SAP S/4HANA Procurement – Considerations for customers with SAP SRM

I’m part of SAP S/4HANA Regional Implementation Group with a focus on procurement. We have been supporting a few hundred customers on their journey to SAP S/4HANA. This allows us to get a good impression in the challenges customer face and topics which are important for them. This blog will address the question what existing SAP SRM (Supplier Relationship Management) customers should consider.

In November 2015 SAP introduced SAP S/4HANA the companies next generation of its business suite. The market introduction of SAP S/4HANA was the starting point of transitioning functionality from the “satellite” systems back into the core or into strategic cloud solutions.

The term “satellite” is being used to describe systems like SAP SRM (Supplier Relationship Management) or SAP CRM (Customer Relationship Management), which provided additional or extended capabilities compared business processes supported in SAP ERP (Enterprise Resource Planning).

In the procurement space this meant that selected business capabilities supported with the SAP SRM Suite are planned to be transitioned and supported with SAP S/4HANA, SAP Ariba or SAP Fieldglass.

Especially customers using SAP SRM are raising questions on what they should do, with SAP S/4HANA becoming more mature and them planning their journey to SAP S/4HANA.

It is not the intention of this blog to provide a final conclusive answer, but to provide some considerations helping customers define their approach.

What is the right procurement solution?

One of the most common questions raised from customer is “Which solution should I use?”. This is one of the key driving principles for SAP S/4HANA, the Principle of One.

This principle is being used to describe two aspects:

1. The first aspects address the technical need in SAP ERP to store the same data in multiple tables to provide end users with the best performance.
2. The second one addresses the historical challenge that often multiple solutions are available to support business processes.

I’ll focus on the second aspect.

SAP traditionally had an overlap of functionalities in SAP ERP and SAP SRM. For example, SAP ERP provided a simplified Shopping Cart experience and SAP SRM provided a Shopping Cart ranging from simple to complex. You will find a similar scope comparison for the supported sourcing capabilities in SAP ERP and SAP SRM.

With the acquisitions of several other solutions and the organic growth of capabilities in SAP SRM, it became more challenging for customers to understand which solution best supports their needs and which solution would be the strategic one from SAP side. In the procurement space, SAP offered Sourcing and Contract Management capabilities with:

• SAP ERP
• SAP SRM
• SAP Sourcing and Contract Lifecycle Management
• Ariba Sourcing & Ariba Contract Management

The above-mentioned solutions are not a conclusive list. Even within some of the solutions multiple consulting solutions have been offered or different functionalities depending on the industry solution, e.g. SAP SRM and SAP SRM PPS (Procurement for Public Sector).

The introduction of SAP S/4HANA, as a legally new solution, allows SAP to clean up and focus the innovations on the strategic solutions like SAP S/4HANA, SAP Ariba and SAP Fieldglass.

SAP provides a Transformation Whitepaper describing the combinations and integrations between SAP S/4HANA, SAP Ariba and SAP Fieldglass solutions.

The SAP solutions are changing, and the latest available version is reflecting these changes and SAP’s recommendations. The link doesn’t change when a new version is made available.

You should download the document in case you want to understand SAP’s latest recommendations.

What steps should an SAP SRM customer take to prepare?

In this section we will focus on 3 key steps you should consider for planning your transition journey from SAP SRM.

The first step will focus on the technical side of your deployment. From there we shift the focus to the business requirements your solution needs to support. It is important for you to have a good understanding to select the correct approach for your organization. In the 3rd and last step we will touch on the innovations which could address some of your existing pain points.

Step 1: Customers should have clear understanding on the technical applications being used to support their procurement processes.

Within SAP SRM we are offering multiple technical solutions. Customer might be using the following technical solutions:

• SAP SUS (Supplier Self-Service)
• SAP SLC (Supplier Lifecycle Management)
• SAP SRM Catalogue, also called SRM-MDM
• SAP SRM, with the different applications, e.g. Shopping Cart, Sourcing, Contract Management
• SAP Portal

The above-mentioned solutions might be integrated with SAP ERP in different ways, e.g. you may have integrated SAP ERP and SAP SUS to enable Service Procurement.

This is important, because the change required will be different for each of the solutions. In case you are using SAP SLC, two Simplification items, described in the Simplification List, would have an impact on your next step:

The first SAP Note 2267719 describes the steps required, if you want to continue using SAP SLC as a standalone solution with SAP S/4HANA. The second mentioned SAP Note 2271188 provides information about the business capabilities transitions from SAP SLC into SAP S/4HANA.

The deployment option of the solution may have an impact on your next step, e.g. the OneClient deployment option of SAP SRM is not supported with SAP S/4HANA.

Other solutions may not be impacted at all, e.g. the integration between SAP SRM and SRM-MDM.

Step 2: Understand your business processes and your business requirements.

In the introduction of the blog I mentioned that the “introduction of SAP S/4HANA was the starting point of transitioning functionality”. The word “transitioning” is important. Whilst we are supporting capabilities from SAP SRM in SAP S/4HANA this does not mean the feature and functions are the same.

To give you some examples:

1. We have introduced Self-Service Procurement capabilities in SAP S/4HANA, which are like the ones provided in SAP SRM with the UI Add-On. In case you compare the configuration guides you will find a lot of similarities, but the supporting technologies are different and the underlying data model. For example, there is no TREX using in SAP S/4HANA and the Self-Service Procurement is technically based on the Purchase Order Request and not a separate data entity like the Shopping Cart in SAP SRM.
2. The Fiori Manage Purchase Requesting application (F1048) allows you to display purchase requisitions, assign sources of supply and create follow-on documents. It therefore provides similar capabilities like the Sourcing Cockpit in SAP SRM, but it has been newly developed.
3. SAP SRM provides strong Workflow capabilities, and which provide a lot of flexibilities. You will now find out of the box workflow capabilities in the procurement space in SAP S/4HANA. These have been newly developed and can be used instead of the traditional release strategy, which is still available for SAP S/4HANA On-Premise customers. SAP SRM customers need to check, if the new workflow capabilities support all the features they may be using in SAP SRM.

It is important to understand the differences between the as-is solution and the target solution. Customers implementing SAP S/4HANA may want to evaluate the capabilities they can consume as part of their transformation journey.

My examples focused on the difference between SAP SRM and SAP S/4HANA. You should do this comparison as well, if you plan to move, for example, from SAP SRM to SAP Ariba.

This will help you managing the underlying change aspects, e.g. technical changes, configuration changes and most important the potential business changes and end users’ expectations.

Step 3: Understand your business challenges and the system innovations.

A possible transition from SAP SRM to SAP S/4HANA may be a good opportunity to review the existing business processes and align them with the future needs of your business.

The above 2 steps focused on the past with the technical changes and comparable business capabilities. Whilst this is important the reason for all of this is to establish a new technical platform and focus on the new innovations this will allow SAP to develop and you to consume.

In the last releases we enabled new intelligent procurement capabilities in the areas of:

• Improving the User Experience, e.g. Procurement Overview Page
• Situation handling, e.g. Overdue central Purchase Order items
• Machine Learning, e.g. predict future consumption of contracts
• Blockchain, e.g. protect RFQ Biddings
• Natural Language Processing – using Co-Pilot, e.g. Smart Buying via Natural Language Processing

Colleagues prepared some videos, which provide a first impression of the innovations SAP made available in SAP S/4HANA, based on standard SAP roles:

Use the opportunity to review your business processes and build your business case with the new innovations in mind.

General recommendation

Each customer journey will be a little bit different, based on their current deployment. We started into a new year 2020, a new decade. This means that customers have 7 years to transition to SAP S/4HANA. This may sound like a lot of time, but time really goes by very quickly.

We, the SAP S/4HANA Regional Implementation group, strongly suggest customers to start their journey to SAP S/4HANA. For us the focus is on the actual transformation of the core system meaning SAP ERP to SAP S/4HANA.

The good news for most SAP SRM customers is, that they can in many cases continue to use their existing SAP SRM system with an SAP S/4HANA system. This is a topic, which is being raised more often and we have live customers running SAP SRM, even SAP SRM PPS, with SAP S/4HANA.

Please check the SAP Note – 2611066 – SAP SRM and S/4HANA. The SAP Note refers to several other, related SAP Notes, which should be checked.

The benefits being able to run an SAP SRM system integrated with an SAP S/4HANA system allows you to:

1. Minimize the overall project scope, potential risk and cost.
2. Transition capabilities and introducing changes within your timeframe.
3. Allowing you to test and understand the innovation in SAP S/4HANA, e.g. in a Sandbox system.
4. Allowing you to introduce innovation in the area it provides benefits.

This is something in general feasible with the other “satellite” solutions as well, e.g. SAP CRM.

Brought to you by the SAP S/4HANA RIG

Related Blogs:

SAP S/4HANA Procurement – Can I integrate SAP SRM with an SAP S/4HANA system and what do I need to do?