SAP Intelligent Spend Management : What to Expect12 min read

On April 29^th 2019, SAP announced that Jim Lucier will be taking over as president of SAP Concur. In addition, Barry Padgett, president of SAP Ariba and SAP Fieldglass will be taking on a larger role as president of SAP Intelligent Spend Management Group, comprised of SAP Ariba, SAP Fieldglass and SAP Concur. To me, that second part is the most interesting one. If you read my Ariba Live 2019 Conference Summary, you’ll recall that I think it’s only a matter of time before Concur goes the way of Fieldglass and is merged with the Ariba/Fieldglass organization and product suite. Accordingly, the creation of this new SAP “Intelligent Spend Group” only heightens my suspicions. I say suspicions as Jim will continue to lead Concur as separate organization, at least for now.

Intelligent Spend Management (ISM) is a term SAP has only started formally pushing in early 2019. You can see the concept taking shape month by month since the beginning of the year on a new page of their website. In January, they whipped together a 1-page infographic. In February and March, they published whitepapers on their internal procurement transformation and on the Intelligent Spend Management vision. Furthermore, they released a Virtual Reality experience on the future of spend management at Ariba Live in April.

Coupled with the Fieldglass integration announcements earlier this year, this latest announcement confirms SAP is springing (pun intended!) into action to operationalize the ISM concept. Therefore, it is now clear that ISM is not just a marketing concept for SAP; it is the future of their procurement product portfolio and line of business. So, what’s the big deal? Customers have been able to buy Ariba, Fieldglass and Concur since their respective acquisitions in 2012 and 2014, right? What does this ISM vision change?

Well, since being acquired, the three organizations have largely operated separately and independently. This is the first time SAP is looking to create a single end-to-end spend management product suite and organization within their portfolio. If SAP can execute on this vision, it will drastically simplify all aspects of managing spend across the application suite. Additionally, it will create new possibilities for cross-module functionalities without the need for integration work. And, it would create a considerable gap between their capabilities and other players on the Source-to-Pay system market.

Product Development Implications

Now that’s all well and good in theory but how will this vision materialize at the product level? SAP has not released details on this yet but, in my opinion, there’s quite a few potential benefits on the table for customers as SAP “renovates it’s old house”. Here’s what I’m hoping to see when the ISM roadmap is defined:

• The Ariba Network as THE SAP Supplier Portal. Currently, suppliers may have to deal with multiple portals if their customers are using Ariba, Fieldglass & Concur. In most cases, because of commodities provided, suppliers will only have to deal with a single portal, but it is a big inconvenience if you are the exception. There is also complexity involved for buyers in managing these separate networks in their landscape, if only for supplier onboarding. Given SAP’s continued focus on promoting the Ariba Network, I suspect this will be one of the first items on the roadmap. This is already in the works for Fieldglass as announced at Ariba Live 2019, Day 1.
• Ariba Guided Buying as the true “one-stop-shop” for procurement needs. Today, Ariba guided buying simply punches out to Fieldglass or Concur when users need to use these solutions, like a simple link to an application on an intranet. By bringing Fieldglass and Concur on the same platform as Ariba Guided Buying, the possibilities for a richer user experience in guided buying will increase tenfold. Organizations will also be able to better enforce procurement policies for categories supported by these modules directly in Guided Buying
• Embedding deep complex services, contingent workforce & travel and expense category functionalities in Ariba Sourcing & Contracts. By bringing Fieldglass and Concur onto the same platform as Ariba Sourcing & Contracts, there is an opportunity to push sourcing and contracts functionalities further to better cater to the categories in these two solutions. This will increase customer value on existing investments and make the purchase of Fieldglass and/or Concur modules more attractive for customers only running Ariba today.
• Rationalizing Duplicate Functionality. When looking closely at the Ariba, Fieldglass & Concur product lines, you’ll notice there are instances of duplicate functionality. To name a few:
  • Concur Invoice vs Ariba Invoice Management (and the integration of purchasing documents to enable a three-way match).
  • Fieldglass vs. Ariba services procurement processes
• One can only hope that by looking at the three solutions collectively, SAP will remove cannibalization of functionality within the suite, keeping the functionality that is the most coherent and provides the most value to customers
• A single reporting platform. Currently, unless you are feeding 100% of your invoices into Ariba Spend Analysis, you need to logon to the different tools (Ariba, Fieldglass, Concur) to find data and reporting related to the processes in each solutions. If you want to merge spend from the three different solutions, you need to send the data to a separate data warehouse and manipulate to get to your ends. Merging these 3 solutions provides an opportunity for a unified, flexible reporting platform for all spend regardless of origin.
• A single workflow protocol / cockpit. Today, the three solutions have their own separate ways of dealing with workflows whether they be for approvals, tasks to complete, exception management, etc. It would be stupendous to be able to manage these all in one place using a single standard.
• A single backend integration method. SAP has already announced the roadmap for getting Ariba and Fieldglass standard integrations onto Ariba Cloud Integration Gateway (CIG) on SAP Cloud Platform Integration (CPI). Hopefully, the integrations for S4 to Concur will also be migrated/developed on CIG. Interestingly, CIG could also be the short-term answer to implementing the ISM vision while the longer, harder suite rationalization exercises take place. SAP could build out-of-the-box integrations between solutions to push functionality forward while all products are migrated to a single platform.
• A single, shared set of procurement master data objects. The vendor master (and supporting data) is the current elephant in the room for me. It currently needs to be fed to each solution independently. If Ariba, Fieldglass and Concur can share common data objects from a single source, this alone will be a big win for customers as it will greatly simplify integration and data management.
• A single way to manage users. Depending on the long-term vision for the SAP Governance, Risk & Compliance (GRC) module, this could be a lower priority item. Your security team can already effectively manage security centrally today if integrations are made between the three solutions and GRC (ie. Connection to Ariba via Greenlight). However, a single user management platform would help customers get rid of 2 interfaces needed today. Moreover, it would simplify user management processes by aligning customers on a single standard.

SAP Organizational Transformation Implications

Certainly, the potential changes and benefits go beyond the product itself. As this vision is implemented, we should also expect the customer relationship with SAP to evolve. Here is where I think we might see some evolution:

• A simplified go-to-market approach. Currently, as you navigate the SAP procurement application portfolio, you need to deal with multiple sales teams for each solution (Ariba, Fieldglass, Concur). These folks often have different titles, approval levels, internal processes, etc. to sell you their module. By merging the organizations, there is an opportunity to streamline sales processes to provide a more seamless and integrated buying experience for customers. The challenge here is that the unified suite will cover a whole lot of product. What are already complex sales will become even more so given the breadth of the ISM suite. Highly skilled salespeople will needed to pull this off.
• Simplified licensing & implementation models. As with the go-to-market approach, licensing models differ between solutions and can get convoluted if you are buying lots of product at once. Some module licenses are based on number of users, some on spend flowing through the module, others on document volumes, etc. Additionally, there are plenty of exceptions around what is and isn’t included in standard implementation services and what system integrators can and cannot do. Hopefully, this unification brings about a standardization and simplification exercise for both licensing and implementation business rules at SAP.
• Unified/simplified product naming. I’m curious to see what SAP will do here. There are large customer bases for all three product suites and renaming them will cause confusion, at least for a little while. However, for new prospects, it makes much more sense to have unified branding, especially if the goal is to convey an integrated, end-to-end suite. I’m putting my money on everything being re-branded under the Ariba banner, but we’ll see… Perhaps they will come up with an entirely new name? ConFieldBa?
• A simplified, unique support model. Have you ever needed to resolve a standard integration issue that involved your SAP S4 backend, Ariba, Fieldglass and/or Concur? All four solutions have different reference documentation, different support phone numbers and portals, distinct release notes, distinct “jurisdictions”, etc. Therefore, it can be a real nightmare if you don’t know your way around. I trust the ISM vision will aim to simplify and unify the support models.

SAP Intelligent Spend Management Next Steps

As I’m sure you’ve gathered from the above list, SAP’s Intelligent Spend Management vision is a very ambitious one. There’s so much to do to make it a reality. I haven’t even addressed the “Intelligent” part of the vision which aims to leverage artificial intelligence in all three solutions to push functionalities further while the suite is being consolidated. That in and of itself is a tall order. All Source to Pay technology providers continue to battle it out on AI functionality prototypes but we have yet to see game changers on this front. However, I think the ISM strategy that’s been laid out by SAP is a solid one. It sets the bar for the next generation of Source to Pay suites.

What’s Missing?

In my opinion, the only two additional pieces that should eventually be considered in this vision are the integrations with Product Lifecycle Management (PLM) and Transportation Management (TM). If Ariba Network is to be “THE SAP Supplier Portal”, functionalities for these two pieces will need to be integrated into the tool. Short term, SAP should open the Ariba Network to developers so these add-ons can be built by third parties. Otherwise, if the Chinese wall to other apps remains active, customers and vendors won’t be able to make the Ariba Network their only portal tool. This lack of flexibility can and will be a deal breaker for some customers as they will have to get another portal to support other integrations. SAP must allow customers to support critical business activities using the Ariba Network as executes on the ISM vision or it will lose savvy customers at the door.

I think in the end, the success of SAP’s Intelligent Spend Management play will come down to execution and implementation and/or migration requirements.

Execution

I am anxious to see the integration roadmaps, next releases and announcements for ISM solutions to see if and how SAP will address the points listed in this article. The devil will most certainly be in the details.

Implementation and/or Migration Requirements

Implementing Ariba, Fieldglass and Concur in your organization can be a long endeavor. Even interally at SAP, implementing and rolling out the three products globally took around 7 years. Customers who have gone through this journey are not looking to start over…

Therefore, it will be interesting to see the migration path for existing customers of the three solutions. If SAP can find ways to provide seamless, low-touch (and therefore low cost!) migration options, it will encourage the move to the new ISM model. Otherwise, not only will they have trouble getting existing customers onboard, but they will also have prospects delaying the start of new implementations while waiting for integration roadmap items to be completed. Migration to the new ISM model needs to be easy. Hopefully this is when the promise of the cloud model is materialized.

Final Thoughts

If SAP can pull this off, it will create a heck of a competitive advantage for them in this space. I am really hoping I don’t have to write you with a marketing fad hangover in a few years… Only time will tell. One thing is for sure, it’s an interesting time to be following the SAP Source-to-Pay portfolio developments. There is an incredible amount of potential value to unlock in your procurement organization. Count on me to report back as it evolves!

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What do you think about SAP’s Intelligent Spend Management vision? How quickly do you think they will be able to execute? Do you think migration to a new model will be easy? Let me know in the comments.

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Last Updated on March 18, 2023 by Joël Collin-Demers