If You Replace Best-of-Breed eProcurement with SAP, Watch Out for Hidden Costs

I was talking to a non-Ariba consultant the other day (i.e., a guy from a third-party consulting firm that happens to do Ariba implementation work, but also works with multiple eProcurement environments) about some of the pitfalls that companies have faced when they move from Ariba to SAP SRM. What I found out will be very useful for those considering changing to any ERP SRM package from a best-of-breed solution.

The person I spoke with suggested that some companies changing from Ariba or another solution with a network-based supplier enablement approach are not aware of the amount of automation they've enjoyed in the past when it comes to exchanging supplier information (e.g., POs, invoices, advanced ship notices, etc.) In fact, one company they were working with had to hire temporary workers to deal with the mountain of supplier paper that a switch to SAP SRM from Ariba created.

Situations like this feel like a huge step backwards from a procurement transformation perspective. It would be analogous to cruising down the highway in the fast lane only to hit stop-and-go traffic -- but on a permanent basis. Not exactly a recipe to drive operational efficiency into procurement (not to mention taking advantage of the other benefits of downstream EIPP and supply chain finance capabilities).

But the good news for companies making the switch from Ariba or another best of breed provider to ERP is that is completely possible to separate out ongoing supplier enablement, automation and management from the requisitioning and catalog management tool itself. I know that Ariba, Hubwoo, Perfect (what's left of it) and others would be more than happy to get a few minutes with any company in this situation to show them the savings that are possible from leveraging an existing supplier network to avoid mounds of paper, among other benefits.

So to sum up my supplier enablement and management advice for any company making the switch to SAP or Oracle: 1) Think through your supplier management and enablement strategy before you implement a new system (and don't take for granted what you have now); 2) Don't let your ERP vendor let you believe that their solution provides everything you have today from a supplier enablement and management perspective; 3) Consider third-party supplier network and enablement solutions providers such as Ariba, Hubwoo, Perfect, Vinimaya or industry marketplace and exchanges.

- Jason Busch

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