Dr, Marcell Vollmer, CPO at SAP spoke at the CPO Event UK 2013

1. The Procurement Organization of the
future between shared services and
strategic procurement
Global Procurement Excellence
Dr. Marcell Vollmer, Chief Procurement Officer at SAP AG
February 8, 2013

2. Agenda
1 SAP's Procurement Organization
2 Evolution Procurement Function
3 Procurement Shared Services @ SAP

3. SAP Today
65,000+
SAP employees worldwide
16.3bn
revenue (2012)
3.6bn
spend (2012)
> 446,000
received invoices (2012)
120 / 350
countries / buildings
14,000+
active suppliers worldwide

4. What keeps me as CPO awake at night?
The business world has witnessed unprecedented challenges in the last years
…global …scarcity of
…unforeseeable climate catastrophes
economic meltdown raw materials
Global Procurement has to be prepared to cope with these challenges, being flexible and deliver high class services within rapid
changing frameworks

5. Vision and Mission and Structural Set-up of Global Procurement
Global Procurement Organization (GPO) @ SAP
Global Procurement Organization (GPO) combines all SAP procurement units. We significantly improve SAP's performance
by leveraging our overall purchasing power and realizing sustainable savings by executing globally streamlined commodity
strategies.
Within the GPO, we strive to implement best-in-class procurement processes, deliver first-class services to our internal
customers, mitigate risk for SAP, and be a fair partner to our vendors.
CPO
Procure-to-Pay
Strategy Group
Concentration of all procurement-related
activities within GPO and support all countries on
purchasing volume in a tiered logic
Commodity Procurement
Procurement Shared Services
(strategic and tactical sourcing) (operational procurement) 44 Locations Worldwide with approx. 200 People

6. Objectives of SAP’s Global Procurement Organization
Our guiding principles to achieve Global Procurement Excellence
Standardization
and Automation
Scalability Cost Efficiency
ONE GPO
Compliance

7. Agenda
1 SAP's Procurement Organization
2 Evolution Procurement Function
3 Procurement Shared Services @ SAP

8. Evolution of Procurement towards Strategic Function
Shared Services as Enabler
Strategic relevance of procurement within a
company
Strategic Partner
Tactical Partner
Operational Partner
Time spend on Time spend on Time spend on
operational tactical strategic
procurement procurement procurement
tasks tasks tasks
Time spend on Time spend on Time spend on
operational tactical strategic
procurement procurement procurement
tasks tasks tasks
In order to enable procurement staff to
focus on value adding strategic tasks,
procurement shared services strives to
Time spend on Time spend on Time spend on
operational tactical strategic
leverage existing resources to the best
procurement procurement procurement extend in order to efficiently handle
tasks tasks tasks
operational procurement processes
until 1950 1950 - today Today 2015 + time

9. Procurement Shared Services
Benefits and Challenges of Procurement Shared Services
Shared Services definition: Concentration of company resources performing activities, typically spread across the organization, in
order to service multiple internal partners at lower cost and with higher service levels, with the common goal of delighting external
customers and enhancing corporate value
Benefits Challenges
• Increased standardization • Change Management and top management buy-in to
implement Shared Services
• Higher degree of automation due to consolidation
• Different local cultures, business practices, and legal
• Economies of scope and scale (improved efficiency and
requirements
effectiveness)
• Eliminate “Shadow” processes and process inefficiencies
• Easier Process Performance Measurement and Analytics
(Business process reengineering)
• Workload balancing around the globe possible
• Difficult to get skilled and experienced project resources
• Full transparency on spend, master data and compliance
• Service level and charging model

10. Procurement Shared Service Center (SSC) Models
Three models can be differentiated: local, regional and global
Geographic scope
Local Set-Up (Centers) Regional Centers Global Center
Separate SSC per location providing individual services to local Regional SSC providing services to all subsidiaries within a One Global SSC providing services to all subsidiaries globally
subsidiaries specific region
• Easy implementation of global standards
Benefits
• Good balance between customer proximity
• Customer proximity
and standard setting • High degree of automation due to high
• Easy adoption to local culture transactional volume (lights out shared
• 24x5 service
services)
• Time zone coverage (deliver 24x5 service)
• Difficult to set-up global standards • Regional standards instead of global
Risks
standards • Business continuity
• Low degree of automation due to limited
transactional volume • Collaboration between regional centers • Competition for skilled people in one
location

11. Agenda
1 SAP's Procurement Organization
2 Evolution Procurement Function
3 Procurement Shared Services @ SAP

12. Procure to Pay @ SAP
Overview of Key KPIs
Procurement Volume @ SAP in 2012
incl. Sybase FTE are working for P2P @ FTE still working for P2P
SAP outside GPO & GFSSO for a non automated P2P process cycle
Active Suppliers in 2012
Clicks, <1 min. to create a shopping cart – but
Purchase Order Line items in 2012 TRAINING REQUIRED
Invoices in 2012
Trip Entries in 2012
Run P2P … ... Procurement Savings
... Show Case Run P2P… ... cheaper ® (FRBT) ... cleaner ®
(Data) ... smoothier ®
... Efficiency & Effectivness ... saver ® (BRBF)
... High Quality (SOX)
... friendlier ® (Usability)
... User friendly ... SAP Runs SAP ... standardizier ® (Self ... stronger ® ... controllier ®
(Governance)
... Compliance Assessment) (KPI)

13. House of Procurement 2015 - Focus, Align and Engage
Best in class procurement organization to be established
2015
GPO Strategy
Best-in-Class Procurement
Strategic Excellence Margin Operative Excellence
Generation of sustainable savings using global procurement SSC
with lean and standardized processes
Commodity Strategy Customer Success Organization
Best in class procurement services for our customers as innovative
frontrunner and example
Sourcing Strategy Customer Centricity
Growth
Be volume ready for 2015 with customer centric operations and
Supplier Management PMI support Processes
People
Frontrunner & Innovation High GPO workforce engagement through leadership, empowerment, Standardization & Automation
trainings and promotion of diversity
People Excellence
Leadership Development Diversity Experts
Governance & Compliance

14. Procurement Shared Services @ SAP
From As-Is (regional) to To-Be (global)
until end of 2012 as of 2013
Regional Centers Global Organization with Regional Centers
EMEA/DACH Procurement Operations
Americas EMEA Americas APJ
APJ
• Procurement Operations organizational units How do we get there: • One globally operating Procurement
handled in a Shared Services Model • Centralization of procurement Operations organization with three regional
• Separate regional organizations for EMEA, operations for EMEA region in Prague centers for EMEA, APJ and Americas
Americas and APJ (Q1 2012), using existing SAP SSC • Globally aligned standards and working
• Centralized centers in Americas and APJ, co- infrastructure in Prague principles
located to existing finance Shared Services • Bringing all three Procurement • In very few exceptional cases operations
Centers Operations organizational units under employees can still be located outside a
• No globally standardized working principles one global umbrella (Q1 2012) in order Shared Services Center
to ensure globally standards

15. Procurement Operations today and in future
From 12 to 3 Locations Worldwide
Stockholm
until 2012: Dublin Berlin Warsaw
St. Ingbert Prague
Dresden
Regional Walldorf
Denver Newtown Square
Centers for
Procurement
Operations Singapore
without global
coordination
Buenos Aires
in 2013:
One
Prague
standardized
global
Procurement
Operations Singapore
Organization
operating within
three regional Buenos Aires
centers
Location with more than 10 employees Location with less than 10 employees Location with less than 3 employees

16. Current Scope of Procurement Shared Services @ SAP
Request handling, Master data and Operational support
• Check quality of Shopping carts
Order & • Perform PO management & processing
1 request
• Manage Procurement Cards (P-Card)
handling
• Support RfX processes/e-sourcing (tactical support) for Commodity and Country Procurement
Master • Execute vendor master management
2 data • Execute material master data and catalogue management
management • Execute Contract management
• Provide
• end-user support
• helpdesk functionality
Operational • system support (power user)
3 • Support/manage M&A activities
Support
• Provide quality management functionality
• Provide analytics (for Commodity/Country Procurement) on request
• Provide operational management for car fleet

17. Take Away’s and Lessons Learned
• The Procurement Function developed from a purely operational function
towards a more strategic Business Partner Function within a company
• Procurement Shared Services is an enabler for the Procurement Function to
focus on strategic tasks
• Different Procurement Shared Services Models exist and each company has to
decide on the best model, according to it‘s geographic scope and
organizational set-up
• Each Procurement Shared Services Organization has to define their service
portfolio according to the maturity and desire for an organization