Issue

The purpose of this Key Decision Document (KDD) is to elaborate on the solution recommended to manage the indirect procurement process, on the new S/4HANA system.

Recommendation

"Guided Buying with S/4HANA" is recommended as the indirect procurement process for Syensqo. This recommendation is based on several key factors, including a high degree of integration with S/4HANA, simplified and intuitive user interface for procurement tasks while ensuring policy compliance for everyday purchases, and the strategic alignment within the SAP ecosystem. It also permits catalog items to be called from Plant Maintenance Work Orders and for indirect spend for both PM and normal items to go through the same approval process.  

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.

During the fourth quarter of 2023, more than 90k Purchase Order (PO) line items were created, with 37% of these being catalog line items.

Below is the architecture of the existing procurement solution. EZBuy is just a frontend, the whole business logic and data are in SRM7. 

Plant Maintenance Integration - Catalogs

Currently there are two ways for users to create Purchase Requisitions for non-stock items (indirect materials, Services) for Plant Maintenance work orders: 

1. Use SRM7 and utilise the above catalogs to create pre-sourced item quickly and easily, but that only creates a financial charge to the WO 
2. Manually create the items in the Plant Maintenance Work Order and PM auto-creates the PR in SAP, but has to be sourced

Having two processes means that the investment made in 340+ catalogs can be used by PM users, but it leads to confusion and impacts on PM reports.

Requisitions created automatically by PM Work Orders are sent to SRM7 for approval by a customisation so that all approvals follow the same process. 

Assumptions

• Syensqo's future ERP system will be based on S/4HANA Cloud Private Edition. This is also subject to a separate KDD Technical Infra - Private vs Public Cloud vs On-Premise

Constraints

• The SAP SRM product is effectively deprecated; it will exit mainstream maintenance in 2027 and SAP have been for some time migrating its functionality into Ariba 
• S/4 HANA and SAP SRM cannot be installed on the same system.
• The procurement solution of S/4HANA is not a successor of SAP SRM and it has limited capabilities compared to SAP SRM.
• "Procure to Pay with SAP Ariba Buying and Invoicing" process is deprecated and will not be enhanced in upcoming releases. SAP recommends to use "Guided Buying Capability with SAP Ariba Buying" instead.
• Plant Maintenance Work Orders also generate Purchase Requisitions for indirect items. These will need to be approved by the same mechanism as  'normal' indirect spend.

Impacts

Implementing Guided Buying with SAP Ariba Buying can significantly enhance the procurement process, offering benefits in terms of user experience, compliance, efficiency, and cost savings. However, the transition requires careful planning considering factors such as change management, system integration, and user training to fully realize these benefits

• Change Management: Implementing a new system requires effective change management to ensure user adoption and to realize the full benefits of the platform.
• Integration: Integration of Guided Buying with S/4HANA cloud or other systems needs to be carefully planned to ensure seamless data flow and process continuity.
• Training and Support: While Guided Buying is designed to be intuitive, providing adequate training and support is crucial to help users navigate the new system and processes effectively.

Business Rules

Currently, no specific business rules have been identified. Further updates may be determined during the detailed design phase.

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 offering distinct features and capabilities.

The main objectives of indirect procurement are:

• Standardization: Standarized processes & tools are key to drive visibility, automation and compliance as basis for value delivery by procurement
• Transparency: Achieve full cost control and booking quality of our indirect spend: Where, When and How do we spend our money
• Compliance: Ensure compliance to policies, standards & negotiated contracts and eliminate maverick buying
• Efficiency: Reduce transaction time for all requesters / approvers / buyers and minimize manual effort with a digital easy-to-use purchase-to-pay process
• Savings: Drive active spend management through bundled and negotiated catalogs and services

In order to achieve these objectives and to enhance user adoption, it is essential to have an easy-to-use and intuitive tool with a simple UI that can guide thousands of casual users, helping them effortlessly find and purchase materials or services. 

Most users involved in indirect procurement are casual users who make infrequent purchases or functional users who buy on behalf of their departments. Since they are not professional buyers working with the indirect procurement system daily, they are prone to maverick buying if the tools they use are overly complicated and not intuitive.

Option A: SAP SRM 7 (As-Is)

SAP SRM 7 is a legacy procurement solution designed to optimize the procurement process, focusing on supplier collaboration and efficiency. This is what Syensqo uses as of 2024 with ECC. 

However, the SRM product is reaching the end of its lifecycle, with product support by SAP ending in 2027. Furthermore 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. This is thus not a feasible option for the future design. 

Option B: SAP S/4HANA Self Service Procurement Fiori App

SAP S/4HANA has a simplified Fiori App that acts as a shopping cart tool similar to SRM or Ariba Guided Buying. It is part of the larger SAP S/4HANA Enterprise Resource Planning (ERP) suite, offering catalog, non catalog and limit PO functionalities.

• Integration: The S/4 HANA Self Service Procurement app directly creates Purchase Requisitions in S/4 HANA itself. So one of its key strengths is its deep integration with other modules within the S/4HANA suite, such as Finance (FI), Controlling (CO)and more. 
• Functionality: S/4HANA App is a simpler and easier to use UI than SRM or the manual creation of Purchase Requisitions. In its standard state it is not as easy to use or as intuitive as Best Of Breed type solutions like Ariba, but the Fiori UI Adaption tools can be used to simplify and improve the user experience without creating a custom app and without significant development effort.
• SAP Fiori Standard: As a standard SAP Fiori App its use is included in the standard S/4 HANA licenses.
• Real-time data: Integration with SAP S/4HANA ensures that users have access to real-time data, improving decision-making and reducing the risk of errors.

Option C: Procure to Pay with SAP Ariba Buying

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. This process is represented by  SAP-standard scope item 1ZM . 

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, although this process is the most-frequently used by existing Ariba customers, the process became deprecated by SAP in 2020, and will not be enhanced in upcoming releases. It is thus also not a good option for the future. 

Option D: Guided Buying with S/4HANA

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. This process is represented by SAP-standard scope item 2NV . 

• 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.
• Plant Maintenance Integration: Guided buying can be integrated with the PM module and allow catalog items to be called from the Work Order.
• Approvals in S/4 HANA: This process allows approvals in S/4 HANA for indirect spend allowing the same approval setup to cover normal indirect spend and Purchase Requisitions from Plant Maintenance Work Orders.

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 and approved. 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.

The table below provides a snapshot of the key advantages and disadvantages associated with each procurement solution.

	Option A: SRM7	Option B: S/4HANA Self Service Procurement App	Option C: P2P with Ariba Buying	Option D: Guided Buying with S/4HANA
Pro	Comprehensive P2P functionalities Strong supplier collaboration Centralized procurement control High degree of customization	Standard SAP Fiori App No subscription costs Native integration with S/4HANA modules UI of App can be improved by Fiori UI Adaption tools	Scalable cloud-based solution Comprehensive P2P functionalities Collaboration with suppliers Spot Buy capabilities	User-friendly interface Enhances policy compliance Comprehensive P2P functionalities Spot Buy capabilities Tactical Sourcing capabilities Seamless integration with S/4HANA Integrates with PM module Allows Approvals on S/4 HANA
Con	Less intuitive user interface Not natively supported by S/4HANA Nearing end of life in 2027	Improvement on SAP standard offerings, but UI still best suited to users who understand SAP Requires effort to improve UI (but not a full scale enhancement) Will not likely meet same user experience and functionalities as Best of Breed, proven indirect procurement tools but a viable solution Missing Tactical Sourcing and policy compliance features	Learning curve for new users Ongoing subscription costs Deprecated by SAP since 2020.  Does not allow Approvals on S/4HANA	Limited customization for complex processes Ongoing subscription costs

Option A "SRM7" is not natively supported by S/4HANA and since SRM7 is also nearing end of lifecycle it is not recommended as a long term solution.   

Option B "S/4HANA Self Service Procurement App" brings deep integration with other S/4HANA modules together with simplified user friendly interface for both catalog and non catalog purchases, with no additional subscription costs, however lacks guided buying capabilities and policy compliance controls. 

Option C "P2P with SAP Ariba Buying" has been deprecated and will not be enhanced in upcoming releases and therefore it is not recommended as a long term solution. 

Option D "Guided Buying with S/4HANA" combines the advantages of option B and option C and adds additional capabilities that focus on simplifying the buying process and improving compliance with procurement policies. It also natively integrates with S/4HANA, however it comes with ongoing subscription costs. 

Evaluation

The decision matrix provided below offers a structured approach to evaluating and comparing four options for indirect procurement process in S/4HANA. Each option is assessed based on various criteria, including ease of use, learning curve for casual users, guided buying and spot buy capabilities, policy compliance controls, sourcing capabilities, long term support, integration, implementation costs, maintenance costs, and license and subscription fees. These criteria are assigned weights based on their relative importance to the decision-making process. For each option, ratings are assigned to indicate how well it meets each criterion. The ratings are then multiplied by the corresponding weights, and the weighted scores are summed up to calculate the total score for each option.

Based on the comprehensive evaluation using the decision matrix provided, for organisations running SAP S/4HANA Cloud, Private Edition, the recommended indirect procurement process is Guided Buying with S/4HANA that combines the guidance for casual users in Amazon like UI provided by Guided Buying with the proven procurement processes provided by SAP S/4HANA Cloud.

While all options have their merits and drawbacks, Option D demonstrates the highest overall ranking, indicating its overall alignment with the specified criteria and weighted priorities. Despite the higher maintenance and ongoing subscription costs, it offers numerous benefits to the indirect procurement process, including improved user experience, spot buy support and allows procurement organisations to scale self-service procurement across spend categories while enforcing compliance and potential cost savings, and avoiding maverick buying. In addition, Guided Buying can be integrated with PM and be called directly from the Work Order, allowing catalog items to be fully integrated with the Work Order and resulting in only one single standard process. 

Though Option B "SAP S/4HANA Self Service Procurement Fiori App" ranked very well. It provides notable benefits such as deep integration with other S/4HANA modules together with simplified user friendly interface for both catalog and non catalog purchases, with no additional subscription costs. However, it lacks guided buying and spot buy capabilities and policy compliance controls.

Option A "SRM7" is not natively supported by S/4HANA and since SRM7 is also nearing end of lifecycle it is not recommended as a long term solution, similarly as Option C "P2P with SAP Ariba Buying" that has been deprecated and will not be enhanced in upcoming releases and therefore it is not recommended as a long term solution. 

See also

Document explaining Guided Buying integration to PM Guided Buying in S/4 HANA

Change log

Workflow history