This research brief provides a comparison and overview of different e-invoicing elements contained in solutions provided by SAP and Ariba (including invoice/data submission supplier portal, interoperability/integration, network connectivity, etc.) It explores current capabilities of SAP and Ariba (including partner solutions), comparative strengths/weaknesses, operating philosophies (e.g., network centric vs. network/connectivity agnostic) and alternative approaches in the market.
This piece will be of particular use to any prospect or customer of Ariba or SAP looking to develop an e-invoicing strategy, pursue a selection process or look to potential solution upgrades. It also provides insight into possible integrated roadmap and solution direction for SAP and Ariba based on an outside perspective.
Comparative Solution Areas Covered:
- Invoice/Data Submission and Capture
- Matching and workflow
- Network compliance, integration
Part 2 (THIS DOCUMENT)
- Supplier portal capabilities and Discounting
- E-Invoicing/P2P interoperability
- Systems Integration (buyer-facing)
- Invoice/Data Submission and Capture
E-invoicing solutions must account for the "long tail" of suppliers to ensure maximum adoption, visibility and control. It is important to focus on enabling a broader supply base, including those suppliers submitting both large numbers of invoices annually and smaller suppliers (e.g., fewer than 100 invoices per year) – and of course all supplier categories in between. Ariba, through its own solutions, and SAP, through partner solutions, have the ability to capture this long tail. However, Ariba can enable such organically, through its own solutions.
Spend Matters research suggests that for smaller suppliers (in most cases), it is essential to offer non-portal-based solutions for invoicing submission, including the ability to accept PDF/email invoices as well as additional scan/capture approaches for fax and mail (including paper conversion services for organizations wanting to outsource this component). Moreover, virtual printer capability can also let suppliers submit and manage invoices electronically without requiring the direct integration into a buyer's system or the need to submit or log on to an invoice via a portal.
Ariba has invested not only in technology to facilitate smooth connections from an invoice/data submission and capture perspective, but also a shared services group that handles supplier enablement and inquiries. This onshore group has become more efficient and experienced over the years, reducing typical on-boarding time to enable the right types of integration to drive supplier data submission and capture. SAP, on the other hand, has relied on the services of partners, and has placed greater emphasis on OCR-related capabilities rather than machine-to-machine submission and capture through its OpenText partnership.
The joint Invoice Management OpenText/SAP solution is written in ABAP (think COBOL, but native SAP COBOL), so it interoperates, looks, and feels like SAP – for better or worse. Moreover, the solution has material traction in the market, with strong support by the SAP field. For companies that are SAP centric, not at the bleeding edge of a combined procurement/AP transformation journey and are less concerned with taking a network-driven approach, complete with a native supplier portal, discounting capability, etc. in a single functional set of capability facing buyers and suppliers, the OpenText/SAP solution may prove more than sufficient.
SAP does have other partnerships in this area that companies should consider, including Hubwoo and IBX/Capgemini, which have developed their own independent solutions in for submission/capture, taking a more network-driven approach.
- Ariba's invoice submission and capture capability puts it among the stronger providers in the established market. Its network-centric approach has numerous benefits
- The on-boarding process to enable submission/capture electronically or via PDF is faster may be faster for certain competing providers, but Ariba has addressed the speed-to-enable suppliers as well as the on-boarding drop-out rate on a steady basis in recent years
- The combination of SAP and Ariba, from a data submission/capture perspective is likely to put pressure on SAP partners, including OpenText, which have currently focused on creating enabling capability around the SAP SRM ecosystem and basic inbound invoice automation capabilities (which have historically taken a more OCR centric approach). Looking forward it is likely these partners will need to take a more holistic approach, combining the network approach of a Hubwoo/IBX with the AP automation approach of an OpenText
- Spend Matters believes that Ariba's submission/capture and network integrated capabilities in this area will likely form the basis of SAP's go-forward strategy from an integrated purchase-to-pay perspective (the OpenText solution is likely to continue as a more AP-centric invoice automation toolset for the foreseeable future)
Matching, Workflow, Network Compliance, Integration and Reporting
Matching and workflow comprise an essential component of a broader electronic invoicing deployment. The ability, for example, to support both off-the-shelf and highly configured – as well as everything in between – validation processes is important. Depending on spend type and other systems, organizations may wish to match off of contract terms, POs, receipts, terms/schedules and other sources. Ariba delivers a range of flexible matching capabilities and has few limitations on workflow configuration. Both SAP and Ariba claim the ability to configure over 70 specific rules. Through OpenText, SAP offers an AP-centric workflow configuration capability. Both solutions support additional configurable rules for exception handling.
Regardless of matching linkages, the ability to configure rules (by invoice amount, dates, quantities, geography, business unit, supplier type/code, material item/code) can become important. In all cases, implemented solutions should enable routing invoices to specific approvers based on a rules-driven approach that leverages exception-handling capability for straight through processing under ideal submittal circumstances. SAP and Ariba can enable these capabilities.
While Ariba was ahead of SAP for sometime in specific capabilities, the combined OpenText/SAP solution has added significant capabilities in the past 18 months, including the ability to post a non-PO invoice with appropriate approval (and exception) routing. SAP notes this approach is important within the EMEA (Europe/Asia) marketplace because VAT reclamation processes "require quick posting but the invoices still need to be approved."
Reporting capabilities of complete electronic invoicing deployments should, at minimum, include baseline reports and metrics to measure performance against. Ideally, an organization should understand its performance in relation to other organizations. Benchmarks in areas such as cost (e.g., cost per FTE to process an invoice, cost per transaction type), overall productivity, supplier quality (e.g., submission accuracy) can be helpful to comparatively measure results and define working goals and desired end states.
Ariba offers significant flexibility and granularity within the application environment itself depending on level of customization/configuration, although competing third-parties (e.g., Basware) embed greater AP-centric benchmarking capabilities and services. SAP includes nine standard out of the box reports through the OpenText solution and supports basic KPIs (e.g., straight through processing %) as well as the ability to build custom reports.
Also important to enabling a broad, global supply base through e-invoicing is ensuring interoperability amongst all supplier networks an organization might interface with to integrate suppliers of varying size, capability and readiness for electronic invoicing capability. Supplier networks can be helpful in enabling suppliers by codifying specific data capture/field standards and formats.
Networks interoperability and localization can be especially helpful in certain markets with stringent VAT and other reporting requirements triggered by an invoice submission (Brazil, Nordics, etc.). Perhaps most important outside of specific geographical requirements, networks can help companies electronically enable vendors (especially smaller suppliers) who might otherwise still push invoices in a less than fully electronic manner (e.g., email/PDF).
While Ariba's approach to e-invoicing adheres to a network centric interconnectivity approach at the core, SAP Invoice Management is, in their words, "agnostic" to the medium used to convey and exchange invoice and related documentations between supplier and buyer systems. The character and document recognition capability, which form the nucleus of the core OpenText platform, enables a range of additional downstream capability, including archiving, document management and extensive audit trails.
Ariba supports similar capability in behind-the-firewall (Buyer, or upgraded Buyer) or in cloud deployments with extensive configuration capabilities, but the AP-centric approach SAP takes might be more appropriate for those organizations looking to drive AP automation from a non-buying, shared services perspective – or even more basic distributed automation. In other words, the "second P" alone in "P2P".
Still, we believe Ariba's overall native matching, workflow, network compliance/integration and reporting capability presents a more encompassing and holistic solution for those companies which want to more tightly integrate not only eProcurement, eInvoicing and invoice capabilities together but also buyer/supplier connectivity that spans all supplier relationship types, sizes and frequency of document interchange. It is possible to adopt a similar approach with SAP, OpenText, Hubwoo and potentially other partners – but it would require working with multiple parties and stitching together different solution elements.
While we will cover some of these areas later throughout this research brief, when it comes to the supplier network specifically, we give Ariba's network an edge on a global basis over SAP's (and SAP's partner ecosystem) network in terms of reach, mass and localization (the Quadrem acquisition helped in this regard). However, for global signing and related compliance, many solutions, including Ariba and SAP's partner solutions, rely on the same Trustweaver certifying authority and components.
Moreover, in Latin America, SAP partner Invoiceware is far ahead of the curve in country-specific (Brazil, Mexico, Argentina) capabilities, providing solutions in native SAP environments. Companies may also wish to consider additional network connectivity approaches to supplement SAP solutions from OB10 and other providers.
- In the broad e-invoicing bucket of matching, workflow, network compliance/integration and reporting, Ariba is ahead of SAP's native and partner capabilities in most areas on an integrated basis, but SAP does offer solid internal AP capability built off of an invoice-automation centric view of AP enablement
- We believe that Ariba capabilities are likely to be adopted by SAP in this regard on an ad-hoc basis as quickly as possible, leveraging the Ariba network (and hosted P2P components) where possible; the OpenText relationship may remain, but we believe this will be for a stand-alone solution targeted at AP only
- Combined SAP/Ariba Analytics, benchmarking and cross-network intelligence/reporting capabilities are likely to be enhanced, eventually, by HANA, creating a network effect that is missing today from the Ariba offering (and others in the market, for that matter)
- From a network perspective, Ariba's global footprint and reach including local compliance presents a more comprehensive singular offering than SAP's native capabilities (however, SAP partners such as Invoiceware may present specific capabilities and experience in certain markets, such as Latin America, which can be complementary on a localized basis)
- Both Ariba and SAP offer a wide range of business rules configuration and validation although Ariba's network-centric capability can address potential exceptions before they go through the firewall (or into the application layer)
- Broadly speaking, Ariba's complete e-invoicing and network will likely form the basis of SAP's go-forward strategy, with OpenText serving in a more targeted optical and document recognition centric role for AP-driven – vs. broader P2P – automation
- A range of other providers, including Basware, Verian, Invoiceware, Pagero, b-pack, Ivalua, GEP, Hubwoo, IBX/Capgemini, Taulia and WALLMEDIEN, among others, offer variable levels of matching, workflow, out of the box rules, approval and related capabilities. Among these, our own research suggests that Basware and Verian have the most experience in the US market complementing (eProcurement), and occasionally displacing (P2P), depending on circumstance, broader Ariba solutions in this foundational area of e-invoicing enablement (along with associated capabilities elsewhere described in this two-part brief). As competitors (and partners or substitutes), Invoiceware and Basware have the broadest global footprints (but particular expertise in certain geographic markets). AP automation/invoice automation vendors (e.g., ReadSoft, Brainware, etc.) should also be considered in cases where the focus is on scanning/capture and AP centralization/shared services -- and to a lessor degree, e-invoicing connectivity and broader enablement