As manufacturers face budget pressures and demands for operational improvement amid a varied and fragmented market for supply and procurement software, many SAP customers are wondering if SAP Supplier Relationship Management (SRM) provides the best set of procurement tools -- or if it’s better to go with “best-of-breed” vendors that can offer more specialized features.
SearchSAP.com spoke to Duncan Jones, a U.K.-based analyst with Cambridge, Mass.-based Forrester Research Inc. about what SAP SRM customers need to know about the SAP procurement software, how to get the most out of the application and how it compares to third-party tools.
SearchSAP: What are some of the strengths and weaknesses of SAP SRM?
Duncan Jones: Some of the strengths are the brand. It’s a rapidly improving product. The latest version of SRM [7.0] is far better than earlier versions. The main strengths are the integration with the rest of the ERP Suite. That’s kind of the main reason why people would buy SRM.
The weaknesses are that it’s maybe not quite as good as some of the other tools in some categories, like in services. There’s no real specialist functionality for services procurement, like contingent labor and things like that. Also, the approval workflow is less flexible than some of the other solutions. With some of the other [vendor] tools, you can configure any sort of workflow approval that you like.
You said that the SAP SRM application is improving. In what ways?
Jones: [SAP has] spent a lot of money developing it, particularly the user interface. It used to be very hard for the people who are creating requisitions. [They’ve] made it easier to find things you need. They’ve added more graphical capabilities, like comparing different items and seeing pictures of each next to each other. You’re better able to compare the capabilities of different products. The whole shopping cart experience is much closer to what people are used to.
How can SAP SRM users get more out of the software?
Jones: Cut down on the approval process. Generally, when you need to buy stuff, you want it now. So if you have a system when you fill out the requisition in SRM, and it has to go through 15 approval levels before the purchase order is created, and you have the purchase order [itself] needing another five approvals, it can be several days before the purchase order goes out, by which time people are tired of waiting. If you have too many approval levels, people just ignore the system; they ring up the supplier and then they create the purchase order after the fact. If you have too many approval levels, you actually end up with weaker controls than if you have the minimum possible.
What about the tools themselves?
Jones: Get as much out of the tools that you can, the catalogs and templates, for example, rather than using free-text requisitions. I’ve seen some companies -- even some quite large companies -- that use SRM for approvals, but the requisition is just typed in [by the person making the order], then someone else turns that into a purchase order for the items. That’s not getting the most effective use [out of the system]. Look at everything that’s being bought outside the system or through free-text requisitions and work out a way to turn it into a catalog item.
What are some things to consider when deciding between SAP SRM and third-party “best-of-breed” vendors?
Jones: The advantages of SAP can be integration, the brand, or you want the financial security of SAP. Maybe you’ve got a great enterprise deal with SAP, so you got a really good price. It may even be free to use SRM. If those advantages of integration with back-end systems are your strategy of going with SAP whenever possible, [and that] outweighs any functional deficiencies, then it makes sense to go with SAP.
Some companies, when they [go with] best-of-breed [software] for certain areas, they end up with lots and lots of different products. So they say, ‘OK, we’ve got too many vendors here; let’s consolidate on a few.’ So they get rid of the best-of-breed products and implement SAP. Then, more things come around the edges, [they gravitate to the new technology the third-party vendor is offering] and it goes through a cycle. You have to have a solid strategy as to when to simplify with SAP and when to get best-of-breed functionality.