Procurement Insights from the SAP Ariba Benchmark Program

Transcription

1 Procurement Insights from the SAP Ariba Benchmark Program November 2017

2 Procurement Insights from the SAP Ariba Benchmark Program 2 /14

3 Background and Key Definitions The information outlined below will help you understand the objective, scope, and contents of this paper. Objective This paper summarizes observations made by the SAP Ariba analytics team about the benchmarking survey and provides our recommendations for improvement on key performance indicators (KPIs). Scope of This Paper Highlight trends and best practices Compare benchmarks of top performers with average performers Compare benchmarks of select metrics with the previous year Provide recommendations to improve benchmark scores Background of the SAP Ariba Benchmark Program Launched in 2002 for Ariba customers Today includes 200+ SAP Ariba customers across 24 SAP industry groups Based on benchmarking survey covering strategic sourcing, operational procurement, and treasury and accounts payable processes SAP Ariba solutions covered are SAP Ariba Spend Analysis, SAP Ariba Sourcing, SAP Ariba Contracts, SAP Ariba Buying, and SAP Ariba Buying and Invoicing Close to 3,500 UNSPSC categories (classes) analyzed Over US$400B in spend analyzed (~$80B in SAP Ariba Sourcing spend, ~$60B in SAP Ariba Contracts, ~$160B in SAP Ariba Buying plus SAP Ariba Buying and Invoicing, and ~$100B in SAP Ariba Spend Analysis) Research Definitions Quartiles are defined by equally dividing the data points for each given metric into four groups Report includes the following benchmarks for each metric: Top quartile: 25% of companies with the highest values; minimum value of top quartile is considered as the benchmark value Average: Arithmetic average of all data points for the metric The paper evaluates: 1. Top quartile performance compared to average performers 2. Top quartile performance in compared to top quartile performance in Time Period of the SAP Ariba Benchmark Program September 2015 to August 2016 Participate in the benchmarking survey at SAP Value Lifecycle Manager Address your queries to Procurement Insights from the SAP Ariba Benchmark Program 3 /14

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5 Table of Contents Overview 6 Key Highlights 7 Strategic Measures to Improve Performance Appendix 9 11 Procurement Insights from the SAP Ariba Benchmark Program 5 /14

6 Overview Optimizing Procurement Processes and Solutions to Better Manage Spend Today s automated procurement solutions support the marketplace for modern business, creating frictionless exchanges between millions of buyers and suppliers across the entire source-to-settle process. By combining these solutions with proven best practices, your company can simplify collaboration with trading partners, make smarter business decisions, and extend collaborative business processes with an open technology platform gaining significant competitive advantage as a result. Key Elements of an Effective Procurement Process Select Goods and Services Enforce Compliance and Order Receive and Reconcile Invoice and Pay To achieve sustainable cost savings, it is imperative to: Maximize efficiency Strengthen compliance and control spend Reduce process complexity Procurement Insights from the SAP Ariba Benchmark Program 6 /14

7 Key Highlights Trends 01 Top performers strategically manage a higher proportion of their procurement spend 02 Purchasing compliance has improved year over year 03 Organizations that link purchase orders (POs) to a catalog or contract have better invoice compliance* 04 Organizations that create contractbased POs have lower maverick spend* 05 Top performers leverage digital procurement to enable higher PO spend 07 Companies with a higher proportion of invoices over Ariba Network have a higher total electronic invoice rate 06 Organizations that create PO transactions against catalogs have shorter requisition-to-order cycle times 08 Organizations that transact more invoices electronically have more touchless invoices* 09 Organizations with a higher proportion of touchless invoices have lower full-time equivalent (FTE) cost per invoice processed 10 Organizations with a higher proportion of touchless invoices have lower invoice approval cycle times * Deduction from correlation analysis see appendix for more information. Procurement Insights from the SAP Ariba Benchmark Program 7 /14

8 Key Highlights Trends 68% 93% Percentage of Procure-to-Pay Spend under Management Top performers have 38% more invoice spend based on a PO, catalog, or contract compared to average performers 56% 27% 23% Compliant PO Spend (% of Total PO Spend, ) 50% Compliant PO Spend (% of Total PO Spend, ) Top performers have 13% higher PO compliance than in previous year PO compliance of top performers is 2x higher than average performers 62% 96% Total Electronic PO Spend (% of Total PO Spend, ) Top performers have 56% more electronic PO spend than average performers 69% 100% Invoice Count via Ariba Network (% of Invoice Count, ) Top performers receive all their invoices through Ariba Network electronically Top performers receive 44% more invoices over Ariba Network than average performers 62% 37% 34% Total Electronic Supplier Invoices ( ) 54% Total Electronic Supplier Invoices ( ) Invoices received electronically from suppliers have increased by 14% from previous year Top performers receive 68% more electronic invoices from suppliers than average performers Average Top Quartile Procurement Insights from the SAP Ariba Benchmark Program 8 /14

9 Strategic Measures to Improve Performance Higher Compliance Conduct frequent spend and compliance reviews with internal stakeholders Identify spend categories that are ideal for procurement through catalogs; investigate opportunities to enable more spend and transactions that are catalog/contract based to increase compliance Enhance catalog/contract enablement to reduce maverick spend Enforce business policies for large spend categories to ensure higher compliance Use guided buying functionality to ensure better compliance Compliance Better Electronic Connectivity Leverage digital capabilities by enabling more suppliers, spend, and transactions across Ariba Network Receive invoices and approvals on mobile devices to increase process efficiency Enable more electronic invoices to increase the percentage of touchless invoices, which in turn contributes to increased process efficiency and FTE productivity Electronic Connectivity Process Efficiency FTE Productivity Greater Process Efficiency Review bottlenecks in catalog and noncatalog requisition process to reduce PO cycle time Determine opportunities to migrate noncatalog orders to catalog-based orders to increase buying compliance Drive PO automation through catalog enablement to achieve better PO efficiency Review approval workflow for invoices to reduce number of approvers and ultimately reduce PO cycle time Consider direct invoice approvals for selected categories to speed up approval cycle time Enhanced FTE Productivity Review internal processes to identify areas for automation to increase FTE productivity Consider enabling more suppliers and transactions electronically to help increase productivity and throughput, which should lead to higher transactions per FTE Increase adoption of touchless invoices to increase FTE productivity Procurement Insights from the SAP Ariba Benchmark Program 9 /14

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11 Appendix Correlation between KPIs Dependent KPI Standard Deviation Independent KPI Standard Deviation Standardized (Beta) Coefficient Inference* Non-compliant invoice spend (in %) 31.4 Compliant PO spend (% of total PO spend) Increase in compliant PO spend by 10.0% decreases the noncompliant invoice spend by 6.3% Maverick spend (% of spend under management) 12.7 PO spend with SAP Ariba Contracts (% of PO spend on Ariba Network) Increase in PO spend linked to an SAP Ariba contract by 10.0% will reduce maverick spend by 2.0% Total touchless supplier invoices (in %) 30.1 Total electronic supplier invoices (in %) Increase in electronic supplier invoices by 10.0% increases touchless invoices by 3.1% *The inference drawn between the dependent and independent KPIs are ceteris paribus i.e., other KPIs are held constant. Procurement Insights from the SAP Ariba Benchmark Program 11 /14

12 Appendix Benchmarks by Industry Benchmarks provided are for top quartile Compliant PO Spend as a Percentage of Total PO Spend Services 86.0% Public Services NA Financial Services 10.7% Energy & Natural Resources 89.6% Discrete Manufacturing 56.1% Consumer Products 30.0% General 56.1% Maverick Spend as a Percentage of Spend Under Management Services 5.0% Public Services 3.0% Financial Services 5.0% Energy & Natural Resources 2.0% Discrete Manufacturing 5.0% Consumer Products 4.0% General 4.9% Total Electronic Supplier Invoices Services 48.8% Public Services 35.0% Financial Services Energy & Natural Resources 79.9% 80.0% Discrete Manufacturing 46.4% Consumer Products General 62.5% 62.1% Procurement Insights from the SAP Ariba Benchmark Program 12 /14

13 Appendix Benchmarks by Industry Benchmarks provided are for top quartile Percentage of Procure-to-Pay Spend under Management Overall Services Public Services NA Financial Services 94.0% Energy & Natural Resources 99.5% Discrete Manufacturing NA Consumer Products General 93.0% 95.0% Total Electronic PO Spend (as a Percentage of Total PO Spend) Services Public Services Financial Services 93.4% Energy & Natural Resources Discrete Manufacturing 95.8% 95.6% Consumer Products General 96.4% Overall Invoice Count Transmitted via Ariba Network as a Percentage of SAP Ariba Invoice Count Services Public Services Financial Services 94.3% Energy & Natural Resources Discrete Manufacturing Consumer Products General 99.9% Procurement Insights from the SAP Ariba Benchmark Program 13 /14

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