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What are the benefits of implementing SAP SRM?

An SAP user wants to know the benefits of implementing SAP SRM, and if it's necessary to also implement SAP BI, XI and MDM at the same time.

We are still in the "discovery" phase to see if we will implement SAP SRM. We've been using SAP for 10 years and have recently upgraded to ECC 6.0. We have a fairly mature end-user base in R/3, with a well-defined IT support model.

Our challenge is trying to justify to management what the benefits of installing SAP SRM will be, considering the...

multi-million dollar implementation estimate. One approach may be to present a phased rollout where we first roll out the Bidding Engine for use by the central purchasing team of buyers/contract officers.

If we do this, do we really need to implement SAP BI, XI, and MDM right off the bat? Our thought is to wait on these until budget is available (we're in the public sector). We are not clear on what is mandatory, and if we should just go with the Bidding Engine at first and then determine what can be phased in during subsequent fiscal years..

You're not alone in the ocean. There are definitely a lot of companies trying to determine the cost benefit/ROI analysis for SRM. But the good part is that there is considerable value in moving forward with SRM, and it's not always in just direct cost reductions. Its costs are hidden in current processes, controls, audits, after the fact reconciliations, etc. -- all of which significantly impact overall costs for the business.

The question about multi-million dollar implementation is very dependent on the scope, timeline, team and implementation partner overall. So, that is a different question all together.

I typically advise my customers to take a phased approach. Frankly, I have yet to see a full-blown, all-SRM functionality implementation that is extremely successful. There are occasions. but ideally the organization needs to implement in phases, so that it can recognize the value of the pieces and decide on what needs to change and what needs to be added over time. A lot of organizations take the approach to implement in focused phases with scope additions in each phase. Many companies have implemented the whole gamut of Operational Procurement, strategic sourcing, Supplier Enablement, collaboration, etc., and only end up using a portion of what's implemented.

The question of whether MDM, XI, or BI is needed is very much dependent on the scope of the project. Bidding Engine could need all of these components, depending on the extent of use. Ideally, if external partners are involved and software update service (SUS) is introduced, then XI is needed. If Bids need to be evaluated in extent, BI analytics would be needed. MDM would be only beneficial in this process if items that need to be bid are repeat and can be catalogued. This is just a quick perspective on a few options available.

What might be of value is for you to try an SRM workshop -- something we have done for a number of clients. It provides a great deal of understanding of where the value might lie for your organization and what it would take to implement.

As you are well aware there are a number of public sector organizations that have implemented SRM, and continue to do so.

This was last published in March 2009

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