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SAP To Take Care Of All Suppliers

Written By: Predrag Jakovljevic
Published On: January 21 2002

Event Summary

On January 9, SAP Markets, Inc., the Internet exchange applications providing company of the SAP AG group of companies (NYSE: SAP), which is a leading provider of business software solutions, announced the availability of mySAP Supplier Relationship Management (mySAP SRM), an SAP Markets solution designed to manage supplier relationships in a comprehensive manner that should improve the competitiveness and profitability of a value chain.

According to the company, currently, due to technology and resource constraints, companies invest heavily in streamlining relationships only with their leading suppliers. Thus most of the supplier relationships today are effectively not managed. This lowers the compliance of the supply to an established standard which puts the supply at risk, while higher turnover hinders efficient supplier selection. Therefore, supplier relationship management (SRM) is possibly the fastest way to lower costs and increase profits. With mySAP SRM, companies can reportedly extend proven business processes to all suppliers for all purchased goods and services to create value-driving, collaborative relationships for mutual benefit.

mySAP SRM builds on and supersedes the mySAP E-Procurement offering, which has more than 1,200 customers worldwide and leverages the newly announced mySAP Technology (see SAP Opens The 'Miss Congeniality' Contest). mySAP SRM is designed to provide a holistic view of all supplier-facing relationships through open integration with both SAP and non-SAP (third-party) supply chain management (SCM), customer relationship management (CRM), product lifecycle management (PLM) and enterprise resource planning (ERP) solutions. By also integrating the e-selling solutions of suppliers, mySAP SRM strives to drive processes that run in, across and beyond a company's boundaries, resulting in more efficient, accurate, and informed sourcing and purchasing decisions and processes.

SAP cites that organizations using the mySAP SRM solution can generate value through three main steps:

  1. Evaluate the supply and sourcing strategy by gathering timely and accurate information on all sourcing activities including supply strategy development, supplier qualification, supplier selection, and contract negotiation & management;
     
  2. Enable the supply base for collaboration and automation through self service and content management; and
     
  3. Engage supply relationships through the integration of cross-company processes such as operational sourcing, self-service procurement, plan-driven procurement, and relationship monitoring.

Relationship monitoring in turn is integrated with supply strategy development, resulting in a full-cycle supplier management solution that is able to manage supply relationships continually rather than as a one-time event. The above efforts should therefore lead to higher compliance across the supply chain, better supplier selection, shorter cycle times and focused sourcing strategies. Analytics capabilities should allow companies to analyze past procurement patterns and project future spending, taking into consideration current and evolving business factors.

Overall, SAP pledges mySAP SRM will reduce the cost per relationship for all parties involved by automating the process flow across organizations. mySAP SRM reportedly leverages advanced technology to give companies the flexibility they need to connect with suppliers of different sizes and capabilities. Hosted services might furthermore provide small and medium-sized suppliers with the means to process orders, generate invoices or provide updates on pricing and specifications using just a Web browser, without having to invest in a new infrastructure. Suppliers with existing sell-side systems can be integrated as well using the mySAP Technology exchange infrastructure. The exchange infrastructure of mySAP Technology incorporates business-to-business (B2B) integration capabilities from SAP Markets' partner, Commerce One, Inc. (NYSE: CMRC).

Market Impact

The above product release keeps SAP abreast of the other supply chain software vendors striving to provide a holistic, closed-loop approach to supplier relationships. For example, some time ago i2 Technologies and Manugistics, expanded upon the SRM territory by releasing their pertinent products. Furthermore, while not necessarily embracing the SRM acronym, Oracle, Ariba, and Commerce One have all been busy rounding out e-procurement applications to support the supplier-relevant processes.

One should closely observe the outcome of SAP's and Commerce One's separate and likely colliding ways with regard to the SRM/sourcing product though, while the companies pledge their commitment to the partnership with regard to e-marketplace infrastructure. PeopleSoft is reportedly expected to unveil an SRM product in the near future, while J.D. Edwards, Baan and Siebel will likely follow suit soon given that they are currently in the process of perfecting their latest customer relationship management (CRM)/ partner relationship management (PRM) products.

What may be of more importance though is that it is SAP's first major product delivery that leverages recently endorsed technology foundation, which allows it to offer a collaborative solution even when some of the component applications (back-end CRM, SCM and ERP system) are not provided natively by SAP. To that end, mySAP Technology addresses the major infrastructure requirements of an exchange platform, including internal integration within a single company and external between companies, business process workflow across applications, identity/role management, and content management. By leveraging its expertise in collaborative business processes and its understanding of business partners' needs, SAP Markets SRM solution might offer the needed functional depth & breadth and integration feasibility to strategically manage a company's suppliers base, which may give competitors a tall order to emulate.

Nonetheless, although the integration of SRM processes intra-enterprise and inter-enterprise with trading partners could result in added value through improved processes and increased efficiencies, enablement of suppliers with poor readiness in terms of antiquated software applications, business processes and/or attitude for that matter remains one of the biggest impediments to achieve that idyllic state of affairs. Although SAP's acknowledgement of the problem is commendable, as can be discerned from the above announcement and through SAP's partnering with some supplier enablement vendors to expedite the issue, do by no means underestimate the amount of time and resources required to implement and manage the supplier enablement process.

User Recommendations

This is primarily good news for SAP customers that aspire to integrate their internal applications with applications from their suppliers and who need to exchange information with their business partners that are often not SAP shops. Current mySAP.com e-Procurement users should enquire about their license entitlement to mySAP CRM and mySAP Technology.

Users anticipating projects in the next year should ascertain the announced technologies bearing in mind the maturity factor and while comparison-shopping with other renowned available products. While SAP has espoused one of the most compelling and promising collaborative-Commerce vision to-date, particularly through its moves in the portal space, its Java compliance and in the Internet marketplace -- the ideal enablers of collaboration it still has to prove to the market it can integrate and deliver, and satisfy the small and medium-size customer with quick implementations and nimble responses to problems, just as the company often states in its PRs lately.

More comprehensive recommendations for both current and potential SAP users can be found in SAP - A Humble Giant From The Reality Land? Part 5: Challenges and User Recommendations and in 'Collaborative Commerce': ERP, CRM, e-Proc, and SCM Unite! A Series Study: SAP AG.

 
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