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How to get ROI from SAP's SRM

Top 10 SRM tips

Dedicate business executives as champions early in the project.

Don't underestimate the impact of change on your organization.

Provide a single purchasing channel: EBP or ERP.

Work with someone who has done an implementation before.

Know who else is implementing. Make a community.

Calculate the total cost of ownership. Consider the cost of licensing, implementation, hardware, support and future upgrades.

Avoid Big Bangs -- consider a pilot approach instead.

Don't overdevelop, and keep an eye on future upgrades. The SRM product line life cycle is very fast paced, with new releases every six to eight months.

Have a clear plan for knowledge transfer.

Identify metrics and establish a baseline for the success of your implementation.

SAP recently released its latest version of my SAP Supplier Relationship Management (SRM), version 3.0. To find out what the new version can -- and cannot do -- for customers, put some questions to our resident SRM expert, Sachin Sethi. He's an e-business solutions manager at Edison, N.J.-based Seal Consulting Inc. and has worked with the mySAP SRM/EBP product line since its initial BBP 1.0 release. In this interview, he tells users how to avoid SRM confusion and offers his top 10 suggestions for a clean SRM implementation.

What advice do you have for ROI-conscious decision makers considering mySAP SRM?
With mySAP SRM, you have the ability to negotiate lower product costs, reduce the overall transaction costs and dramatically compress your cycle time, but you have to do your homework. To get a feel for what kind of ROI you can expect, you have to look at the big picture. Calculate the total procurement spending. Examine your processes and your timeline, as they stand today, in both direct and indirect terms. When you have the big picture worked out, evaluate your findings and see what parts you have strategic suppliers assigned to, and which ones you do not.

It is a complex project that may take a few weeks to go through, but it is worth it. You may be able to shave off 5% to 15% of your total spending, which gives you an idea of the ROI. This could be pretty good if you already have a license.

How is SRM different from the old SAP eProcurement product, and how does it tie in with Enterprise Buyer Professional (EBP)?
MySAP SRM is an umbrella of solution offerings for the entire process related to Supplier Relationship Management. It covers many areas: strategic sourcing, supplier enabling, and operational procurement and content -- the underlying data that supports the overall procurement and sourcing activities.

EBP is now re-labeled and marketed as SRM Enterprise Buyer, but it remains the key engine that supports the other business processes related to SRM. It seems the release numbers are out of sync at the moment (SRM 3.0, EBP 4.0, etc.) which can be confusing, but hopefully the components of the SRM product suite will be normalized by the next SRM release.

What are the main enhancements to the new version, mySAP SRM 3.0?
The shopping experience has been redesigned to appeal to different types of users: Casual users, frequent users and professional users. This means some users work with shopping carts, others with wizards. These different interfaces are great in terms of usability. Other new improvements include supplier evaluation, global spending analysis and cross-catalog searching, which utilizes the new version of the Open Catalog Interface (OCI). Can you explain the live auction feature?
The basic auction and reverse-auction capability is already there, but the new thing is the real-time monitoring and tracking of different auctions taking place. It has a graphical interface powered by a set of Java-based tools that enables users to participate in a virtual auction floor. You can chat, track participants and follow the action in real time, providing much better visibility than mySAP SRM 2.0. However, the live auction feature is not going to be available until later in 2003. Do you think SAP SRM 3.0 will be widely embraced?
The main reason for creating this product was to enhance usability, and I think they got it right. It is much better. If I were an SAP customer, I would readily go with SAP SRM 3.0. How does the licensing work?
Anyone who has a license already has the Enterprise Buyer Professional solution. It's part of the package, and all you have to do is implement it. Once EBP is implemented, you can go ahead and subscribe to the SRM license, which will give you components like Supplier Self-Services, the bidding engine for RFx, auction capabilities, and so on. Companies need to be on EBP release 3.5 or above to actually license the SRM enhanced suite. Are there any rules of thumb for successful mySAP SRM implementations?
When you undertake an eProcurement initiative, it is not just a software component addition. It is more an organizational shift than a technological enhancement -- you must be familiar with the underlying implications.

It is also important to involve the business process owners and IS support personnel up front in the project strategy, so allocations can be determined to support the new environment. It is also good to have an experienced implementation team with multiple skill sets.


Sachin Sethi is an e-business solutions manager at Seal Consulting Inc.

To provide your feedback on this article, contact Matt Danielsson.

What improvements would you like in the next version of mySAP SRM?
Supplier Self Services within mySAP SRM would be very helpful. There is a need for the ability to directly communicate the forecast and demand, scheduling agreements, and contracts with your suppliers. This would enhance the supplier community for each company and establish a stronger relationship across the supply chain.

Other key improvements I would like to see are the enhanced supplier adoption functionality and consolidation in the overall infrastructure required for the SRM solution. There are a number of components, and each one requires an independent environment. There must be something SAP could do to simplify this. Last but not least, it would be nice to have customer-created, on-demand workflows that don't require a developer making enhancements.

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