

Another powerful argument for switching to S/4 Hana and Ariba is the new intuitive interface technology SAP Fiori. It offers purchasing staff simplified, personalized access to all the procurement functions they need, on the move from any device.

The apps are integrated into individual launchpads with a tile look and enable user experiences that are otherwise only known from the consumer world.

This means that SAP Fiori meets the requirements of younger users in particular, who expect the same convenience from communication devices and applications in the company as they do when using them privately.

The companies themselves benefit from accelerated workflows and lower costs thanks to Fiori.

Systematic project management

When introducing the new S/4 Hana and Ariba functions for purchasing, a structured and efficient approach is decisive for the success of the project.

The first step should be to work with HR and IT managers to identify all stakeholders who will be affected by the anticipated transformation projects. These include not only purchasing and IT staff, but also users from other departments and selected suppliers.

The stakeholders should work together - for example in workshops - to define a digital strategy and a purchasing strategy aligned to it. This will result in fields of action for the digital roadmap and the strategic orientation of SAP-based purchasing in the following three to five years.

Jean-Paul Wehrens recommends that companies bring on board a consulting partner with extensive expertise and experience in purchasing based on SAP and Ariba:

"In our experience, most companies assess their digital maturity level much better than it actually is. In addition, many SAP users are currently very uncertain about which purchasing solutions they should rely on in the medium term."

That's why it makes sense to work with external specialists who can use systematic checklists to determine the digital status quo. Once the quick checks have been completed, each company will know where it currently stands with its systems, processes, employees and collaboration scenarios in the digital transformation and what transformation needs exist.

Change management required

To prepare the affected employees and business partners for the changed roles and tasks, management should initiate change management. The central building block must be a communications strategy that is aligned with the corporate, purchasing and IT strategies.

"This is the only way to ensure that digital transformation is also supported, for example, by employees who are less open to innovations"

Apsolut partner Wehrens points out. Another important task is to educate employees about the impact of digitization on their existing jobs.

"Only if it is made transparent which jobs are being eliminated and which new ones are being created can an atmosphere unfold that is open to digital transformation."