Effective use of SAP Ariba solutions can drive significant results, but to maximize value, a focus on factors like governance, compliance, and success measurement is critical. How do you leverage your executive sponsorship to drive compliance? How do you measure success and communicate it? Learn how to align these factors to unlock value and win the hearts and minds of your stakeholders. In this session, we also review actions you can take now to get a plan on track.

1. PUBLIC
March 22, 2017
Shannon McMahon-Kennedy, SAP
Darrow Weiss, SAP
Value Academy:
Maximize SAP Ariba Solution ROI Through Optimized
Governance, Compliance, and Success Measurement

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“Surveying” your knowledge
On a scale of 1 to 5,
How knowledgeable are you about choosing and calculating metrics to measure success of
your Ariba program?
On a scale of 1 to 5,
Rate your confidence in writing or revising compliance-related policies that will drive spend
adoption.

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Success Measurement
 What Is Success Measurement?
– Why Measurement Is Important
 Performance Measurement Best Practices
 Success Measurement Workshop Activity:
– Real-Time Benchmarking
– Metrics That Matter
– Custom Scorecard
Policies
 Why Policies?
 Key Elements of a Good Policy
 Compliance Workshop Activity: Write the Policy
Agenda

4. Success Measurement

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1
Prove value proposition from the business case to ensure continued progress
and how clients are meeting their objectives with SAP Ariba solutions
2
Educate and train on how and what to measure against best-in-class
companies
3 Provide framework for ongoing best practice “health check” discussions
4 Take the emotion out of decision making, allowing facts to rule over feelings
5 Provide targets to achieve and support continuous improvement
Why is measurement important? It can be used to:
What is success measurement?
Drive business value through strategic improvement linked to key metrics of lowering
cost, increasing effectiveness, and maintaining through compliance.

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For customers who are actively measuring performance, the benefits are
well worth the effort
Quantitative1
– Increased program sponsorship
and engagement
– Increased alignment between
business groups
– Tighter strategy-to-execution
loop
– Improved change management
and end-user adoption
Strategic
(1) Performance of companies with high level of best-practices adoption compared to those with low levels of adoption
Source: SAP Value Management Best Practices Survey; 630+ respondents
1.9X
more
On time
Projects delivered on or below budget
1.5X
more
On budget
1.5X
higher
On value
projects delivering
value on or ahead
of schedule
projects delivered
on or below
budget
business benefits
achieved
Companies with active value management overachieve on all value drivers

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VALUE LEVER METRIC
BOTTOM
25%
VALUE CONTINUUM TOP 25%
Spend under
management
% addressable spend under management 59% 80%
Cost reduction savings as a % of spend – indirect 0.85% 3.8%
Control and
compliance
Maverick spend (%) 25% 5%
Compliant PO spend (as % of total PO spend) 2% 50%
Process
efficiency
% of electronic POs through Ariba Network (as %
of total SAP Ariba POs)
59% 99%
POs per procurement FTE 1,332 10,721
PO cycle time (days) 1.9 0.2
% of transaction lines that are catalog based (as
% of total transaction lines)
41% 96%
% electronic invoices through Ariba Network (as
% of total SAP Ariba invoices)
45% 99%
Invoices per FTE 5,958 24,371
% of invoices that are touchless 80% 98%
Days to approve invoice 18.8 6.9
Cash
management
Days payable outstanding 28 45
Supplier discounts realized (per $B in invoice
spend)*
0K $2M
Recommended performance measures across 4 value levers for a
complete view of performance
20%
20%
270
6,371
10
0%
Sample data only
Original business case indicates
steady-state savings of $2M through
tactical sourcing, collaboration, and
spend visibility
Original business case indicates
steady-state savings of $3M
through contract compliance and
invoice error reduction
Original business case indicates
steady-state savings of $0.7M
through reduction in PO and invoice
processing FTEs
Original business case indicates
steady-state savings of $0.2M
through early payment discounts

8. Success Measurement Workshop Activity

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Real-time benchmarking
Using your mobile devices, please answer the questions below using a scale of 0-5:
0- Not at all, I’m not sure, or I don’t know
1- Only has a few of these specific metrics, and few tie directly to financials
2- Many of these metrics could be tied to financials, but are not today
3- Many of these specific metrics, but few tie directly to financials
4- Many metrics and some already tie to financials
5- All or nearly all our org’s metrics tie to at least to one or more of our company financials
Do your organization’s performance metrics tie directly to financial value for…
1. Cost reduction (examples: operational, inventory)?
2. Compliance (examples: buy from contracts, catalogs)?
3. Process efficiency (examples: electronic invoice/payment, order-to-pay cycle time)?
4. Cash management (examples: invoice error, days payable outstanding)?

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Metrics that matter
Business area Metric Laggard Customer value
Best in
class
Cost reduction Sourcing
Average project sourcing savings % 4% 14%
# of suppliers per $1B in spend 7,500 2,500
Spend under management 39% 95%
Fiscal control
and
compliance
Procurement
% of spend on catalog 0% 58%
PO and invoice lines against contract 20% 75%
# of POs per procurement FTE 2,000 12,000
Process
efficiency
Finance and
accounts payable
% of electronic invoices 7% 55%
# of invoices per AP FTE 9,109 45,000
Cash
management
WCM and
discounts
Avg. invoice approval days 20 2.3
% of spend on discount terms 2% 15%
Days payable outstanding 28 55

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Success measurement activity
Using the “metrics that matter” framework, select one metric for each value lever to create a
scorecard that could be implemented within your organization.
Discuss at your table and share what your respective organizations are doing today…
 What has worked well
 What could be done better
Call to action:
 Discuss your custom scorecard with your management team and SAP Ariba account
team to see how to put it into practice.

12. Policies

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Policies can vary from centralized to center-led to a blended approach to help achieve value:
 Clear policies help measure adoption and outcome
 They provide specific expectations for compliance
 They align to a corporate strategy
– To achieve specific business outcomes
Why policies?

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 Executive sponsorship
 Alignment to clear business goals
– Risk management, quality assurance, profitability, efficiency, …
 Supported with required procedures and tools
 Communication strategy and training
 Measurement that ensures compliance
 Effective date and version of policy
Key elements of a good policy

15. Policies Workshop Activity

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Write the policy
Read through the assigned policy that best-in-class companies implement:
• No PO, no pay
• Competitive bid
• Supplier noncompliance to Ariba Network
Select the elements that could apply to your own company to create a customized
policy.
Collaborate with others at your table to see what has worked with them and get
additional suggestions on what to include.

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“Surveying” your knowledge
On a scale of 1 to 5,
How knowledgeable are you now about choosing and calculating metrics to measure
success of your Ariba program?
On a scale of 1 to 5,
Rate your confidence now in writing or revising compliance-related policies that will drive
spend adoption.

18. Thank you
Contact information:
Shannon McMahon-Kennedy Darrow Weiss
Director Value Realization Director Value Realization
shannon.mcmahon.kennedy@sap.com darrow.weiss@sap.com