Note: This post is the second in a two-part series covering the SAP Ariba Live 2019 general sessions. For my analysis of day 1, see Ariba Live 2019 Conference Summary, Day 1.
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For the day 2 general session at SAP Ariba Live 2019, the format resembled that of day 1. The Ariba Network was again front and center and the other segments focused on highlighting lessons learned from implementations, key announcements and customer case studies. We also saw a few more demos to highlight key application development areas for 2019.
Increasing the Ariba Network Value Proposition
After briefly coming back on the conference theme of 3 Trillion Reasons to spend better (in reference to the 3 trillion dollars of annual spend flowing through the Ariba Network), Tifenn Dano Kwan (@Twitter, @LinkedIn), SAP Ariba’s Chief Marketing Officer, handed things off to Sean Thompson (@Twitter, @LinkedIn), SVP of Business Network and Ecosystem at SAP Ariba, to demonstrate how the Ariba Network value proposition for buyers and suppliers will be sweetened in 2019.
Lessons Learned from Concur
In the first segment, Sean invited Jessica Pankov (@LinkedIn), Senior Director of Platform & Product Partnerships at SAP Concur, to the stage. The fellow SAP product line has been very successful in growing their network over the past few years. Hence, the Ariba team believes that the lessons learned at Concur will be useful to keep developing the Ariba Network. Jessica and Sean focused on two main points in their discussion:
- Concur opening up the platform up to partners via APIs. All players in the Concur ecosystem were asking for better ways to integrate with the cloud-based tool. To meet demand, SAP Concur rolled out a set of APIs to give the ecosystem access to the application data. Consequently, new partner-developed features started popping up providing value to tax, payroll & compliance teams for use cases that had not even been conceived by the product development team.
- Concur embracing partnerships to remove friction for users.SAP Concur developed integrations with partners like Uber and AirBnb. This enabled a better user experience by seamlessly integrating receipts into Concur when creating expense reports.
My Thoughts
As on day 1, SAP Concur was used as the shining example for Ariba Network next steps. It was never really made explicit, but one can only assume that was the intended message. The increased focus on Concur also heightens my suspicions that we are in for an Ariba/Concur “merger” announcement shorlty. I also mentioned this in my analysis of day 1.
At the very least, SAP Ariba continuing to develop their APIs is good news but isn’t really a new announcement. APIs were made available in the last year for Analytics, Ariba Network, Catalog, Procurement, Strategic Sourcing & Supplier Management. However, I am hopeful this means we can expect an increased focus on this functionality in the upcoming quarterly releases. To be fair, they did include some enhancements to support custom fields in the APIs in the 2019 Q1 release (#11 in my Top 20 SAP Ariba 2019 Q1 Release Features list) so things are heading in the right direction.
On the partnership side, we saw announcements in subsequent segments, so I’ll hold my thoughts until then.
Deepening the Partnership with American Express
Following the discussion with Jessica, Sean was joined by E-Bai Koo (@LinkedIn), EVP of Global Commercial Services at American Express, to announce a new initiative to fully embed American Express payment capabilities directly in SAP Ariba. Users can setup their virtual AMEX card in their existing Ariba account and pay directly from the application. E-Bai listed the following 6 major benefits of this new functionality:
Benefits for Buyers
- Single Platform. Ability to manage all payments in one platform which will help tremendously with reconciliation of payments with transactions. No need to “step out” of Ariba to pay.
- Single Account. Users will be able to use existing AMEX card account for payment once setup in Ariba. No need to create new Ariba-specific accounts.
- Integrated Business Model. American Express plays the role of Issuer, Network and Acquirer during a payment transaction so using this service should help you increase monetize more of your spending. Don’t you just love the “more your buy, the more you save” model…
Benefits for Suppliers
- Improve Speed of Payment. American Express pays the suppliers next day after the payment is submitted in Ariba. Also, buyers can execute payments directly in Ariba as the next logical step in their process. There is no need to wait for interfaces and replication times to other systems. Therefore, this should shorten the cycle time to get to payment (if buyers choose to take advantage of this capability).
- Reduce Collections Risk. As suppliers are paid next day, American Express is on the hook for collection with the buyer.
- Improve Reconciliation. Buyer can add up to 20 extra fields in their payment mappings to describe the details of the payment. For example, for a partial invoice, the invoice line item reference numbers could be added to the payment file. This increases the supplier’s ability to easily and quickly reconcile payments against upstream transactions.
My Thoughts
First, it was great to see Ariba follow up their statement on focus on partner extension development with this announcement. It further develops their expertise in an area where they traditionally have not been a big player (Pcards & payments). However, it was unclear which applications would benefit from this new extension and whether additional licenses would be needed. Accordingly, I think this is only important if the functionality can be used in the Ariba Network without having to deploy Ariba Payables, similar to Dynamic Discounting functionality. If this is not the case, then I don’t think the lion’s share of Ariba customers will benefit from this functionality as I don’t believe the majority are using the Ariba Payables module. To add, no timeline was announced for availability so it will be interesting to see when this comes out.
Second, from a benefits perspective, I thought only 4/6 benefits mentioned would be tangible. The first two benefits for suppliers seem to be associated to credit card payments in general. Speed of payment might improve for customers who can’t respect payment terms but won’t change the behavior of non-delinquent customers. Collections risk is lowered simply by accepting credit cards as a payment option, regardless of the origin of that payment.
New Celonis Standard Integration for Ariba
Up next, Sean welcomed Rachel Macciocchi (@Twitter, @LinkedIn), senior solution consultant at SAP Ariba, to demo the new Celonis add-on for process analysis and optimization. If you’ve worked with Celonis on the SAP ECC or S/4HANA side, then all you need to know is that you can now connect with standard integration tools to an Ariba data source as well to get 100% of your procurement process data easily analyzed in the tool.
If you’ve never worked with Celonis, then what you need to know is that by connecting this add-on to your Ariba and/or SAP ERP system, you get a visual representation of all the process variations that exist within your company for a given process (for example, standard purchase order process). By analyzing the root causes of these variations (why do 60% of our purchase orders require a change in pricing?) and attacking them (pricing master data quality), you can drive significant cycle time optimization (FTE reductions) in the processes analyzed. In short, Celonis helps identify these process improvement opportunities and measure the outcome of intervention. You can model as many processes as you want in Celonis so the possibilities are limitless.
My Thoughts
This functionality was silently released during the 2019 Q1 release. I listed this as being the #1 most important feature my analysis of the Top 20 SAP Ariba 2019 Q1 Release Features in February. If you want to drive big benefits by simplifying and optimizing your existing application investments instead of purchasing the “next new thing”, then Celonis is the answer. You would be surprised at the cycle time reduction possibilities after analyzing the health of your processes. Kudos to Ariba for putting this standard integration out. In my opinion, it makes the offering viable for SAP enabled procurement departments (SAP ECC or S4/HANA & Ariba).
There are additional fees for this module, but I believe these can easily be paid with your first optimization initiatives. Also, once you’ve gone through the quick wins, you could choose to dispense with the Celonis application if you’re not planning on managing your business by process for the long haul. I’m a strong advocate against continued usage but it’s something to consider when building your business case.
Nutrien Transformation Case Study
After new partnership announcements, the focus turned to customer case studies. First up was Nurtien, the world’s largest provider of crop inputs, services and solutions. Shane Curley (@LinkedIn), VP of Strategic Procurement at Nutrien, Jason Ruiter (@LinkedIn), Senior manager of procurement enterprise applications at Nutrien and their partner, Andrea Strongitharm (@LinkedIn), Managing Director at Accenture Strategy Consulting, sat down to discuss the context of the transformation, the outcomes and the lessons learned.
Transformation Context
Nutrien was born out of a merger between Potash & Agrium in January 2018. They have a footprint of about 10 different ERP systems. As with any merger, one of the first goals for Nutrien was to achieve “synergistic savings” (gotta love that expression) by combining the two organizations into a new, optimized one. The CEO had made three clear statements at the outset:
- There would be no ERP unification program any time soon.
- Digital transformation should be prioritized over simple rationalization. Both organizations need to update their business models to catch up with current trends.
- Procurement was to lead the charge with a 100M$ savings target
set publicly with markets.
After months of preparation and due diligence, Shane and his team decided on a centralized procurement approach and selected Ariba as the application to support this transformation. Because of its end-to-end process depth, operational support model, ability to easily integrate with multiple ERP platforms and Total Cost of Ownership (TCO), it was the best choice for them.
Outcomes
- Within 1 year, Nutrien achieved 77M$ in sourcing savings (Target 75M$) with their program, utilizing the Ariba Sourcing & Contracts modules to drive the benefits.
- The technical implementation (Sourcing, Contracts, Ariba Buying & Invoicing & Commerce Automation) took 10 months and was delivered on schedule (it would be interesting to know how many physical business units operate on the solution).
Lessons Learned
When asked by Sean what it takes to be successful in this type of endeavor, Shane, Andrea and Jason put emphasis on the following points:
- A “one team” mentality between Business, IT and the implementation partner. Having a “badgeless team” where all members are invested in the success of the implementation was a key success factor. Jason mentioned: “IT became procurement experts and procurement became IT experts.” Which I thought was very telling.
- Keeping the team as small as possible and minimizing churn to gain velocity.
- “Leveling up” IT capabilities to deploy cloud solutions (vs. traditional on-premise applications) as it is quite different.
- Thinking about the initiative as being transformational
vs. just as an IT system implementation and planning for the implications (roles, responsibilities, change management, sustainment, etc.) - Entering the project with a mindset that this was a multi-year journey for the organization. Even though the technology would be in place in 10 months, things like channel strategy, catalog plan, end user onboarding, sustainment ramp-up, etc. were long term projects.
- Not being afraid to overinvest in change management. The hardest part is getting the organization aligned on goals and executing on the new operational models. Also, since suppliers are being onboarded into your application landscape (significant different vs. present day), dedicate change management efforts to this stream (this point was also highlighted on day 1).
My Thoughts
We heard many of the same points as the Las Vegas Sands Corp case study on day 1. However, it’s important to note that for any customer case study, you must be wary of basing your implementation on the same numbers that are shared as they are very specific to the client context.
To illustrate, on day 1 Las Vegas Sands Corp stated that to roll out the solution, it took them 30 months. They weren’t specific on which modules were rolled out, but the scope included 6 resort sites in multiple countries. Nutrien stated a 10 month roll out time but didn’t state the number of sites in scope. By the modules mentioned, we can extrapolate that only indirect procurement processes were rolled out at Nutrien (at least from an operational purchasing perspective). Also, a quick look at their website reveals 4 corporate offices and 28 operational facilities, mostly located in Canada and the US. My guess would be that they did not roll out the solution to all 32 facilities in that 10-month period.
My point – ensure you are digging into the details of customer case studies to understand the components used to build out the strategy and deployment plan. Understanding the levers is what will be useful to you when planning your own project. This is also why SAP Ariba recommends partnering with professional service firms. They understand the levers and have operated them many times previously.
Updates on the Supplier Value Proposition
The last Ariba-led segment included Mugdha Walawalkar (@LinkedIn), Senior solution consultant at SAP Ariba, who presented and demoed the updates to the Ariba Network increasing the supplier value proposition in three key focus areas:
- Simplified Onboarding. A new integrated web assistant developed on the SAP EnableNow technology was highlighted. For key common actions, like submitting an invoice, the supplier can turn on the assistant and be guided click by click, field by field on how to complete the process.
- Unified Supplier Experience. The supplier mobile application and Smart Invoicing (previously referred to as PDF to Invoice) were highlighted. Smart Invoicing represents integration of Optical Character Recognition (OCR) technology directly in the Ariba Network. The supplier also has the of pre-validating invoice conversion before submission. These two tools should help suppliers push towards using Ariba Network as their unique electronic communication platform. It’s important to note that the Smart Invoicing functionality is not available outside the US yet.
- AI and Machine Learning Driven Intelligence. Mugdha lightly touched on new system projected payment and approval dates based on previous transactions by did not demo it.
To close, Mugdha and Sean reiterated that the Ariba Network currently represents 18.6 million suppliers operating in 186 countries. It is really becoming the business network of reference.
My Thoughts
It was encouraging to see a few new goodies available for suppliers as supplier enablement remains, in my opinion, the most important success factor for realizing benefits in the implementation of any Source-to-Pay application suite. You can configure the best end-to-end process in the world but if you can’t scale it to your supplier base, you will still be managing by exception with legacy processes.
I was also impressed by the use of SAP EnableNow directly in the application. This further demonstrates that SAP Ariba and SAP are finally taking the time to cross-pollinate between product suites to best leverage the functionality available in the wider SAP application portfolio. This has not always been the case as I alluded to in the day 1 summary, so it’s very encouraging for future features as well.
On the supplier experience side, both items demoed have been available for a while now so not much different here. The big change I did see that wasn’t highlighted is the simplified user interface. As you can see from the print screens, it is much cleaner.
As for the “AI” piece, I may be wrong, but the functionality presented seems more like a simple average of past payment and approval times used to project future dates. But, all tech companies have been guilty of using the term Artificial Intelligence liberally these past years so I can’t really fault them for it.
Verizon’s Participation in the War on 5G
Last up to the stage before the talk by Simon Sinek was John Vazquez (@LinkedIn) SVP and Chief Supply Chain Officer at Verizon. He did not spend too much time talking about Verizon’s Ariba journey other than to say that they currently have 25 billion dollars of spend (on a total of 50) going through Ariba tools representing about 1.25 million invoices per year (which is nothing to sneeze at!). Therefore, they needed a robust product suite and turned to Ariba to support this volume.
Otherwise, it was more a sales pitch for new 5G network capabilities than anything else. Verizon just launched its first 5G networks in Minneapolis & Chicago and will be ramping up across the US. What John didn’t mention in his presentation that I find most interesting is that it’s shaping up to be an intense geopolitical “space race” between South Korea, China and the US for who can provide the “best” 5G. There are also far reaching implications. If you are interested in learning more, here’s the link to an article that outlines the stakes at play.
My Thoughts
To be honest, I was expecting this segment would focus more on Verizion’s Ariba journey than on 5G. However, after a bit of research, I now have an interest in following the “5G war” to see how it will evolve. There may be impacts on markets like streaming services and cloud hosting providers. I didn’t realize the far-reaching implications of the “global” upgrade to a 5G network. In the end, I suppose that means John’s segment served its purpose of raising awareness about 5G…
Playing the Infinite Game
To close out the conference, Simon Sinek discussed the difference between playing finite games vs. infinite games. It’s a subtle shift in perspective that can have a massive impact on company strategy or, on a personal basis, how you approach your career. Ariba did not record this talk but you can find similar talks by Simon about playing infinite games on Youtube .
Closing Thoughts
In this summary, I only covered the General Session content (and thank god because I would have written a book, right?!). There were a number of additional breakout sessions held during the conference and you can find presentation material for all of these sessions on the Ariba Live site.
I was encouraged by several elements coming out of the conference, most notably, what I felt was an increased focus on Ariba becoming “just another SAP module”. What I mean by that is that both from an organizational and product perspective, I get the sense that Ariba is now part of the SAP whole instead of being separate piece off to the side. This seems like a small thing but has implications at all levels of the organization and in all the Ariba modules, whether in implementation or operation. It was my #1 pain point in my conference review last year, so I’m really psyched about this and what it means for the future of the platform for SAP customers.
Remaining Questions
Unfortunately, even after browsing the breakout session material, I concluded that the pain points #2-4 listed in last year’s article were not addressed so I’m still on the lookout for announcements that will tackle these points. Otherwise, the only question that remains open from my day 1 summary closing remarks is: “how are the direct material solution developments progressing?”. There seemed to be very little focus on the direct solutions in the general session which is surprising as I feel the battle is still raging between the top providers in this space. However, there was quite a bit of content on direct in the breakout sessions which highlighted innovations such as SAP Integrated Business Planning (IBP) integration for forecast communication to suppliers, support for handling units and packaging in Ariba Network transactions along with the “push quote” and “clean sheet” functionalities in Product Sourcing. Furthermore, the innovation roadmap continues to look quite strong in this space.
In closing, Ariba Live was once again a well produced, content packed event and many of the announcements bode well for the future of the solution and the company. It will be exciting to see how Fieldglass is integrated when it comes down to details as I think this integration has the potential to generate tremendous value for organizations with important services spend. The S2P market as a whole is still a fertile battleground as there remains lots to do before a provider can claim they have the holy grail of S2P solutions, but it was encouraging to see SAP Ariba confirming its position as a front runner with tangible announcements at the conference this year.
See you all next year! In the meantime, don’t hesitate to reach out with your SAP Ariba questions.
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Note: This post is the second in a two-part series covering the SAP Ariba Live 2019 general sessions. For my analysis of Day 1, see Ariba Live 2019 Conference Summary, Day 1.
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What did you think about Ariba Live 2019? Is there an announcement that stood out in your mind? What are the features you would like to see in the roadmap? Let me know in the comments.
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Last Updated on January 7, 2021 by Joël Collin-Demers
