On Becoming a CPO and Procurement Transformation at SAP: An Interview with Dr. Marcell Vollmer (Part 1)

At SAP Ariba LIVE last week, I had the chance to catch up with Dr. Marcell Vollmer, who, despite his degree, comes off as anything but an academic. The discussion quickly turned into an interview because I was most curious about his past role as an almost “accidental CPO” at SAP before he became the chief digital officer for SAP Ariba.

Marcell’s internal journey within SAP is one that many aspiring procurement leaders can (and should) learn from. Some of the happenstance activities (e.g., working for a company that acquired Ariba, Fieldglass and Concur nearly concurrently) make his story even more fascinating, as he literally got the “keys to the kingdom” from a solutions perspective while also facing pressure to showcase results using modern technology much more quickly than any CPO could reasonably be challenged to achieve.

I’ll share my notes and commentary from the interview below in this three-part series, and also invite others (including Marcell) to chime in with anything else to add in the comments section — or if I missed anything important to note.

From Shared Services to Procurement

Marcell did not have a background in procurement. He ended up in the function by walking a peculiar path. Marcell was working in finance within SAP and essentially got an offer from the CFO “that he could not refuse.”

Specifically, this job would center on transforming SAP’s internal functions through building a global shared services capability primarily centered on streamlining SG&A. Marcell established the first center, which grew to 1,200 employees, in Walldorf, Germany, and then created additional centers in Singapore and Buenos Aires, Argentina.

These efforts ultimately improved SAP’s financial results by significant margins, and unsurprisingly, Marcell got noticed. From an internal labor arbitrage and efficiency perspective, Marcell noted that SAP saved $20 million in annual costs from the efforts.

At the same time, SAP’s strategy was changing, as well. Roughly around 2007, SAP shifted from an organic growth model to one fueled by acquisition. The first (large) target was BusinessObjects, an analytics provider, followed a short time later by SAP’s acquisition of database firm Sybase.

But SAP was not done. Marcell said the company wanted to transform itself to a future-oriented organization focused on cloud — and it knew this could not be done internally. So within the course of a short period of time, it acquired the three largest cloud-based players in different areas of procurement: Ariba, Fieldglass and Concur.

Targeting Savings: Transitioning From Personnel to Spend

When Marcell took over as CPO, in 2011, SAP spent just over €3 billion annually. He inherited a centralized procurement function with 250 FTEs and a global group spanning source-to-pay (S2P) with an additional 250 resources.

As CPO, Marcell’s charter was not just sourcing, category management and general cost reduction, but also source-to-pay (including accounts payable). When he took the role, he was aware of SAP’s lack of investment in processes and systems. In fact, from an indirect buying perspective, SAP was eating its own legacy dog food, and the primary tools he inherited were SAP SRM 5.0 (with SRM Catalog) and SAP ERP 4.7.

Marcell recounted that when he tried to purchase a laptop with the old system, four or five models (and pictures) popped up in his e-procurement browser window. But none of the actual laptops was actually available — and all the pictures were just stock images. The only thing in common with the actual available (approved) catalog items was the manufacturer, which at least was still the provider of laptops to SAP.

This was Marcell’s first experience with SAP procurement. And he quickly realized what had to be fixed to improve its reputation internally!

To be continued…

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First Voice

  1. Uday Sonar:

    This is interesting. I echo the fact that through global procurement one can get quite a good view of all functions, business and ofcourse the external world and network through partners who are always evolving and provide another window. Being part of global procurement in some ways over the past 18 years, I would be keen to know further about this journey and stay connected with like minded people
    Thanks and appreciated

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