SAP Updates SRM

Adds live auctions, services procurement, supplier portal to supplier relationship management solution

Nashville, TN — May 21, 2003 — German software company SAP this week took the wraps off the latest iteration of its mySAP Supplier Relationship Management (mySAP SRM) solution, which adds live auction capabilities, a supplier portal and services procurement features.

SAP introduced mySAP SRM in January 2002, basing the solution on its e-procurement offering, which dated to 1997. This new, third release of the SRM solution, which begins shipping in June, includes functionality for procurement, sourcing, supplier enablement and content management.

On the procurement side, the solution already covered direct and indirect materials procurement processes, but the new version adds tools for services procurement processes.

Faheem Ahmed, product marketing manager for mySAP SRM, said the services procurement functionality takes into account the specific nature of services, such as payment according to an hourly rate and reimbursement for expenses. "If I'm contracting someone to fix my copying machine, when I create the purchase order, I don't know the amount that it's going to cost me," Ahmed explained. "I've agreed a rate that they are going to charge per hour, and I've agreed to pick up the expense for the materials used, but I don't know how many hours they've worked or what materials they've used. You need a process where the supplier can collaboratively tell you what that is, and you also need someone to validate it."

On the sourcing side, the existing solution provided the ability to create request-for-proposal or quote (RFx) events, run reverse auctions, analyze bids and negotiate contracts. Now, Ahmed said, SAP has added more sophisticated analytics to the product so that companies can do global spend analysis, even when the data is coming from multiple purchasing systems.

In addition, the new version includes live auction capabilities, which Ahmed contrasted with reverse auction capabilities. "Reverse auctions run unattended, and suppliers are responding to them," said Ahmed. "But we found that many of our customers wanted to work in a more collaborative fashion, and they don't necessarily want to knock it down to the lowest possible price because their supply base is too valuable for that, and they want to nurture relationships. But they do want to give it some sense of urgency and have events that run shorter. So instead of having an auction that runs a few weeks, they'll run it over a few days."

The live auction capabilities also allow participating suppliers to view the lowest current bid in an auction and the average bid, although the suppliers will not be able to see who is bidding what. Buyers see a "cockpit" showing all the suppliers and their bids.

With regard to supplier enablement, the solution released last year allowed suppliers go to a Web site to view all their incoming orders, acknowledge receipt of orders, send advanced shipping notices and invoices to the buyer (or into the buyer's e-procurement system), or query the buyer about a particular order. This feature streamlines interactions with suppliers that are not big enough or sophisticated enough to have automated order systems. "This is key for all those thousands of suppliers that are critical to your business but that are not so big that they have their own ERP or sell-side system, or don't have the investment to connect with your system via EDI," Ahmed said.

The new version includes a supplier portal that provides a framework, built on SAP's NetWeaver integration technology, which allows suppliers to participate in design and inventory collaboration.

On the content side, SAP in the past has handled content through catalogs, but those catalogs were often dispersed in disparate systems that used different nomenclature to describe the same products or suppliers. The new solution adds a tool for consolidating content. Ahmed said that the tool doesn't change the underlying data in the systems of origin. Rather, the tool creates an overlying table to match up the data and map it to the original systems, allowing for spend aggregation, analysis and management with changing the underlying data.

SAP said that two companies, Pemex Gas and Blanco, have already agreed to deploy the new version of mySAP SRM. Ahmed said that SAP currently has 407 customers live on SRM today, or a total of about 1,800 customers that have licensed the solution, with many still in deployment or pilots.

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