oilfiield purchase- to-pay (p2p) in sapfm.sap.com/pdf/bf05ho/9_suprenant_bf_houston.pdf ·...

Robert Surprenant

Industry Principal – Upstream O&G SAP America

Oilfiield Purchase-to-Pay (P2P) in SAP

Why Oilfield Purchase-to-Pay (P2P)mySAP Supplier Relationship Mgmt (SRM)SAP NetWeaver in Oilfield P2PCustomer Value Proof PointsThe Evolution of Complex Services P2P

© SAP AG 2005, Oilfield P2P / Robert Surprenant / 3

Avg. Improvement via e-Sourcing

14.3% cost savings

Cut sourcing cycles in half

Reduce sourcing administration costs > 60%

Shrink time-to-market cycles 10% to 15%

ID and standardize on sourcing best practices. Enhanced knowledge capture and transfer.

Enhance market knowledge and transparency

ID and negotiate with new global supply sources

Detailed RFx and enhanced collaboration clarifies expectations and improves supply relations. Cycle times savings allows buyers to build and develop

supply base.

Process efficiencies empowers application of strategic sourcing to more spend

e-Sourcing

Compliance, Value Drive Renewed Interest in e-procurement

Avg. Improvement via e-Procurement

7% reduction in prices paid due to improved compliance

Increase contract compliance 50% - 70%

Reduce requisition to order cycles from 8+ days to <2 days

Cut requisition to order costs from $114 per request to <$30 per request

Reduce inventory costs by 25%

Enhance spend visibility and leverage

e-Procurement

Source: AberdeenGroup 2004 & 2005

Why Oilfield Purchase to Pay (P2P)


Sarbanes Oxley Implications for Supplier Relationship Management

The CEO/CFO must certify quarterly and annually that the SEC report being filed has been reviewed and does not contain any untrue statements or omit any material facts

Section 301 requires that Management certify internal controls and section 404 requires that Management annually assess the internal controls and procedures for financial reporting

Highlights of Sarbanes OxleyMust automate offline processes to ensure compliance with company controls and spending guidelines

Requirements are not limited to traditional financial systems (e.g., accounts payable). Rather, it is dispersed among relationship management (e.g., customer, supplier), planning (e.g., supply chain), management (e.g., asset, product life cycle, human capital), and operational solutions (e.g., billing) in the support of end-to-end processes

Reporting must include what the risks are and what the actual implications of contracts are in their entirety

Key Implications

Why Oilfield Purchase to Pay (P2P)


Can we do it in E&P?

Source – Oil & Gas Investor


The Confusing Landscape of Oilfield P2P

ERP/ Integration

e-Procurement

e-Sourcing

Complex ServicesProcuremente-Invoicing e-Field Ticket

Common data exchange standards

Catalog Content Integration

Networks / Marketplaces

Connectivity

MC Escher - Relativity

SAP NetWeaverSAP Supplier Relationship

Management (SRM)


What Do We Want?

Single solution for all procurement activities

Standardized and streamlined process

Seamless integration

Improved data capture and analysis

New composite applications for specific roles or processes

Closer ties between Front and Back-Office


IDC defines SRM as “those applications designed to handle sourcing, procurement, transaction processing, order management, and payment support functions, all of which are connected to create a single view of the spending levels at a company and how its purchasing activities are integrated into a supplier community that can be easily tracked, benchmarked, and analyzed.”

Supports business changeflexible & open business scenarios

and better spend control

Increases supplier participationto reduce effort, increase visibility, and manage risk of supply

1. What is Supplier Relationship Management (SRM)?

Provides repeatable savingsthrough ongoing unit cost reductions

instead of one-time wins

Closes the loopbetween sourcing and procurement to realize negotiated benefits

mySAP Supplier Relationship Management is a purchasing platform for

sustainable savings and value generation through enterprise-wide supply

management.


Evolution of P2P Solutions - ERP

R/3

Materials

Mgmt

1. RequisitionFor materials and servicesApproval workflow

5. PayCheckElectronic Fund Transfer

4. Invoice2 way/3-way matchingEvaluated Receipt Settlement

2. PurchaseApproval workflowMonitoring History

3. ReceiveMaterials and services


Evolution of P2P Solutions - SRM

1. RequisitionAdaptive requisitioning Service specifications

5. ReceiveConfirmationsService entry sheets

4. OrderOrder managementServices – temporary labor

2. ApproveApproval workflowMonitoring Alerting

3. AssignSourcing cockpitSource of supply determinationContract comparisonDemand integration from MRP, PM, PS, APO, Non-SAP

7. MonitorSpend analysisReporting in shoppingApproval monitoring

6. InvoiceElectronic invoicing 2-way / 3-way matchingEvaluate Receipt

Settlement (ERS)

R/3

Materials

Mgmt

Operational Procurement



3. QualifySupplier qualification BiddingReverse auctioning

6. ContractContract developmentContract distributionExecution and monitoring

2. StrategizeDemand aggregation & planningPortfolio analysis Purchasing strategy planning

1. AnalyzeSupplier Performance MgmtGlobal spend analysisContent consolidation

4. NegotiateTerms and conditions Engineering specificationsDiscussion & Collaboration

5. AwardBid comparisonsWeighting and scoringWinner award

R/3

Materials

Mgmt


Strategic Purchasing



1. SellingRelationship monitoring Supplier selection (Rfx, auctions)Contract negotiationsSelf-registration

5. FullfillmentASN processingConfirmations, packagingConnectivity

2. DesignCollaborative engineeringCollaborative design Collaborative project mgmt

4. Order Mgmt / BillingOrder collaboration Invoicing PaymentAccount information

R/3

Materials

Mgmt


Strategic Purchasing

Supplier Collaboration

3. PlanningDemand & inventory visibility Supplier managed inventory (SMI)Replenishment planningAlert monitoring


Key Value Drivers And Business Benefits

Compressed Cycle TimesAutomation of tedious RFP and RFQ cyclesFaster procurement execution through on-line approvalQuicker acknowledgement & response from suppliers

Reduced Process CostsIncreased compliance through reduce maverick buyingReduce complexity through content consolidationIncreased efficiency through procurement automation

Improved Sourcing StrategyImproved quality of supply and reduced riskBetter access to data on supplier performance

Price ReductionDemand consolidation across multiple business unitsBetter price through competitive bidding


SAP NetWeaver™C

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PEOPLE INTEGRATION

Multi channel access

Portal Collaboration

INFORMATION INTEGRATION

Bus. Intelligence

Master Data Management

Knowledge Mgmt

PROCESS INTEGRATION

Integration Broker

BusinessProcess Mgmt

APPLICATION PLATFORM

J2EE

DB and OS Abstraction

ABAPL

ife Cycle M

gmt

SAP Enterprise Portal

The Role of SAP NetWeaver in Oilfield P2P

Unifies enterprise applications, information & services from SAP and non-SAP sources to support inter-company processes. Provides presentation services enabling suppliers and purchasers to use functionality from multiple applications without needing to know about the specific application they are using.Provides security services ensuring that supplier bids and catalog prices remain confidential.


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PEOPLE INTEGRATION




Bus. Intelligence


Knowledge Mgmt

PROCESS INTEGRATION

Integration Broker



J2EE


ABAPL

ife Cycle M

gmt

SAP Business Intelligence


Provides capabilities to identify, integrate and analyze disparate business data from heterogeneous sources.Provides standard procurement business content to enable comparison among supplier bids, supports vendor evaluations, and facilitates global spend analysis.

SAP Master Data ManagementProvides A platform to consolidate, cleanse and synchronize a single version of the truth for master dataFlexible object modeling for business objects (product, customer, supplier, employee, and user-defined objects)Services to maintain, search, analyze, distribute and cleanse master data


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Bus. Intelligence


Knowledge Mgmt

PROCESS INTEGRATION

Integration Broker



J2EE


ABAPL

ife Cycle M

gmt


SAP Exchange Infrastructure (XI)Provides Open Integration technologies that support process-centric collaboration among SAP and non-SAP components, both within and beyond enterprise boundariesEnables data exchange among key applications between buyers and suppliers.


SRM Integration Costs are not Trivial

mySAP SRM and SAP NetWeaver offers the lowest Total cost of Ownership:

No interfaces are required to R/3 resulting in significant cost savings and speed to value

Only SAP delivers an out of the box integration between all core sourcing and enterprise applications

Development and Integration Cost

Ongoing Support Cost

”Building an SRM strategy has so far been an exercise in assembling disparate applications… SAP’s direction with its SRM strategy holds much promise for users trying to move beyond this expensive integration exercise.”

Use of a single vendor solution avoids the pitfalls associated with duplication of support resources, multiple training regimens, multiple sources for problem resolution, and the challenges of software upgrades across many vendors found in the best-of-breed scenario.

Karen Peterson, 2002

October, 2003


SAP Delivers Value

SAP NetWeaver“The functionality of SAP NetWeaver is richer than expected…the concurrent use of the service by a high proportion of BG Group employees demonstrates that the implementation has become of significant importance to the organization”

mySAP Oil & Gas“The reason we’ve moved to SAP in such a large way is it allows so much greater internal, as well as external collaboration to get us access to the resources necessary to effectively compete in the marketplace, which our systems in the past didn’t allow.”

mySAP SRM“mySAP SRM helps us make radical changes to the way we buy, the speed at which we buy, and how we and our suppliers work together. “

“We chose mySAP SRM because it’s oriented to direct and indirect material procurement, and we could manage content by using integrated electronic catalogs.”

“We’re getting an immediate payback through better efficiency, and purchasers can spend more time on strategic sourcing.”

BG Group


Price reductionsReduced prices on one-year contracts - 6% on AverageReduced prices on electronic bids and strategic sourcing by 2% as a result of demand aggregation, automation, and collaboration withsuppliers

Efficient operationsLowered cycle times associated with order placement - 33% to 72%Reduced costs by 20% for order execution and by 13% for public and restricted invitation biddingImproved productivity by:

Eliminating 17% to 64% of activitiesAutomating 60% to 75% of formerly manual processesEliminating 33% to 60% of paper documents

mySAP SRM Results


Cost reductionReduced overall administrative costs by 2% – supported by simplified processes and an aggregation of demand

Reduced number of contracts by 37% while increasing total contracted amount by 47%

Inventory reductionReduced inventory of procured items by 25% as a consequence of shortened cycle times

Some stock reductions were greater than 25%

Supported by the ability to make more frequent and smaller purchases

mySAP SRM Results


The Evolution of Complex Services P2P

Wellogix, Inc. Announces that Wellogix and SAP will Provide Marathon with Integrated Solutions for Enhanced Purchase to Pay Functionality


Wellogix - Powered by SAP NetWeaver

Wellogix CommitmentsExposing functionality via SAP Enterprise Portal (iViews) Integration & Data Exchange via SAP Exchange Infrastructure Adopt SAP NetWeaver as a Strategic Platform

SAP CommitmentsSales & Marketing

Joint marketing and sales activitySolution Catalog inclusionMarketing endorsement (partner directory, web site)Usage of Powered by SAP NetWeaver endorsement line

TechnologyTechnical support during integration/certification development phase

SAP® xApps™ PartnersSAP® xApps™ Partners

Powered by SAP NetWeaver™Powered by SAP NetWeaver™

SAP NetWeaver CertifiedSAP NetWeaver Certified

Non-certified Integration to SAP NetWeaver

Non-certified Integration to SAP NetWeaver

oilfiield purchase- to-pay (p2p) in sapfm.sap.com/pdf/bf05ho/9_suprenant_bf_houston.pdf ·...

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