5.8    SAP Ariba

SAP Ariba is a commerce cloud platform that enables an enterprise to carry out the entire source to pay process and helps organizations control costs, minimize risks, and improve profits. SAP S/4HANA is the source system for providing master data (suppliers, SAP General Ledger [G/L] account, and cost center) to SAP Ariba. Transactional documents such as purchase orders, goods receipts, and contracts get replicated in real time from SAP Ariba to SAP S/4HANA. SAP Ariba includes the following solution components:

• Ariba Network
• SAP Ariba Strategic Sourcing (previously known as Upstream)
• SAP Ariba Procurement Content (previously known as Downstream)

5.8.1    Ariba Network

The cloud-based Ariba Network enables buyers and suppliers to collaborate efficiently to manage business processes. Buyers can exchange purchase orders electronically with Ariba Network, and suppliers use Ariba Network to exchange order confirmations and advance shipping notifications (ASNs), and to send invoices effectively.

Ariba Network provides the following benefits:

• Ariba Network can integrate with any SAP ERP backend and protocols.
• Ariba Network supports the exchange of procurement documents that are relevant for the procurement of goods and services.
• Ariba Network transaction rules help to validate invoice errors upfront and reduce invoice errors in accounts payable functions.

Ariba Network delivers benefits and value to companies of all sizes, industries, and regions. Figure 5.23 shows Ariba Network value propositions for suppliers and buyers.

Figure 5.23    SAP Ariba Network Value Proposition

Following are the Ariba Network key capabilities:

• Electronic invoices
  Turn paper into efficient electronic transactions. Ariba Network accepts electronic versions of purchase orders from SAP S/4HANA and enables the supplier to flip the purchase orders to invoices.
• Collaboration
  Collaborate immediately with all trading partners, as the access to all network suppliers is already enabled.
• Compliance
  Catch errors and correct them before they happen. Ariba Network enables global invoice compliance, enforces policy and compliance in real time, and sends notifications and alerts based on transactional data.

5.8.2    SAP Ariba Strategic Sourcing (Upstream)

SAP Ariba Strategic Sourcing covers sourcing, contract management, and spend analysis, and it has the following solution components:

• SAP Ariba sourcing
  The SAP Ariba sourcing solution includes process management features that allow business users to control sourcing projects from the planning stage to the awarding of individual events. SAP Ariba sourcing is a comprehensive web-based tool that allows users to create and manage online requests for information (RFIs), requests for proposals (RFPs), and auctions. Following are the key functions of SAP Ariba sourcing:
  • Templates: Enables users to create new events and projects using approved business processes, and to store and manage events and documents.
  • Collaboration: Supports workflow notifications for reviewers, approvers, and sourcing negotiation participants.
  • Project tracking: Helps users keep track of upcoming projects based on duration and allocates resources for future projects.
  • Track savings: Manages multiple related events and tracks savings, including negotiated, implemented, and actual savings.
  • Workflow: Customizes review and approval flow to match a company’s business processes.
  Figure 5.24 shows SAP Ariba sourcing services and tools.

Figure 5.24    SAP Ariba Sourcing Tools and Services

• SAP Ariba contract management
  SAP Ariba contract management solution allows you to automate contract authoring and publishing, manage contracts across the organization, and enforce contract compliance. The key functions of SAP Ariba contract management include the following:
  • Contract type: Supports contracts of any type (buy, sell, internal/corporate).
  • Integration: Built-in integration with SAP Ariba sourcing for contract creation.
  • Audit: Supports performance/audit management on contracts and automated compliance monitoring and alerts.
• SAP Ariba supplier performance management
  Supplier performance management is the process that defines, measures, monitors, and analyzes supplier performance to meet business goals. It uses KPIs as elements of scorecards to monitor and manage supplier performance in achieving objectives. Supplier performance management key objectives include the following:
  • Objectives: Defines objectives aligned to your enterprise and spend management strategy, defines KPIs, and gathers data (surveys, scorecards).
  • Analyzing performance data: Shares performance data (with divisions and suppliers) and collaborates with suppliers to improve performance through corrective action plans.
• SAP Ariba spend analysis
  SAP Ariba spend analysis provides visibility on your spend data and enables you to make strategic decisions.
• SAP Ariba discovery
  SAP Ariba discovery is a matching service that allows buyers to find new suppliers. SAP Ariba discovery gives buyers and sellers the opportunity to spend less time searching for a sustainable partner.
  Buyers can specify their requirements in 10–15 minutes, and SAP Ariba discovery finds qualified matches. SAP Ariba discovery is automatically integrated with SAP Ariba sourcing.

5.8.3    SAP Ariba Procurement Content (Downstream)

SAP Ariba Procurement Content covers operational procurement activities. SAP Ariba Procurement Content contains the following solution components:

• SAP Ariba buying, advanced edition (SAP Ariba PTP)
  Covers the entire lifecycle of a purchasing transaction from requisitioning, ordering, receiving goods, receiving invoice, and reconciliation. After the invoice is reconciled, the approved invoice export (OK to pay file) is generated in SAP Ariba and sent to SAP S/4HANA system for supplier payments. Figure 5.25 shows SAP Ariba PTP components integrated with SAP S/4HANA and Ariba Network.

Figure 5.25    SAP Ariba Procure-to-Pay Integration with SAP S/4HANA and Ariba Network

• SAP Ariba buying edition (SAP Ariba Procure to Order)
  Covers requisition, purchase order creation, approval, and receipt processes in SAP Ariba. Invoice reconciliation and payment occurs in SAP S/4HANA.
• SAP Ariba catalog (SAP Ariba Procurement Content)
  Allows users to create purchase requisitions from SAP S/4HANA and punch out to SAP Ariba catalogs. After selecting goods and services, users check out and are directed back to SAP S/4HANA to submit the purchase requisition. Purchase requisition approval, purchase order creation, goods receipt, invoice reconciliation, and payment occur in SAP S/4HANA.
• SAP Ariba invoice management (SAP Ariba Invoice Pro)
  Fills the void of inadequate accounts payable automation. Requisition, approval, purchase order creation, and goods receipt occur in SAP S/4HANA. Invoice receipt, invoice reconciliation, and payment occur in SAP Ariba invoice management.

5.8.4    SAP S/4HANA Native Integration with Ariba Network

Prior to SAP S/4HANA, collaboration between suppliers and buyers was limited because many manual interfaces have to be built to support collaboration, and the wait time after each transaction caused a longer procurement cycle.

SAP S/4HANA provides native (built-in) integration to Ariba Network for buyers and suppliers to effectively collaborate and exchange purchase orders, confirmations, ASNs, goods receipts, and invoices. No separate add-on is required. Document exchange between SAP S/4HANA and SAP Ariba occurs through commerce Extensible Markup Language (cXML). Figure 5.26 shows the standard integration between SAP S/4HANA and SAP Ariba.

Figure 5.26    SAP S/4HANA and SAP Ariba Standard Integration

Purchase Order Collaboration

Let's explore purchase order collaboration's four main functions:

• Send purchase orders from SAP S/4HANA
  Purchase orders (new, change, and cancel) can be sent to Ariba Network.
• Receive confirmations from Ariba Network
  Receive purchase order confirmation from suppliers.
• Receive ASN from Ariba Network
  ASNs can be received from suppliers, which creates inbound delivery in SAP S/4HANA, and inbound delivery information gets updated in purchase orders.
• Send goods receipt (materials) from SAP S/4HANA
  Sends goods receipt to suppliers on Ariba Network for informing receipt of materials.

Invoice Collaboration

The three main statuses in the invoice collaboration process include receive, send and validate. Let's explore these further:

• Receive invoice from Ariba Network
  Invoices are received from suppliers via Ariba Network.
• Send carbon copy invoice
  Supplier invoices created in SAP S/4HANA can be transferred as CC invoices (carbon copy) to suppliers through Ariba Network for status tracking purposes.
• Status update
  Status update for invoices received from SAP Ariba network and CC invoices are sent to suppliers via Ariba Network (when invoice is posted, paid, or invoice block is released).

Following are the key benefits of SAP S/4HANA and SAP Ariba Native integration:

• Visibility
  Enhanced visibility to suppliers and buyers in purchase orders and invoice document statuses.
• Procurement cycle
  Accelerated procurement cycle time due to instant exchange of procurement documents and real-time update of business process information.
• Prevent errors
  No errors in invoice receipts because Ariba Network validates the invoices before submission.