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SAP (NYSE: SAP) this month will begin shipping an updated version of its supplier relationship management (SRM) suite, which includes new features for live auctions, supplier portals and service procurement.
The upgrade rounds out the company's SRM offering, which focuses on strategic sourcing, operational procurement, supplier enablement and content management.
By expanding its lineup, SAP is attempting to gain a leg up in the fast-growing SRM market. However, the company still faces competition from the likes of Ariba (Nasdaq: ARBA) and PeopleSoft.
Promising Prospects
SAP is moving in the right direction with its SRM product, Yankee Group senior analyst Jon Derome told CRM Buyer. He places SRM under the aegis of unified supply management, a market that Yankee Group analysts believe will grow from US$920 million in 2002 to $2.3 billion by 2007.
Although SRM is considered an emerging market, the concept behind it is not new, according to Gartner (NYSE: IT) research director David Hope-Ross. "It began many moons ago with the quest to make legacy P.O. processing more efficient," he told CRM Buyer, noting that SAP has been in this space a long time and that its position has evolved from its initial role in ERP (enterprise resource planning).
Differentiating Qualities
In fact, tight integration between SAP's ERP system and its SRM suite is a distinct advantage for the company, Derome said.
In addition, while new clients will benefit from this integration and from shared content between sourcing and procurement processes, existing mySAP SRM users will find an advantage in the adaptive user interface, which caters to clients with varying skills, mySAP SRM product marketing manager Faheem Ahmed told CRM Buyer.
The upgraded offering uses the SAP NetWeaver platform to make collaboration easier, harmonize information and connect companies with their suppliers. These capabilities help organizations manage business processes across different systems and companies, eliminating the need for custom integration.
MySAP SRM also uses NetWeaver's business-intelligence capabilities to analyze and monitor spending and supplier performance, helping companies save money through more informed negotiation.
Portal to Collaboration
SAP also is lending its expertise in portal technology to the SRM upgrade, according to Derome.
For example, the new supplier portal is designed to streamline buyer-supplier relationships by making order collaboration easier. "Suppliers can log in and see all the orders you place with them," Ahmed said. "It puts purchase-order collaboration in the context of a portal."
The portal also provides optional links to other SAP modules for design and inventory collaboration. Eventually, the SRM application's users will share inventory plans and designs via the portal technology, according to Ahmed. "We built the framework to use these capabilities, but there is not much demand for them yet," he noted.
The application's live auction capabilities also help foster collaboration, he added. Customers can operate live auctions that track supplier bids graphically in real-time, in stark contrast to the asynchronous auctions of the past. "You can see all the bids in real-time -- who else is bidding, how the bids stack up."
Pick and Choose
In addition, the new release supports procurement of services, such as temporary labor and consulting, with new processes for service-cost containment. "Companies purchasing services can pay wildly different prices for similar services," Derome said. "The ability to identify cost discrepancies and negotiate new contracts can be very powerful."
Although SAP has added service procurement capabilities to its SRM suite to be more competitive, Ariba and PeopleSoft are ahead of the company in this area, he added.
MySAP SRM pricing starts below US$100,000 for a basic system, according to Ahmed, who noted that "the customer 
can start small -- say, 50 users -- and can scale much higher."
However, customers should carefully choose the most appropriate elements when considering such a broad-based suite, Hope-Ross said. "They need to take a hard look at the individual components within the offering and how they meet their needs."
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