I spent last week in Las Vegas attending SAP Spend Connect. Spend Connect is the evolution of the old Ariba Live and now covers the entirety of SAP Intelligent Spend and Business Network (ISBN as SAP calls it).
The conference was kicked off by CMO Etosha Thurman who spoke about placing some big bets on a strong hand of strategic collaboration, effortless compliance, seamless integration, increased productivity, and informed decision-making. She was followed by the president and chief product officer, Manoj Swaminathan, who spoke about three themes for SAP ISBN — data, intelligence, and suite. Swaminathan also casually mentioned that spend management is the second-biggest investment area for SAP (behind only ERP) and that they have more than 5,000 engineers and developers.
Around 2,000 participants at the beautiful Venetian were treated to a jam-packed agenda over two days covering everything from invoice management to category management and everything in between. Too much to cover in this article, so I’m going to focus on three areas that stood out.
The SAP Business Network
Speaking of data: The SAP Business Network (a combination of SAP’s Asset Network, Logistics Network, and the Ariba Network) is a major differentiator for SAP. It really has no rival in the S2P space, neither from a scale nor a capability perspective. Currently, more than $6 trillion worth of transactions are flowing through it, up from $1.7 trillion back in 2018. I would assume much of this growth comes from the addition of supply chain transactions with SAP investing in support for these types of spend (think forecast collaboration, VMI, consignment stock, scheduling, subcontracting, quality notifications, and those sort of things).
This gives SAP a huge amount of data to mine for insights and trends and to train AI models. The issue for SAP, however, is to agree with their customers what data they can use and how they can use it. SAP’s policy is a share-to-participate approach that basically means if you want to access the capabilities enabled by the data, you have to share your data. This approach makes a lot of sense, and I don’t see access to data being an issue moving forward as customers seem more than eager to adopt AI-based capabilities. That said, it’s a complex issue, as one of the SAP executives I spoke to pointed out. For example, SAP wants customers to have the option of opting out even if they opted in before. What happens to the models if part of the underlying data is removed? Kudos to SAP for taking this nuanced approach to data sharing, which is something I think many customers (especially those based in Europe) will appreciate.
But regardless of the data privacy issues, the SAP Spend Network is starting to realize some of those network effects that have been talked about for so long. For example, Thermo Fisher was on stage talking about how they have over 400 customers and more than $6 billion in revenue on the network. There is still a long way to go, but the Business Network is clearly a strategic focus for SAP, and they are continuing to invest in it and the integration into the associated applications.
I was also glad to see a focus on the supplier as a key persona. SAP is making investments to ensure that the suppliers are getting more value out of the solutions (especially the Network) and that the experience of interacting with their customers is as efficient and seamless as possible.
Intake Management
As is the case with most of the S2P solution providers, SAP has finally woken up to the fact that Intake Management and Procurement Process Orchestration (IM&PPO) is a thing and something that customers are asking for. In fact, an SAP study showed that IM&PPO was the number two top technology trend that procurement organizations are looking to implement in the next 12 to 18 months (trailing only, to no one’s surprise, generative AI for procurement).
So, SAP is planning to release what it calls SAP Ariba Intake Management in Q1 of 2025. The name is slightly misleading to me as it also includes orchestration capabilities, which, in many ways, is the more critical aspect of IM&PPO, and SAP states it will be able to integrate and interact with any type of third-party applications as necessary.
This announcement wasn’t that surprising but considering all the IM&PPO partners that attended the conference, some of them even presenting their solutions with the support of SAP, it gets a little bit confusing. Are there cases where the partner solutions are preferred, or will SAP push their own solution? It will be interesting to see how this unfolds.
The Breadth of SAP ISBN
SAP has acquired over the years Ariba, Fieldglass, Concur, and Taulia and built out the broadest set of spend management solutions in the market (especially if you add in the ERP capabilities). But the different architectures and data models haven’t always made it easy for customers to efficiently get the value out of this collection of solutions. That said, SAP is continuing to re-platform and integrate the solutions and add newer capabilities like SAP Joules (an AI assistant or agent, if you will) and Ariba Intake Management to help customers get more value out of the fact that these are all SAP solutions.
But broad capabilities are not always the same as deep capabilities. SAP is continuing to work with partners in certain areas where it deems its customers are better with partners (examples include CLM, where SAP partners with Icertis and Keelvar in the sourcing optimization space). This is a sensible strategy since there are so many specific customer needs that it’s not realistic to have a single solution or suite that covers every customer need (as I’ve stated before).
Another historical challenge for SAP customers has been ease of use. Most SAP procurement solutions have had the required functionality but the UI and number of clicks necessary have made the solutions complex to use. SAP has invested heavily in user experience and continues to do so. Guided Sourcing is one example of how SAP focuses on this area (Ariba Intake Management — although not generally available yet), Spend Control Tower, and Guided Buying are others).
Guided Sourcing aims to reduce the number of clicks needed to launch a sourcing event down to two! So far this has meant more advanced capabilities found in the traditional Ariba Sourcing have been missing, to the chagrin of more mature users of eSourcing. But SAP is working on bringing up Guided Sourcing to functional parity with Ariba Sourcing by the end of the year.
Thurman ended the conference with a cliff hanger where she started to talk about the location of next year’s conference but never revealed it. So, I guess we’ll have to wait and see.
