Procurement of services is a complex business process. Comparing it with procurement of goods , professional buyers would attribute several factors contributing to the complexity associated in buying of services as,
– the nature of service demand, especially unplanned, breakdown services
– challenges in specifying, quantifying and itemising the services,
– sequence of logically dependent services steps required,
– difference in planned vs actual service outcome and cost variances,
– high collaboration efforts between planners and providers.
With these challenges in center, with SAP products, we have taken up to transform the external services procurement from the existing complex way of managing it to a collaborative one, from a mere buyer and supplier centric persona to a more engaging and holistic services supplier relationship management.
In the product equation , the S/4HANA Cloud focuses on sourcing, planning and ordering of services and the business networks with Ariba Network and SAP Fieldglass , we focus on the collaboration aspects of end to end service procurement process.
This blog is structured from the SAP solution perspective into two parts.
Part 1: Focuses on specification and ordering of hierarchical itemised services.
In SAP S/4HANA Cloud we have redesigned the services procurement by bringing a completely new buying experience, a harmonised product master, new architecture of business documents, as well as a total spend management analytics and reporting tool to the service buyers. We believe these features would take the complexity out of the user’s services buying experience and offer a transparency the service procurement process needs.
At the architectural level, since S/4HANA 1709 FPS1 release, both material and services procurement is harmonised by sharing the same set of master as well as transactional data.
The feature is also known as lean services procurement and forms the foundation of the transformation service procurement is undergoing. This architecture differs from the MM-SRV based services procurement which had its own master and transactional data , different from the material.
With S/4HANA Cloud 2202 release, we have brought the item hierarchies to the purchasing contracts. A hierarchy list is a hierarchical view of items in a purchase contract. A hierarchy list can contain item sets and functional items arranged in a structured way. For more information on creating items in the hierarchy list, see the product blog Item Hierarchies in Purchase Contracts.
ECC customers in asset intensive and construction , maintenance industries , had been using the MM-SRV based Service Hierarchies . These ECC customers transforming to S/4HANA Cloud can use these hierarchies.
For example , purchasers can create now purchasing contracts with up to 5 levels of item hierarchies. Also a migration of MM-SRV Contracts into new S/4HANA Cloud Contracts with item hierarchies is supported. Migration Cockpit for MM-Purchasing contracts.
Here an example with two level item hierarchy.
After creation of contacts , users can send it for approval . Once contracts are approved and released , buyers can create call-offs.
One of the popular process has been procurement of unplanned services .Buyers typically have a dedicated supplier with contracts. Buyers define the budget they would like to spend on the services. Rest the supplier is well versed with what needs to be done.
Here service requisitioners can create an “Enhanced Limit Item” in a purchase requisition, and assign to the limit item a contract . This contract has now the item hierarchies with several services , spare parts logically grouped into it.
Once approved, the purchase requisition can be converted to purchase order and sent to the supplier.
The purchaser persona can now add Items from Item Hierarchies in Purchase Contracts in Manage Service Entry Sheets. Documentation
Following popup is displayed with the contract items in form of item hierarchies.
On pressing the add button, the functional contract items are added to the service entry sheet where the date and service performance hours can be added to submit the service entry sheet.
On approval of service entry sheet the invoice can be posted.
Part 2 : Order Collaboration with Services Supplier.
For a precise specification and ordering of services, communication with the services supplier is of prime importance. This demands for a seamless orchestration of IT tools used by buyers, purchasers as well as supplier side service coordinators and service technicians.
With ECC MM-SRV as central component for master and transaction data, little over the last two decades, customers have enriched their landscapes with partner or homegrown collaborative IT tools. These tools come in all shapes and sizes , from sharing order details with simple spreadsheets, PDF data and e-mail attachments all the way to Fax, EDI and supplier portals for time sheets submission.
These tools did perform the tasks, but they bring in a break in the flow and format of information needing custom tools . Different tools brings with it visual as well as structural breaks when exchanged between architecturally heterogeneous often custom developed IT tools. The custom tools also impacted the maintainability and upgradability of the whole landscape.
Research has shown that with every break in the buying experience user interface or custom integration in data, leads to a drop of upto 40% in user efficiency.
With SAP Business Networks, Ariba and SAP Fieldglass out of box integration with S/4HANA through the best practices content , we offer out of box integration with Ariba Network and SAP Fieldglass. For more details , pls refer to the documentation below.
One more important feature over ECC MM-SRS is that the productisation of services described in part 1 above now enables purchasing documents to have a mix of goods , materials and services , with their expected where to deliver information or service start dates. These purchase orders with SAP out of box integration , are seamlessly sent to goods and services suppliers as statement of work.
With statement of work representing all the order execution data at one place, service technicians can plan the execution of services and submit their timesheets and invoices requiring minimal to no out of tool communications with their buyers.
The flow of item hierarchies are planned in further documents in subsequent releases enabling further scenarios.
Pls stay tuned to the next part of this blog for further updates.
Kindly share your feedback and thoughts regarding this post in the comments section below. If you have any questions, you can submit them here and follow the respective tag. You can also get in touch via the Community Page for SAP S/4HANA Sourcing and Procurement or the Influence Portal.