SAP: How Leading Companies Optimise Source-to-Pay Processes
Harnessing digital tools is a vital component of modern procurement, helping to drive operational efficiency in their work. SAP's Procurement Benchmarks Survey Insights shows how top-performing companies use SAP Ariba and its solutions to obtain outstanding results across their source-to-pay processes.
The report showcases the key metrics and practices that can help companies improve their procurement performance.
Manoj Swaminathan, President and Chief Product Officer for Intelligent Spend and Business Network at SAP, said, when looking ahead to 2025: “The technology landscape is rapidly evolving, and organisations are grappling with a heterogeneous mix of solutions.
"Many companies now employ multiple systems to meet their end-to-end business needs, leading to siloed processes and confused employees. Procurement, in particular, often suffers from fragmented systems handling everything from purchase requests to supplier onboarding, creating inefficiencies and frustration.
“To address this challenge, we’re seeing a shift toward process orchestration – a centralised approach that connects disparate systems, streamlining procurement inquiries and status updates. Our newest solution, SAP Ariba Intake Management, can tackle this head-on by automating request creation and providing a single point of entry so that organisations can empower employees to adhere to policies and regulations without the burden of manual corrections.
“This approach can not only save valuable time and resources but also drive user adoption and increase compliance and efficiency, positioning companies to thrive in an increasingly competitive landscape.”
The report surveyed leaders over the past two years, with SAP's report covering the key metrics in procurement processes across the source-to-pay cycle. Results are presented as top, average and bottom quartiles to indicate the degree of participant success. SAP also lists best practices that elevate companies from an average level of performance or savings to best in class, offering insight into effective strategies.
The sourcing benchmark
The report found a difference between how leading companies harness sourcing savings. Top-quartile organisations achieved an impressive 13% annual sourcing savings rate from awarded auction events, compared to just 3.9% for bottom performers. Additionally, these leading companies realised 9.4% total strategic sourcing savings as a percentage of addressable spend, nearly three times higher than the bottom quartile.
There is also efficiency in sourcing processes, highlighting the gap between those at the top. The average sourcing cycle time for those organisations is just 17 days – compared to those falling behind, with the bottom performers taking 68 days. The top speeds of these higher performers reduce costs and improve agility in responding to shifts in the market.
Management of supplier onboarding
The benchmark report also shows the importance of having a streamlined onboarding process for new suppliers. Top-quartile organisations can onboard them in just one week — four times faster than bottom performers. Quick and efficient onboarding allows companies to adapt quickly to disruptions in their supply chain while also enabling them to capitalise on new opportunities.
There is also the management of supplier compliance, which shows the gulf between those at the top, Leading companies had a 73.1% rate of invoices associated with contracts, catalogues and blanket purchase orders (POs), indicating a high level of spend control and compliance. In contrast, bottom performers only achieved a 12.7% rate in this metric.
Invoicing and purchase orders
SAP's findings uncovered that the top-performing organisations create 86.5% of their purchase order line items from contracts, catalogues and blanket POs. This high rate of structured transactions contributes to increased efficiency and compliance in procurement processes.
Efficiency in transaction processing was another area where leading companies excelled. Top-quartile organisations achieved a remarkably short requisition-to-order cycle time of just 0.9 days, compared to 2.7 days for bottom performers. This speed in processing not only improves operational efficiency but also enhances user satisfaction and compliance.
The cost savings across processing were also impressive – those leaders paid just US$2.06 per invoice processed, while bottom performers incurred costs of US$8.84 per invoice. Similarly, the cost per PO processed for top performers was US$9.02, less than a third of the US$34.70 spent by bottom-quartile organisations.
Harnessing digital tools: The difference
SAP's report found that those adopting digital technologies in invoicing and purchase order transmission emerged as a key differentiator among high-performing companies. Top-quartile organisations received 99.8% of their invoices through SAP Business Network, compared to just 40.2% for bottom performers. Furthermore, leading companies transmitted 100% of their purchase orders electronically, highlighting their commitment to digital transformation.
This higher rate of digital adoption translated into significant improvements in invoice approval cycle times — top performers achieved an average cycle time of 0.4 days, in contrast to the 2.2 days for bottom-quartile organisations.
Early payment discounts and working capital management
Leading organisations leverage early payment discounts to enhance their financial performance. Top-quartile companies had 39% of their spend associated with early payment discounts, potentially saving more than US$1m for every US$1bn of spend under management.
Leading organisations employ flexible working capital management strategies incorporating supply chain financing and early payment discounts; faster invoice processing and capturing these discounts can significantly enhance cash flow and working capital position.
Best practices for improvement
- Increase the use of auctions in sourcing activities to drive down costs and reduce cycle times.
- Streamline supplier onboarding processes and leverage secure, networked supplier collaboration.
- Prioritise contract - and catalogue-based transactions to increase compliance and automate processes.
- Utilise guided buying capabilities to direct users to preferred pricing and suppliers.
- Adopt digital tools for invoice validation, compliance checking and exception management.
- Maximise supplier participation in electronic networks to increase digital invoicing and PO transmission.
- Implement flexible working capital management strategies, including supply chain financing and early payment discounts.
The case for change
As with any significant investment, procurement transformation requires a compelling business case to garner support over other projects competing for funds – and benchmark data can help you create one. The information in this report offers a useful starting point to assess your source-to-pay performance in relation to other companies and identify areas where new strategies and digital solutions will drive the greatest improvements.
As you move forward with your transformation efforts, remember the following:
Executive sponsorship, strong governance and effective management are essential for success.
- Automate as much as possible to help drive compliance, reduce exceptions and enable your team to focus on more value-added activities.
- Adoption is critical to achieving business objectives and a good user experience is critical to driving adoption.
- Measure procurement contributions that go beyond sourcing savings and risk reduction: How else are you adding value?
- Transformation is a journey of many small steps – celebrate the wins.
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