It's Alive — SAP SRM 7.0 in Depth (Part 3)

Continuing on the "It's Alive" SRM 7.0 series, today I'll continue the discussion, highlighting a number of the new functional elements of SAP SRM 7.0. Let me offer an apology in advance for the relative dryness of this series so far -- once I get through some of the most important areas of major functional enhancement, I'll offer a more comparative and lively analysis. For SRM 7.0 prospects, one of the major new features that might prove attractive is basic services procurement capability which brings the application up to levels approaching those of Oracle, Peoplesoft and Ariba in these areas (but not the best of breed services procurement providers). SRM services procurement includes a number of capabilities designed for both contingent labor and other service categories.

Services procurement in 7.0 comes with configurable sourcing templates and workflow that supports the capacity to manage time, deliverable, and goal-based lifecycle models to manage a range of service categories. I spoke to one person close to the solution who said SAP expects that users will use it for monitoring a range of service areas, from construction to outsourcing agreements -- in addition to temporary labor.

SRM 7.0 also includes enhanced contract management capabilities as part of the core application (this is not the CLM On Demand application, which is different). SRM 7.0 includes unified contract objects that enable companies to create a centralized agreement that can be leveraged by both the SRM application as well as the core requisitioning capabilities within the ERP environment. Other enhancements let organizations incorporate additional descriptions in contracts -- not just as attachments -- including supplier part numbers within the SRM environment. Users can now more easily search for contracts on a broad range of metrics (e.g., dates, payment terms, size, etc.)

Additionally, SRM 7.0 includes a number of other contract enhancements including the ability to provide greater contract line descriptions and an enhanced ability to control and access payment terms on multiple levels. Users also have enhanced flexibility to define and implement capabilities around discount release management on a pre-defined set of criteria. Other targeted enhancements include new exchange rate setting threshold capability, enhanced versioning, change and revision controls, greater capabilities to create audit trails, and currency flexibility.

SRM 7.0 also now has embedded analytics capabilities (not to be confused with SAP's Spend Performance Management application, formerly known as spend analytics). The analytical capability in SRM 7.0 allows users at all levels of an organization to access spending information that is going through the SRM system -- from high-level dashboard views for executives through to an OLAP environment for analysts. Given the limited spending data relative to overall organizational spend it captures and a lack of enrichment and classification capabilities, SRM 7.0 is not a replacement for Spend Performance Management.

Overall, in the services procurement, contract management and analytics areas, SRM 7.0 represents a significant step forward. While each of these capabilities is not industry leading, they might prove sufficient for organizations interested in standardizing on a single platform. However, given the ability to easily integrate third-party services procurement and contract management applications with stronger capabilities -- either in a hosted or SaaS model -- I do not believe it's a given that companies who make the switch to SRM 7.0 will necessarily rationalize all of their third party applications. But at least they have an increasing choice to do so with 7.0 if the great IT-led rationalizing sucking sound takes them willingly or unwillingly down that path.

Jason Busch

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