Introducing Processes

Objective

After completing this lesson, you will be able to describe the contracting process in SAP Ariba Contracts.

Strategic Procurement Process

SAP Ariba Contracts is part of the strategic procurement process. SAP Ariba Sourcing and SAP Ariba Contracts cover the business process from sourcing to contract management. They allow you to:

Define and create the category strategy.
Identify and source material and services needs.
Negotiate and manage contracts with trading partners.

SAP Ariba’s supplier and risk management applications provide overall support to the process by handling supplier data used for sourcing and contract management activities.

Depending on a company’s internal needs and procedures, the contract management activities can be handled through two main processes. One has a contract request as a starting point, and the other, skips this step and, starts with the contract workspace creation.

Contract Request Process Overview

Contract requests enable a customer’s business stakeholders to engage the buyer category management team for a new contract to be executed or amend an existing contract. Contract requests can be initiated from within the SAP Ariba Strategic Sourcing application directly.

The main stages in the contract request management can be summarized as follows:

Requesting - creating the contract request project.
Collecting contract information - collecting and storing contract request relevant data for approval.
Approving - approving the start of a contract workspace project.
Closing - creating a contract workspace project if the contract request is approved.

Business Process Overview

Once the contract request has been created, the initiator must provide all supporting documentation into the document repository of the project to ensure the contract manager reviewing the request has enough information to review.

As soon as the business stakeholders have provided all the necessary documentation, they will send the request to the contract manager for review and approval. The contract manager will review the overview data, as well as, all collateral provided by the initiator. If the contract manager deems that there is insufficient information or that the request is invalid, they will deny the request providing their reasoning for the denial. The initiator will receive a notification of the denied request and can proceed to close the request or provide additional information and re-submit the request for review and approval.

Depending on the nature of the request, the approval by the contract manager will lead to either the creation of a new contract as a follow-on project of the contract request or the amendment of the referenced contract by the contract manager. Once the new contract or amendment of the contract has been initiated, the contract request can then be closed by the contract manager.

Contract Workspace Process Overview

As discussed in unit 1, SAP Ariba Contracts workspaces typically have a pre-set lifecycle:

The main stages in contract workspace management can be summarized as follows:

Publishing - preparing and authoring the contract, reviewing and negotiating the contract, and approving and finalizing the contract.
Amending - modifying a published workspace for amendment, renewal, or termination.
Holding (Optional) - putting a contract on hold for a certain period of time due to unforeseen circumstances.
Closing - ending a contract either because it has reached its expiration date or prior to that if the business needs require it.

A workspace is created - The workspace is in Draft state. During this time, documents are added and edited, and tasks are submitted and completed.
The workspace is published - The workspace and its documents cannot be modified anymore. If users want to modify a published workspace, the workspace must be amended. When modifications are complete, the amended workspace can be published again, or the amendment is completed, depending on the type of amendment.

If the contract term type (controls the behavior of a contract workspace project when it reaches its expiration date) is Fixed or Auto Renew, the contract expires on its expiration date.

Additionally, it is also possible to:

Put a workspace on hold to suspend work on the contract.
Manually close a workspace prior to its expiration date (or at any time if its term type is Perpetual). The contract cannot be modified and the only notifications sent are for notification tasks (no notifications are sent for approval, review, or to do tasks; no notifications are sent for contract expirations).

Amendments

Any changes to the contract workspace done after it was publish will initiate the amendment process for the contract. As discussed previously, SAP Ariba has several amendment types to help define the amendment being made. Administrative amendments do not have a process built in as it is a restrictive amendment type that allows few changes to the contract. All other amendments follow the same process aside from the termination which has additional steps for completion. The amendment process is repeatable throughout the lifecycle of the process and does not have a limit to the number of amendments which can be made.

Once approved by the business stakeholders, the contract manager can assemble and issue the final contract for signing by the supplier and procurement executive. On receiving the final signed off document the contract manager must then review any savings or benefits forms and risk logs and ensure they have been updated and published in alignment with the signed amendment updates as required. The contract manager must then make the relevant updates to the overview page of the contract workspace, if any, and then re-publish the contract.

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