5000 developers are working on product enhancements and extensions to the SAP spend management suite. This is the largest area of investment for the company outside of ERP. With that level of investment, one would expect an aggressive product buildout. At SAP Spend Connect Live, held October 14-16 in Las Vegas, SAP did make several significant product announcements.
Spend Management Takeaways
SAP continues to invest in using generative AI to improve the user experience. Their copilot-style solution is known as Joule. SAP is embedding its generative Joule across the SAP Ariba source-to-pay solution portfolio to make it easier for their customers to manage routine inquiries, such as status updates, summarization, and frequently asked questions.
While SAP has had procurement analytics solutions, last year at Spend Connect Live, SAP announced the Spend Control Tower. This solution provides insights in a much easier way to digest. The Warner Music Group was an early adopter. Daniel Chapman, the senior director of process transformation for procure to pay at Warner Music, was a keynote speaker. Users at Warner Music now automatically get insights. The solution breaks down spending by categories and derives “new subcategories that we didn’t know even existed. My advice,” he concluded, “is just jump in. It is a brilliant tool.”
The enterprise software company also announced a new analytics solution covering external workforce management. This solution allows human resource managers to review performance against over 50 external workforce key performance indicators, access global market intelligence (including rates, talent supply and demand, and time-to-hire trends), and track progress across diversity and worker health and safety initiatives.
At one of the demo booths, what stood out was the ability of the procurement solution to track savings leakage over the course of a contract. When a procurement contract is negotiated, the buyer has planned to achieve a certain level of savings. However, those savings can leak away in several different ways. I have been to other vendors’ procurement conferences and cannot recall seeing similar functionality.
Business Network Takeaways
While Business Network rolls up into the spend management product development organization, the trading partner collaboration this platform covers extends beyond just sourcing. SAP’s Business Network is a supply chain collaboration network. SCCN solutions allow trading partners to collaborate across defined trading partner processes based on a common data model. The transactions are captured in the platform, eliminating “he said, she said” type arguments. For example, a buyer might say, “You only shipped me 800 of the 1000 products I ordered.” And the supplier might reply, “I only agreed to ship 800.” Those types of disagreements disappear in a SCCN platform.
The most common trading partner collaborative processes covered in SCCN suites are purchase order/procurement collaboration, demand forecast collaboration, and the transportation shipper tender/carrier accept process. SAP announced a new transportation collaboration solution that involved messaging not just between shippers and carriers but also three-way communication involving logistics service providers.
However, SAP has a broader suite of collaboration solutions than other vendors. They also cover supplier managed inventory, quality collaboration, manufacturing line collaboration, and asset collaboration. Asset collaboration includes the process flows and documentation associated with commissioning or maintaining capital equipment. The structured message sets can connect OEMs, component suppliers, factory operators, and maintenance services providers.
The more extensive a SCCN network, the more benefits sellers and buyers get from participating. The buyer typically pays for trading partners to participate. The larger the network, the more likely a buyer will find several suppliers they want to do a better job of collaborating with already on the network. This makes trading partner integration much more straightforward.
If the network is constructed correctly, it also means that the network becomes a marketplace where sellers and buyers can find each other. The SAP Business Network has millions of companies conducting nearly $6 trillion in commerce annually on the platform. Most of the spend moving across the network is for indirect materials, although executives stated that direct materials procurement on the network is growing much faster.
In the first quarter of 2025, the Business Network will launch a new service that allows sellers to pay a subscription fee and receive value-added features that will help those suppliers attract new buyers. For example, a pallet supplier in the United Kingdom would be able to look at the analytics and see what their market share in the UK is. The solution can also provide suggestions like “your D&B data is not up to date” or “you have not noted that you are a minority-owned business in the directory” that can help the sellers garner more business.
The Business Network is also building out its ability to capture carbon emissions and provide track and trace. Carbon certificates can be viewed in the catalog or captured via advanced ship notices. SAP has partnered with Shippeo, a provider of real-time transportation visibility, to allow the carbon associated with shipments to be tracked. Track and trace is supported through the capture of batch serial numbers.
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