openSAP

Introduction to Ariba
Week 1 Unit 1
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Welcome to the course overview for Introduction to Ariba. Hello. I am Michael Koch,
director of solutions marketing-Ariba.
This course will explain how Ariba and the business network change the game for
businesses in the digital economy.
You will learn that in order to keep up with the demands and expectations of a global
marketplace, companies must connect, interact, and integrate
faster and more efficiently than they have ever done before. The Ariba solutions provide
the platforms and connections
that deliver connectivity, efficiency, and collaboration that allow user experiences on any
device at any time.
I'm joined in delivering this course by Lloyd Keays, global head of the Ariba business
network presales architects.
Also joining me is Drew Hofler, senior director for Ariba solutions marketing. And finally,
Elizabeth Craymer, senior director North America seller account management.
This course will consist of 10 units, and will deliver video lectures, self-tests, customer
examples, and a final exam.
Over the course of the program, in total, you will need about 3.5 hours of learning time to
complete the video lectures and the final examination.
Everyone who completes the course and passes the final assignment will receive a record
of achievement. It confirms the successful completion of the course.
In the first unit, we'll introduce the Ariba soluions and the digital economy. explaining how
this hyper-growth time we live in is driving change at an unprededented pace.
We will also get right to work covering our solutions. We will start with better ways of
analyzing your spend and learning how you can better manage your supply base.
In the second unit, we will continue covering the Ariba solutions and the Ariba suite. We
will begin with Sourcing Professional and how it can impact your procurement processes.

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We will then move into Contract Management, a natural flow in the buy-sell process. Next,
we will look at how the Procure-to-Pay solutions can deliver end-to-end integrated
solutions.

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These core business functions streamline integration with internal and external processes
and drive better collaboration with your customers, partners, and employees.
In the third, unit, you'll take a deeper look at the Ariba Network and value for both buyers
and sellers.
We'll detail how Ariba empowers buyers by helping them address core processes and
opportunities to maximize the transactions
with payment options and insights into invoicing processes. We will also look at how Ariba
enables sellers to increase their top-line growth,
increase wallet share with existing customers, and find new business opportunities. We
want this experience to be as interactive as possible for you.
That's why the online lectures are complemented by an online forum. Here, you can
discuss all of your questions, comments, and ideas
with your fellow students, Ariba experts, and the instructor himself. I'm sure you will enjoy
this introduction to Ariba.
In the next unit, we will take a deeper look into the digital economy. Thank you.

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Week 1 Unit 2
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Welcome to back to week 1, unit 2: Ariba Solutions and the Digital Economy. If you have
not seen it, Ariba president Alex Atzberger presented in another course
how Ariba fits into the digital economy in which we live today. Over the past 40 years, we
have seen a very rapid advancement in the use of technology in business.
We have moved from writing letters and mailing them through the postal service to e-mail
and text.
The computer has gone from a big box sitting on your desk taking up space to something
more powerful that you can hold in the palm of your hand.
We have migrated away from manual processes to technology-led business collaboration.
with minimal human involvement.
We have seen it every day in our personal and work lives. Think about all the devices you
have connected to the Internet,
how many social media texts and chat applications you use every day. Now look at your
family and your business networks. That's a lot of devices.
It includes not just your cell phones or computers or tablets, but also it's the gaming
consoles and the televisions,
and even automobiles today are equipped with networking devices. There are more
devices connected tto the Internet today than there are people in the world.
Now with all of that, think about how you manage buying goods and services
electronically, not just from your personal standpoint, but from a business viewpoint as
well.
Everything is about buying quickly, efficiently, and simply. The world has continued to
change, and so have business challenges and opportunities.
Today's world is digital and networked. The pace of data generation is accelerating.
In the last 2 years, it's said over 90% of the world's data has been generated. Over the
next 2 years, there will be a 40% growth in the adoption of business networks.
And by the end of the decade, over 212 billion things, from cars to heavy equipment to
consumer appliances, will all be connected to the Internet.
By 2020, there will be 9 billion mobile users in the world. Last year alone, 51% of
workloads were processed in the cloud.
That amount will only continue to grow. Companies have worked hard at being digitally
connected within their businesses.
But they still have a long way to go to get connected to other companies. Over the next
few years, businesses will connect in the same way
people have been connected on social networks. Believe it or not, more than 80% of
purchase orders and invoices
and other transactions will still take place offline, involving lots of paper and people and
inefficiency.
By some estimates, this inefficiency can cost businesses as much as $650 billion per year
in missed sales opportunities and higher operating and supply chain costs.
And slower cash management and cash flows. Digital networks allow you to do new
things to reimagine your business
to add new services. In fact, Ariba is already delivering on it, connecting you to a digital
marketplace through which you can discover, connect, and collaborate
better than ever before. All of this starts in the procurement organization.
Procurement has evolved from a cost-saving function within the organization to a more
strategic relationship both internally and with suppliers.
But CPOs need help to havigate a changing environment. Competing pressure on
procurement organizations include economic volatility,
increased globalization, a focus on risk and regulatory changes. Also, there is continuous
pressure on margins

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and new business models such as outsourcing and the reliance on big data. As the leader
in cloud-based procurement and invoice solutions and business networks,
Ariba provides everything you need to digitize your commerce activities and simplify the
way you operate. It helps facilitate or eliminate all the hassles of paper, the phone calls,
the manual acts you perform each day to find new suppliers or business opportunities. It
provides you a place to manage orders, collaborate with customers or partners, or even
just get paid.

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Every company needs to be able to work with suppliers in a completely different way in a
digital economy. Companies cannot manage suppliers based on cost and price or service
alone any longer.

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Suppliers are also looking at the value of a network economy. Ariba provides benefits to
both sides of the buy-sell organization.
Benefits include lower costs, greater efficiency, and transparancy into the order process
with better data accuracy.
Businesses can see an improved working capital, whether through increased sales or
cash management.
Overall, you can see an increase in customer retention to help your customer sustain your
procurement and sales goals.
All of the Ariba solutions come with a network of suppliers and procurement providers to
help support the spend and the overall process in a digital manner.
We are the only company that can deliver on this. Our vision for business collaboration is
threefold.
First, there's an end-to-end integration throughout the enterprise. Business collaboration
starts with automating, digitizing, and standardizing
your own internal processes to meet the requirements of the future. Secondly, to have a
collaborative and highly connected network with a broad range of suppliers and partners
with the ability to be category-specific. There is not just one single way to collaborate with
business partners.
Business collaboration takes e-business beyond simply sending a PO and receiving an
invoice. And third, having scale and breadth that extends to the benefit
of new categories of spend across industries and regions. It's not a one-size-fits-all
environment.
Collaborative commerce also means extending the benefits of the business network to
new categories of spend.
Only Ariba Network, powered by HANA, can meet the above critera to facilitate that
collaboration.
Now that we have seen how Ariba can help your company drive results in the digital
economy, It's time to look at the solutions.
In the three main areas of plan, buy, and pay, we will look at an overview of each solution
and how they closely integrate data with workflows within the procurement process.
To give you a quick preview, enjoy this closing video presented around how plan, buy,
and pay can work for you.
Thank you.

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Week 1 Unit 3
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Hi. I'm Lloyd Keays. Nice to meet you. And I'm going to be taking you through the journey
of the Ariba modules.
The first one is Spend Visibility. In this unit, we will discuss spend analytics and how
enrichment can help your procurement.
But before we start, I would like to show you a little film I made, just to go over the entire
process.
Whoa! I guess I've just been procured. So let's talk about procurement.
Procurement is at the center of every business. It takes care of obtaining what the
business needs for its operations.
I'm going to show you how Ariba goes one step further by merging all the functions of
procurement into one single tool
that even includes finance and the suppliers. So let's start this journey with a concrete
example.
Peter, our security officer, will be needing first-aid kits. Now, this is only one example of
many. MRO, goods, services that are covered by procurement.
Let's go quickly over the process. We'll come back with a demo. So Peter goes into the
internal catalog
and makes a requisition with first-aid kits. This then needs to be approved by his boss
and then it becomes a purchase order. For the sake of simplicity, when you see blue, it's
related to the buying process.
When it's going to be orange, it's the pay or the supplier interaction. And later, when we're
going to look at green, it will be the planning phase.
So the supplier receives the purchase orders, confirms it, and sends a delivery
notification, for example.
At that point, Peter receives the good into the system so that when the supplier sends an
invoice,
it can be matched with the purchase order and with the receipt for good compliance, and
it's ready to be paid.
This was part 2 of the procurement process. It was the operational part. Now where do
you think this first-aid kit came from in the first place?
Well, it came from a contract and this contract was negotiated with many suppliers
that were pre-qualified, registered, and some of them were even discovered in emerging
markets, for example.
And all of this is based on the procurement planning that you did in the beginning of the
year based on your spend analytics.
So you see now in green how the planning phase gets then executed during the buying
process,
all the way up to the supplier who sends an invoice. So what gets paid is what was
negotiated
and what gets planned gets executed. And this is how Ariba merges the planning, buying,
and execution or paying phase of the process
all under one tool, under one login, both for the supplier and for the buyers.
They say that knowledge is power. Power to change things, power to understand, power
to decide on what should be done.
In context of procurement, understanding your spend profile and purchasing behavior is
key to improvements.
This being said, every company has one form or another of reporting about their spend.
Sometimes it comes from purchase orders recorded in a data warehouse.
Sometimes it comes from Excel spreadsheets. But most of the time, the data that is used
for reporting is financial data.

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How much was spent, in which financial ledger. This kind of report is good for margins
and turnover
but it's not so adequate to help procurement do a better job. It's even worse when the data
comes from invoices that were scanned.
Often, you have limited line item information which would give you a clue about what kind
of spend this is.
Was it services? Was it office supply? Was it from a contract? If there was no purchase
order, who ordered that?
Did we pay the good price? All those questions are difficult to answer when the data
sitting in the ERP
is used in its raw form to provide intelligence. It's rather limited.
In this module, we will explore how the Spend Visibility solution of Ariba delivers what I
call "actionable reporting".
In other words, with the help of the enrichment, classifications, supplier rationalizations,
and other mechanism to enrich and revisit the data,
we will deliver spend analytics that are suitable for procurement. Let's look at the situation.
The fundamental problem to be addressed here is the fact that raw data is very difficult to
use as such. There might be various sources of data.
I mean, I know a client that has more than 120 ERP systems worldwide. Imagine the
complexity of trying to align all this data into a single model.
And we're not even talking about languages. The data itself is often poor and badly
classified.
Some companies might have something like 25 GL accounts for which they classify their
spend. This is the limit of their reporting.
You can only know what has been spent in those 25 categories. This means that you can
only produce very high-level reports
that give you hints of what the data might be. To make an analogy, if you receive a very
small image on your smartphone
and try to zoom it, it's never clear. It never as sharp as if a high-resolution image was
delivered.
You might have an idea of what the details are, but it's your imagination that is filling the
gaps rather than proper knowledge
There is limited decisions you can make to improve your procurement. You can
acknowledge that the spend that is processed in procurement is there.
You can provide general guidelines of what you think should be improved, but it's very
difficult to obtain a good healthy pipeline of sourcing goals for the next year for example.
I remember some years ago, I was visiting a state bank and I was doing some spend
analytics for them.
I discovered an anomaly in the spend of about 8 million euros, or 8 million dollars, if you
prefer.
I failed to notice the face of the chief procurement officer in the room. I went on, telling
them how interesting that this is,
and this came from a category that was called "Art Work". At that point, my spend
analysis had uncovered something that the procurement boss didn't know.
I tiptoed out of the conversation. But the fact remains: This data was not hidden.
It had been there all the time in the first place. But since they could not report on a
granular level,
it was washed in a bigger spend bucket and nobody noticed it. So what does Ariba do
about this?
Well, first we ask our clients to send us all their data in their raw form, in any source that
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We then use a mix of technology and human reviews to cleanse and enrich this data.
This would is done by a team of professionals in Ariba
because we believe that technology is not sufficient to really enrich the data. Then we can
add benchmark data to help the client run reports, understand their spend,
have a sourcing pipeline, know which suppliers are duplicates, or which ones should have
e-catalogs,
or even calculate how much costs are caused in accounts payable because of paper
invoices. Let's summarize how this works.
First, the data from any system or any ERP is extracted. Our teams can help the client
extract the data at regular intervals
and then align the format in a useable way. The end goal is to create one "language" for
reporting across all the different types of data.
Then our team performs several actions. We classify the spend according to the
international standard called UNSPSC.
We also provide a more procurement-friendly taxonomy. Example: At the lower level, an
LCD screen would be part of Displays,
which would be part of IT Hardware, which would be in the IT Technology category.

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The results are presented in our HANA-powered analytics interface online. And there,
you can use the prepackaged reports provided
or create any report on your own to drive your procurement. Finally, the decisions you will
make will get implemented
and with the help of the same analytics, you can come back one year later to see what
was planned and if it got delivered.
Let's look at a demo. We're going to look here at Spend Visibility. We're going to have a
little demo here of the system.
First, when you log in, you have a dashboard. This is your landing page. It's fully
customizable. You can put everything you need in there per user
Let's zoom in here. You see on the left this was the data before we did anything, from the
ERP.
And on the right here, we have the information about the classification

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once our team did the work. If we drill down into the report,

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now we see the data itself. This is how the pie chart was made. And this is a spend cube.

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You can basically move, select, drill down to search and find opportunities or behavior that
you want to analyze.
If I need to add more information, I can take, for example... For example, here I'm hiding
some categories to better refine
or I can drag and drop the supplier information here to add this new set of data inside the
system.
And this helps me find out everything I need to know Who are my top suppliers, with
whom do I need to do better contracts, and things like this.
All my categories are there. I can derive my planning based on this. The system will let
you create pie charts and different visual formats
that you can publish back into your own dashboard. You can share, you can export to
Excel.
There is everything you need in there to use the reporting. So let's look at different types
of reports you can have.
We're going to go here to organization. I see the spend based on who ordered, which
categories,
which place in my company, which employee has ordered. I can also see some specific
categores that I want to zoom

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or even forecast savings. I want to achieve 20% savings in this category this year. Has it
happened? Has it not been done? Where is my status right now?
Then we have opportunity analysis. Here, we use a benchmark from Ariba. Ariba has
calculated a lot of savings based on spend that was done through its system.
and we see well, in this category, we typically do 27% savings in sourcing. This what your
spend would have the equivalent of this amount.
It's a nice way to have a pipeline of what you do. Other things here. Fragmentation. 250
suppliers in 100 cost centers.
This is all little suppliers spread out around all the different places of your organization.
That's difficult to control. That's another opportunity. Try to regroup this.
Now let's look at other kinds of information. We've brough benchmarking to the story.
Consumer price index, movement,
different kinds of Dun & Bradstreet, for example, benchmarks that are here. And it lets me
see what's the difference between the market and what I pay.
What's the difference between my behavior and my peers? And that helps to see if you're
doing well or if you could do a little bit better.
Now we're into another area where we see the suppliers themselves. And this was also
heavily enriched. You see the supplier before and after.
Before, you see the list is different. It's not the same orders. Basically, who you thought
your suppliers were,
they're not necessarily that in reality. And the spend that is done in different one of those
buckets,
this one is pretty much the same, Kelly Services, it has not changed. But if we look at IBM,
$109 million and $111 million.
There were 2 millions that were hidden somewhere that we didn't know about. It came
when we rationalized the suppliers. So if we look into this supplier rationalization, we have
an example here.
Imacle was four different suppliers in your system and we summoned it back into one
family, the parent company, which is Imacle,
who also includes San Macrosolids, for example. To help you drive this information,
we will provide a lot of prepackaged reports. We will deliver it as a standard menu report
in different topics that will help you
explore, understand, and take decisions about your spend. Here, a different example of
supplier reports that can help you understand that landscape
or commodity analysis. Just another example here. What can you do to better understand,
have a good visibility about how to track your spend.
Ultimately, this is to drive better compliance.

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Supplier Information and Performance Management. In this module, we will discuss two
processes around the suppliers.
The first one is their profile in their system, then second one is their performance and
quality.
Let's start with their profile. What do you think I mean by profile do you think?
In procurement, a supplier is not only a name and a phone number. That's a phone book.
There is much more information needed about the supplier for different reasons.
To give you some examples, you might need information about the type of products or
services the supplier delivers to you. Or you want to find out who should be invited to an
RFP.
RFP stands for request for proposal. It's a tender, if you don't know. And you might need
some financial data related to where to send the purchase order
or what is the legal name of the company. Who is responsible? You might want to track if
the supplier is green or supports minority empowerment,
local economic development, or other initiatives your company or government is asking to
check You might also want to send them a list of questions
or even an entire assessment questionnaire around their security and accountability.
Think of suppliers of nuclear pharmaceutical-grade equipment, for example.
Inside a company, you might be surprised how many departments might use that data.
Some suppliers are even your clients on the other side.
This is where the ariba Supplier Information Management solution comes in. If you use
Facebook, you might have seen on other Web sites
when they want you to register a button register with facebook. You simply re-use
the data of your facebook account to avoid having to retype everything in the new website.
You simply reuse the data of your Facebook account
to avoid having to retype everything in the new Web site. This is, in a way, what Ariba
does.
We have suppliers in millions on the network. They all fill their basic information,
and most of them also provide enriched information such as category, marketing
information, and financial data.
Why not simply reuse this as a starting point? The problem is that the data is never really
up to date.
When you look at the supplier data, the core problem is that it changes. Phone number
changes, companies move or they get acquired, people change jobs.
So what you registered as your supplier profile last year, might simply not be the same
this year.
And you will not know, because the supplier won't notify you. You will use this data in
many places and this can even bring you risks.
If you have a wrong fax number and you do that kind of procurement-- there are still a lot
of companies that use fax-well, your order will not get delivered. And it might take you days if not weeks to figure out
that there is something wrong with that order.
It human nature to believe that because you have a page on your Web site for your
suppliers, that they will come naturally to update their information.
The reality is that suppliers have too much complexity on their side to remember to go on
all their clients' Web sites to update their profile.
They only do it when they need something from you. This means, well, that your data
doesn't reflect reality
And like I said, this can bring risks. Actually, costs, annoyance, it's all part of bad data.
Because at the moment you need to use this data, it's too late to be facing data that is
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So what needs to be done? Well, to summarize what we have said so far, the best way to
solve this issue
is to make sure that the source of data that is fresh and updated is used for your own
data. In other words, try to reuse the data that it is already on the Ariba network.
If you need more information from your supplier, you can even publish your private
questionnaires to them as well in there..
And from there, you can reuse this data that in many different places in your process,
notably inside your ERP to synchronize.
Just to give you an example, this is a profile screen of a supplier. As you can see, we
incentivized the supplier to provide the best information possible.
We will highlight some of the information that is still missing, we will provide him a status
bar to tell him how much work remains to be done,
and we have Dun & Bradstreet integration. The main reason why the supplier wants to
keep this details up to date
is that we generate leads for them. They can get sales. This is a bit like their sophisticated
business card where people can find them.
I highly suggest that you visit discovery.ariba.com to see it for yourself. Let's have a look
at the demo.
The supplier registration starts on your Web site, for example. This would be your Web
site. Which suppliers, new suppliers, and then clicking there and the supplier gets to
their registration page of the Ariba network. We're going here at light speed to fill in the
information into the system,
and we continue. What's interesting is the first page that the supplier gets when he comes
back
is your own questions. The questions you want to know. And those questions are
dynamic.
See? Question 5 I'm changing the option here and oh, I have a 5.2. I change again
another answer and oh, I have a 5.2.2. It's dynamic.
We only show the questions that the supplier really needs to answer. And on his generic
Ariba profile on the network,
he has different topics and we try to incentivize him by telling him hey, you haven't done
everything. You still need to fill some questions.
And from here, the supplier will be able to get quotes, contract, purchase orders. Now let's
go to your side of the story. This is your dashboard.
In your dashboard, you have actions. In here we see that you need to approve suppliers.
So we're going to search for this guy who just registered. There he is.
It's a Dutch word. It's called Gebouw III. So it's unapproved
and we see here the page we need to approve. That's the process to make sure that
when suppliers register, we have a control around this.
So once approved, he will be available for our processes. And the data here contains
many different topics. We're not going to go into all the details, but
it contains basically everything you need to manage that relationship with the supplier.
And the last piece here is the reporting.
You will have 360-degree reports on everything the supplier does with your procurement
here, even supplier performance.
So purchase orders, everything you can have a report on for that supplier. So that's a nice
transition to the next topic: supplier performance.
Supplier Performance Management. The second part of the solution addresses the risk
management and performance of the suppliers.
This solution will typically be used for just a handful of suppliers that are critical to your
organization. The term KPI means key performance indicators.
Think of it as quality, delivery on time, collaboration, product adequacy, responsiveness,
etc.

00:08:12
00:08:22
00:08:32

Those are the criteria that you will be using to track what is happening with your supplier.
Why is this hard to achieve?
Because it has a lot to do with qualitative and perception data. You want to know if the
supplier has delivered on time.
You want to know if you need to penalize him according to the contract clause because
they did not comply. Your production had to stop because there were delays caused by
the supplier.

00:08:43

This needs to be addressed. It is crucial to track the supplier on their performance

00:08:48

00:10:25

to avoid the abuses, the costs, and the risks associated with their potential failure. So
what can you do about it?
Well, in order to address this, you first need to identify who the suppliers are, who are your
strategic suppliers,
and most companies would already know this. Then you can set up a key performance
indicator pattern
and start the program where you send surveys to your organization. You can also use
transactional data analysis coming from your ERP, for example, delivery on time.
Just to make this clear, if your company is making cupcakes, for example, the supplier sits
at the beginning of the process
If the milk that gets delivered to you is spoiled, and you trust your supplier without
tracking,
you might end up with not so tasteful cupcakes. So. First you should set up the key
performance indicator and have a program around it.
Then you launch the program periodically depending on how reactive your conditions of
supply is. This can be quarterly, twice a year, yearly
depending on the type of supply. In Ariba, we support this with questionnaires that can be
sent to your organization
and also with analytical reports coming from your transactional data From there you can
access the report, which will give you the trends and performance.
And then you can take action with the suppliers who need it and you put in place
corrective plans to make sure that the performance improves.
Let's look at the demo. This is how the data tells a story. Let's look at ServerTech here.

00:10:33

Q1, 95. Great performance. Q2, hmm. Yellow. Not so good. Something went wrong.

00:10:38

Q3, red. We called them up, we made an action plan, and it got a little bit better. It's on the
trend to get improved.
So this is the kind information you want to do with your suppliers. And this can be in
commodities and different aspects and regions and anything you need.
But at its baseline, it's trackign the performance of those suppliers. So you see here, for
example, sustainability.
This would be another KPI, key performance indicator, that has been tracked. And if you
look where does the data come from, it's very simple.
In this case, it came from a survey. So we had different questions and four people from
our company answered.
And you see Sabine is not very happy. The guy never answers or never participates in the
meeting.
We turn this into mathematics. So you see, this same question gives a score for 78.75,

00:08:56
00:09:03
00:09:10
00:09:22
00:09:32
00:09:38
00:09:50
00:09:59
00:10:07
00:10:16

00:10:46
00:10:54
00:11:02
00:11:11
00:11:18
00:11:26
00:11:33
00:11:41
00:11:50

so it's a score depending on the answer chosen by Sabine and the others. And if we look
at how this scoring works, it's very easy again.
Here, a question. Does the supplier collaborate? Never: 60%. Sometimes: 80%. All the
time: 100%.
And this question adds some importance into the system. So this is how the scoring works
for the qualitative data.

10

00:11:58
00:12:08
00:12:16
00:12:23

It can be more fancy. I'm trying to just give you an overview here. We can also include
transactional data, ERP data-driven.
So to conclude here, you should reuse the supplier profile already existing on the network
for yourself.
Then, you can track the quality and performance of the supplier using surveys and
qualitative data.
And all of this information will help you do better negotiations.

11

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