Options For Digital Purchasing: Cloud, On-Premise Or Hybrid?
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Options For Digital Purchasing: Cloud, On-Premise Or Hybrid?

The digital transformation will change economic and social conditions as much as the industrial revolution. SAP-based purchasing also faces a massive transformation.

The great impact of digitalisation is demonstrated clearly by the triumph of smartphones: Within just a few years, the possibility of mobile communication has changed users’ lives – whether it’s conversations with friends, baking, news consumption or Christmas shopping.

The same can be expected now in the business world: Cloud solutions in particular are driving the digital transformation.

“Companies have to adapt by reorienting their products, services, processes and business models and putting their IT systems and IT architects to the test”, says Jean-Paul Wehrens, who is responsible at the IT consultancy firm apsolut as Senior Partner for strategic procurement processes and is a member of the executive board.

He adds, “This includes the job of preparing employees and business partners for their future rules and tasks in getting the corporate culture into shape for the digital transformation.”

IT Becomes the Driver

Digitalisation also requires realignment in purchasing. This includes among other things interactions with IT departments. As Wehrens emphasises: “With the advent of new technologies, the general role of IT is changing from that of mere implementer to an active innovator and shaper of digital purchasing strategy.”

This requires much more intensive collaboration between buyers and IT departments, which has to be established through joint project groups or newly created positions.

Cloud services are becoming increasingly important here because they enable fast, flexible, cost-effective implementation of new purchasing solutions, which makes them an important component of the digital transformation.

In order to develop their full potential, it is recommended that companies integrate cloud services gradually into existing purchasing applications and combine these services with modern on-premise solutions in hybrid approaches until the old systems can be eliminated completely.

In the SAP-based purchasing environment, this primarily involves the cloud services of the new realtime ERP suite S/4Hana and Ariba, which are signposts for digitalisation (S/4 is also available of course as an on-premise solution).

Every company should determine for themselves when and how the new cloud-based purchasing solutions will be implemented in a digital roadmap that is aligned with the corporate strategy and purchasing strategy. Several organisational and technological aspects have to be considered here.

End of Support for a Number of SAP Products Coming

The time has also come for SAP Supplier Relationship Management 7.0 (SRM) with the announcement of the end of support for releases for the core application SAP Business Suite 7 in 2025. After this date, users will no longer be provided with regular enhancement packages and security updates.

Therefore, companies need to develop a plan regarding which operative and strategic purchasing processes will be performed with which S/4 or Ariba solution and when the individual transformation projects should be started.

This is all the more true with regard to the rapid pace at which S/4Hana and Ariba are currently developing: Anyone who does not keep up with the digital transformation will be left behind.
Better performance, lower costs

The real-time ERP suite S/4 as well as Ariba offer a number of benefits for purchasing organisations. At the core of S/4, the in-memory platform Hana simplifies access to data structures considerably, which leads to significant performance increases as well as better opportunities for ad-hoc reporting, analysis and simulations.

By leveraging the cloud-based Ariba network, companies benefit from the ability to collaborate more efficiently  with their vendors when it comes to handling offers, contracts, orders, invoices and payments.

With more than two million stakeholders, Ariba is the world’s largest business and supplier network and provides purchasing organisations with standard interfaces to digitise all their purchasing processes, which saves time, money and resources.

User Experience Similar to the Consumer World

Another important argument for switching to S/4 and Ariba is the new intuitive interface technology SAP Fiori. It provides the purchasing staff with simplified, personalised access to all required procurement functions – mobily from any terminal.

The apps are integrated into individual launch pads with a tiled display and enable experiences users are only accustomed to from the consumer world. SAP Fiori thereby meets the needs of younger users who expect the same ease in company communication devices and applications as in private use.

The companies themselves also benefit from Fiori’s accelerated workflows and lower costs.

Systematic Project Management

With the introduction of the new S/4 and Ariba purchasing functions, a structured and efficient approach ensures projects are successful. In the first step, all stakeholders who are affected by the expected transformation projects should be identified together with HR and IT managers.

This includes not only the purchasing and IT staff but also users from other specialist areas as well as selected vendors.

The stakeholders should work together – for example in workshops – on the definition of a digital strategy and the accompanying purchasing strategy. This produces action areas for the digital roadmap and the strategic orientation of SAP-based purchasing for the coming three to five years.

Jean-Paul Wehrens recommends companies bring a consulting partner on board for this process who has comprehensive expertise and experience in SAP and Ariba-based purchasing: “In our experience, most companies rate their digital maturity much higher than it actually is.

In addition, many SAP users are currently very unsure about which purchasing solutions they should implement over the medium term.”

That is why it makes sense to cooperate with external specialists who can determine the company’s digital status quo using systematic checklists. After the completion of the quick check, each company knows which systems, processes, employees and collaboration strategies are currently in digital transformation and what transformation needs still exist.

Change Management Required

To prepare affected employees and business partners for changed roles and tasks, management should initiate a change-management process. The central building block needs to be a communication strategy that is tailored to the company, purchasing and IT strategy.

“This is the only way to ensure that the digital transformation is supported, for example, by employees, who might be less open-minded about innovations”, points out apsolut partner Wehrens. Another important task is to inform the employees about the effects of digitisation on existing positions.

Wehrens concludes,“An atmosphere that is open to the digital transformation requires transparency about which positions will be lost and which new ones will be created.”


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