| Status | |
| Owner | RUSNAK-ext, Peter |
| Stakeholders |
Issue
The purpose of this Key Decision Document (KDD) is to elaborate on the solution recommended to manage indirect procurement process on the new S/4HANA Cloud Private Edition SAP ERP system.
Recommendation
Summarise the recommendation being made for the reader, leaving the pro/con evaluation and exact decision-making process to the subsequent sections.
Background & Context
Currently, all indirect purchases for both goods and services are handled in SAP SRM7 that works with both ERP systems. EZBuy platform that is built on top of SRM7 offers an “Amazon like” experience and serves as the gateway to Ariba Catalogs. Here, shopping carts for non-stock catalog items are assembled and then sent back to SRM7 for the approval and ordering processes to proceed.
Ariba Catalogs are utilized by 14 countries, encompassing a total of 200 internal non-stock material catalogs and 140 punchout catalogs.
Bellow is the architecture of the existing procurement solution. EZBuy is just a frontend, the whole business logic and data are in SRM7.
Assumptions
Clearly describe the underlying assumptions which informed or limited the choices available, or impacted the decision: cost, schedule, regulatory requirements, business drivers, country footprint, technology, etc. Include links as necessary. This section is important because a future change in circumstances might invalidate some key assumptions, which then prompts a decision to be revisited.
Constraints
Capture any constraints or limitations inherent to the recommended option. This could be aspects which, if changed or removed in future, could cause the decision to be revisited or invalidated. For example, a constraint might be that a new product has significant gaps in important functionality, which caused an older alternative to be recommended. If those gaps are closed in future, this might cause the decision to be invalidated.
Impacts
Describe the impact of the decision on other aspects such as other processes, infrastructure, other SAP modules or systems, data cleansing and migration, developments, automations, interfaces, in-flight projects, etc.
Business Rules
The decision may translate into business rules which enforce the decision and will require configuration. List these business rules here. For example, "An Outline Agreement cannot be created via the RFQ process. An awarded RFQ can only result in a Purchase Order".
Options considered
Indirect procurement, which involves the acquisition of goods and services that are not directly incorporated into a product being manufactured, can be managed through various solutions, each with its own set of features and capabilities.
Option A: SAP SRM 7
SAP SRM 7 is a legacy procurement solution designed to optimize the procurement process, focusing on supplier collaboration and efficiency.
However, it is reaching the end of its lifecycle and it is not natively included or specifically designed to run as part of the S/4HANA suite. Its Shopping Cart functionality was replaced with the S/4HANA Self-Service Procurement functionality based on the Purchase Requisition document.
Option B: SAP S/4HANA MM
SAP S/4HANA MM is part of the larger SAP S/4HANA Enterprise Resource Planning (ERP) suite, offering comprehensive materials management and procurement functionalities. It is designed for businesses looking for an integrated solution that covers all aspects of their operations, including procurement.
- Integration: One of the key strengths of S/4HANA MM is its deep integration with other modules within the S/4HANA suite, such as Finance (FI), Controlling (CO), Sales and Distribution (SD), and more. This integration facilitates seamless data flow across departments, enabling more efficient operations and decision-making.
- Functionality: S/4HANA MM provides a wide range of procurement functionalities, including purchase requisition, purchase order management, vendor management, inventory management, and invoice verification. It supports both direct and indirect procurement processes.
- Analytics: Embedded analytics in S/4HANA MM offer real-time insights into procurement activities, helping organizations to monitor performance, identify bottlenecks, and optimize their procurement processes.
- Flexibility: While primarily designed for on-premise deployment, S/4HANA also offers cloud and hybrid options, providing flexibility to businesses in how they deploy and manage their ERP systems.
Option C: Procure to Pay with SAP Ariba Buying (1ZM)
SAP Ariba Buying is a comprehensive cloud-based procurement solution designed to manage the end-to-end procure-to-pay process. It offers a wide range of functionalities to automate and optimize procurement tasks.
Procure to Pay with SAP Ariba Buying combines the simple and elegant shopping experience and the user guidance of Ariba Buying and Invoicing with integrated business processes and data transparency of SAP S/4HANA Cloud as the digital core.
- Comprehensive Procurement Solution: It covers all aspects of the procurement process, from requisition to payment, including supplier management, contract management, and spend analysis.
- Customization and Control: Offers extensive customization options to tailor the procurement process to the specific needs of the organization. This includes custom workflows, approval rules, and integration capabilities with ERP systems like SAP S/4HANA.
- Collaboration and Supplier Management: Facilitates direct collaboration with suppliers through the Ariba Network, enabling efficient communication, negotiation, and performance tracking.
- Spend Visibility and Control: Provides detailed insights into procurement spending, helping organizations to identify savings opportunities and enforce compliance with procurement policies.
The following picture illustrates the process.
However, with the latest S/4HANA release this process became deprecated and will not be enhanced in upcoming releases.
Option D: Guided Buying with SAP Ariba Buying (2NV)
Guided Buying is an add-on capability to SAP Ariba Buying that focuses on enhancing the user experience by providing a simplified and intuitive interface for procurement tasks. It is designed to help users make the right purchasing decisions in compliance with company policies. It combines the guidance for requisitioners provided by guided buying with the proven procurement processes provided by SAP S/4HANA Cloud.
- User Experience: Guided Buying stands out for its user-friendly interface, designed to provide a consumer-like shopping experience. It guides users to the right items and preferred suppliers, making it easier for employees to purchase goods and services in compliance with company policies.
- Policy Compliance: Guided Buying helps enforce procurement policies by guiding users to approved suppliers and negotiated contracts, thereby ensuring compliance and leveraging pre-negotiated savings.
- Spot Buy Capability: Includes features like Spot Buy for handling non-sourced or emergency purchases by accessing a curated catalog of suppliers for immediate needs.
- Integration: While Ariba can be used as a standalone procurement solution, it also offers integration capabilities with SAP S/4HANA and other ERP systems, ensuring data consistency and process efficiency across platforms.
- Supplier Network: Ariba's extensive supplier network is a significant advantage, offering access to a wide range of suppliers and enabling competitive sourcing, supplier discovery, and collaboration.
In this scenario, employees create requests for catalog items, existing materials, planned lean services, limit items for material and service, or free-text items by adding them to a request in Guided Buying. Then the request is replicated to SAP S/4HANA Cloud, where a purchase requisition is created. In the request in Guided Buying, employees can see the document numbers of the follow-on documents that were created in SAP S/4HANA Cloud.
Evaluation
For organisations running SAP S/4HANA Cloud, Private Edition, the recommended indirect procurement solution is Guided Buying with SAP Ariba Buying (2NV) that combines the guidance for requisitioners provided by guided buying with the proven procurement processes provided by SAP S/4HANA Cloud.
While SRM7 and
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See also
Insert links and references to other documents which are relevant when trying to understand this decision and its implications. Other decisions are often impacted, so it's good to list them here with links. Attachments are also possible but dangerous as they are static documents and not updated by their authors.
