This is the first part of a two-part interview series with Manfred Heil. Heil is Senior Vice President, SRM, at SAP. Formerly, he was an executive in GE's procurement and sourcing group in Europe and served as CEO and Founder of Goodex, a European sourcing company.
Spend Matters: Please tell us a little about your background and experience in the sourcing and procurement sector.
Manfred: Back in the nineties I worked for General Electric as the sourcing director for one of their European divisions. We dealt with a complex mix of direct and indirect materials. Back then, GE was following an aggressive acquisition path and we had to integrate an entirely new company every six months. Simultaneously we also drove low-cost-country sourcing -- Welch's strategy was to exploit the crisis situations in South America and Asia so we moved our sourcing volume around the globe wherever possible. Later the first bidding events came up and Welch again hammered all of his businesses to adopt the concept. "Make it auctionable," he said to people who thought certain categories would not fit to the concept.
GE was a great experience for me. We had a strong focus on systems that could flexibly support our strategy of expansion and globalization. Yet, the true success factor was clear direction and leadership from top-management.
Spend Matters: What is your perspective on the current state of SRM and Spend Management? What are the biggest changes that you've observed in the market in recent years?
Manfred: Supplier Relationship Management has matured from a conceptual perspective as well as a systems view. Many companies have gone through a trial phase, doing one-off auctioning programs with best-of-breed applications or via service providers. By and large their early experiences were positive, but they seldom scaled within their organizations. That's why the focus today is shifting towards adoption and integration.
Take the marketplace concept of the late nineties -- back then the promise was to actually find better suppliers over the web, providing value-add services and content. But today, companies simply ask for robust and affordable supplier connectivity, almost like the products provided by the utility industry. The same is true for auctioning -- a few years ago people were crazy about new features and functions in that area, even combining it with simulation and optimization. But honestly, where is the business value of inventing the 400th variant of a reverse auction if you haven't adopted the basics and reached critical mass in your organization?
What began as point solutions for connectivity, negotiations or contracts is now growing together into comprehensive, integrated suites. And those suites have to be integrated into the various backbone systems to make them scalable.
Spend Matters: To what do you attribute SAP’s growth in SRM?
Manfred: We've been growing by 35% in the first half of 2005. Two factors are essential for this growth. First of all, we’ve been investing in the solution and the increasing maturity of our SRM suite has triggered investment decisions within the market. More and more companies are now replacing various point solutions with our integrated suite. Secondly, we have changed our roll-in process and go-to-market strategy to look at SRM as a business topic instead of an IT problem. As a consequence we have intensified our discussions with procurement departments and made a concerted effort to understand the business needs first-hand from end-users. In many accounts we became the trusted advisor of the CPO, not only discussing tools and systems, but having an ongoing dialog around the business.