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SAP's mySAP supplier relationship management (SRM) suite is an outgrowth of its e-procurement applications that promises to manage profitability rather than purchases. There is a huge difference between the two, says Faheem Ahmed, SAP's (NYSE: SAP) 
head of market strategy for SRM.
E-procurement traditionally has focused on automating manual processes, Ahmed told CRM Buyer Magazine -- getting the best price from whatever supplier. Sourcing, on the other hand, has played a more strategic role. Ahmed now sees the trend moving toward automation of sourcing, "while procurement is getting more strategic."
This is in line with Aberdeen Group vice president Tim Minahan's assessment of supply chain and SRM applications. He told CRM Buyer that they will become more comprehensive, allowing companies to capture not only those first savings gleaned from a price negotiation, but also the much more significant savings possible through strategic sourcing.
Size Changes Goals
Smaller companies using mySAP SRM are interested in managing and tracking their "spend" -- the total dollars put toward supplies and services, Ahmed said.
Larger, global firms, on the other hand, are interested in consolidating their global spend -- a more complex task. "Larger companies don't want to run auctions on a public site," he explained. "So, at the high end, it becomes like a private exchange."
The mySAP SRM suite includes the following modules:
- Bidding Engine
- Business Information Warehouse
- Enterprise Buyer
- Enterprise Portal
- Exchange Infrastructure
- Supplier Self-Services
The fixed price for limited mySAP SRM functionality for a smaller company -- perhaps 50 users -- is US$50,000, according to Ahmed. The range tops out in the multiple millions for global enterprises. Thus, large enterprises seeking complete SRM functionality are looking at a hefty price tag -- not welcome news in an economy recovering at a snail's pace.
However, SAP, like many of its competitors in the large enterprise
space, is actively pursuing small- to mid-size businesses -- a
market segment that many analysts identify as the best hope for a
struggling enterprise software field. Not only will it have to compete
with the likes of PeopleSoft and Oracle (Nasdaq: ORCL) toward this goal, but also with
mid-market specialists like J.D. Edwards.
What Sets It Apart
In addition to traditional sourcing and procurement features, SAP offers two features unique to the SRM world, Ahmed said. A content integration tool helps automate the "tedious business" of cleaning vendor and product records -- that is, reducing duplicates.
"Let's say a photo processing company buys chlorine both to process photos and to clean its floors," Ahmed said, by way of example. That chlorine likely would be bought from different vendors and listed in the data warehouse multiple times. For a company like Shell Oil, he said, which has 140 different back-end systems from multiple vendors, harmonizing the data can be a nightmare.
The mySAP procurement application offers an electronic purchase order tool
that accepts supplier verification and feedback via phone and fax in
addition to through the system. Not all suppliers have the
capability or desire to use self-service features, he noted. The
multichannel purchase order feature allows companies using mySAP SRM
to trade with suppliers as small or as big as needed.
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