builds greener, more efficient supplier relationships with support from IBM and SAP 1

Powering the future with sustainable energy

Iberdrola builds greener, more efficient IBM Global Business Services supplier relationships with support from 5-minute read IBM and SAP Iberdrola builds greener, more efficient supplier relationships with support from IBM and SAP 2

eading climate scientists, L governments and international organizations like the United Nations recognize that we are heading towards a climate emergency. To avoid irreversible ecological damage, experts warn that humankind must act fast to prevent a dangerous rise in global temperatures. leading role in helping businesses and to as many people as we possibly communities to build a greener, more can, while ensuring that our business Switching to sustainable future for all. model is environmentally sustainable, sources is a key weapon in the battle competitive and profitable. Building against climate change, and Iberdrola Ramón Zumárraga, Director of on our commitment to reach carbon is at the forefront of the revolution. Purchasing Services at Iberdrola, neutrality by 2030 in and 2050 Serving over 100 million customers in explains: “Sustainability is in our DNA. globally, we want all our suppliers to countries across Europe, the US, Brazil, That’s why we’ve made it our mission join us in taking active steps to prevent Australia and Mexico, Iberdrola plays a to provide affordable, clean energy climate change—and embracing Iberdrola builds greener, more efficient supplier relationships with support from IBM and SAP 3

innovative technologies will help us to achieve this target.”

To help all Iberdrola set the ambitious goal of business units ensuring that 70% of its core suppliers buy with 200 have put in place effective sustainable confidence, Iberdrola will development policies and standards create over catalogs of products and services by the year 2022. To achieve this, the company looked for ways to improve its supplier relationships, monitor and measure progress, and make smarter, Iberdrola more-efficient purchasing decisions. spends EUR 15 billion “For many years, we relied on a highly customized on-premises supplier on products and services using SAP Ariba relationship management system,” Zumárraga continues, “but maintaining and managing the supporting Iberdrola infrastructure was becoming increasingly dramatically expensive and time-intensive.” reduces IT spend

In addition, the supplier relationship by eliminating on-premises IT maintenance costs management (SRM) solution offered limited governance features for company-wide purchasing and, most Iberdrola builds greener, more efficient supplier relationships with support from IBM and SAP 4

importantly, provided no capability to assess new and existing suppliers “With IBM and against sustainability criteria. SAP at our side, “Our existing SRM platform was so difficult to update that we were unable to keep it up to speed with the we are even increasing requirements of our own procurement process,” comments better placed to Zumárraga. “This made it necessary for some internal processes to be play a key part carried out manually by email. Given the acceleration of new requirements in building a and our own strong commitment to sustainability, continuing to conduct these processes in such a non-standard more sustainable way could have led to us not meeting our ambitious environmental, social and world for future governance targets. Equally, handling procurement processes manually generations.” could have also increased the risk of our teams settling contracts that , Director of Purchasing Services, Iberdrola would contravene internal policies on Ramón Zumárraga cybersecurity or labor risk.” Iberdrola builds greener, more efficient supplier relationships with support from IBM and SAP 5

Harnessing the power of cloud computing

To increase procurement efficiency and boost purchasing governance, Iberdrola chose to retire its on-premises SRM system and move to all-cloud SAP® Ariba® solutions.

Referred to internally within Iberdrola as “IBuy,” SAP Ariba will equip the company’s purchasing teams with a full suite of procurement and supply chain management solutions hosted in an SAP cloud environment.

Imanol Barquin, Responsible for Digital Transformation and Processes in Procurement and Project Director of the SAP Ariba Implementation at Iberdrola, says: “We considered a variety of SRM Iberdrola builds greener, more efficient supplier relationships with support from IBM and SAP 6

solutions and SAP Ariba stood in a league of its own, due to its flexibility, capability and scalability. The fact that we could easily integrate SAP Ariba with our existing SAP ERP solution was a huge plus too, as it would make it much easier for us integrate procurement with core business processes, such as capacity and resource planning, finances and more.”

Zumárraga adds: “With SAP Ariba we could retain the sophisticated features of our existing on-premises solution, of third-party integrations available in Ariba deployments at other global and gain the ability to add new features SAP Ariba. For instance, the SAP team companies, the combined team and functionality. We were especially helped us to easily integrate a supplier designed a prototype of Iberdrola’s impressed with the fact that SAP Ariba sustainability scoring solution with SAP new SAP Ariba environment and would help us to design guided buying Ariba and supported us with configuring configured the solution step-by- protocols and enhanced reporting, it to our unique needs.” step following a carefully planned while also supporting API connections waterfall methodology. with third-party tools, such as our To ensure best-practice during the supplier sustainability scoring solution. implementation of SAP Ariba, Iberdrola “As one of SAP’s long-term strategic enlisted the support of IBM Services®. partners, we knew that IBM had the “The SAP team went the extra mile to Taking advantage of templates expertise and the experience required make sure that we could make the most generated by IBM from successful SAP to ensure that we could complete Iberdrola builds greener, more efficient supplier relationships with support from IBM and SAP 7

the move to SAP Ariba quickly and premises solution to a cloud-based fully digitized and automated solution effectively,” says Barquin. “With its platform. IBM supported us every for creating, managing and executing extensive portfolio of successful SAP step of the way, and we were pleased new and existing contracts. Following Ariba implementations and serious to see that senior members of the this, IBM configured SAP Ariba Procure- interest in helping Iberdrola transform IBM team were fully committed to to-Order to support guided buying its procurement operations, IBM stood making sure this project ran smoothly within Iberdrola’s procurement teams apart from all other service providers and successfully.” and across the wider organization. that we considered working with.” After designing and testing a “Thanks to outstanding support He continues: “IBM offered the most prototype version of SAP Ariba and from IBM, we successfully migrated competitive proposal and their team customizing the templates used for the our legacy SRM solution—which did an excellent job explaining how implementation to Iberdrola’s needs, contained 20 years of in-house we could optimize our migration IBM helped the company to deploy the custom development Zumárraga to SAP Ariba and work through the SAP Ariba Source-to-Contract module, continues to SAP Ariba in under a complexities of moving from an on- which would give procurement teams a year,” explains Zumárraga.

“As one of SAP’s long-term strategic partners, we knew that IBM had the expertise and the experience required to ensure that we could complete the move to SAP Ariba quickly and effectively.”

Imanol Barquin, Responsible for Digital Transformation and Processes in Procurement and Project Director of the SAP Ariba Implementation, Iberdrola Iberdrola builds greener, more efficient supplier relationships with support from IBM and SAP 8

Building smarter, more sustainable procurement processes

Moving its procurement processes to SAP Ariba has enabled Iberdrola to reduce the risk associated with supplier spend and boost procurement efficiency. Today, Iberdrola runs over 9,000 sourcing projects and manages relationships with more than 20,000 suppliers using SAP Ariba. Already, 4,000 users regularly engage with the solution—a figure that is expected to grow as Iberdrola rolls out SAP Ariba across more business units.

Barquin comments: “SAP Ariba will help us reduce the risk of Iberdrola employees overspending or making purchases with unvetted suppliers. We will achieve this by using SAP Ariba Iberdrola builds greener, more efficient supplier relationships with support from IBM and SAP 9

to build guided buying protocols and by creating catalogs of pre-approved products and services from our suppliers—a capability that we didn’t have with our previous solution. So far, we’ve rolled out new catalogs and guided buying for our IT department, and we plan to launch a further 200 catalogs for all other departments within Iberdrola.”

With guided buying protocols and catalogs of pre-approved products and services, Iberdrola can ensure that each department makes purchases at a unified price, and according to the correct contract conditions. This new feature also provides the company with conducted in SAP Ariba, we’ve even smarter purchasing decisions. detailed data on all purchases, fees eliminated the need for our What’s more, using SAP Ariba and contract terms—information that procurement teams to finalize ensures that best-practice is baked Iberdrola can use to strike even more agreements via email. The intuitive into all of our procurement and cost-effective supplier agreements in user interface of SAP Ariba helps our purchasing decisions.” the future. procurement department to work more efficiently and provides our He continues: “By embracing SAP Zumárraga adds: “Because all our team of over 250 buyers with cloud technology to support our procurement contracts are now much more detailed data to drive procurement activities, we’ve gained Iberdrola builds greener, more efficient supplier relationships with support from IBM and SAP 10

much more flexibility and scalability, environmental impact of our supply concept for its UK operations. Using while also freeing Iberdrola from the chain,” explains Zumárraga. “Using IBM Watson and related IBM AI cost and maintenance burden of this information, we can make capabilities, Iberdrola has identified running on-premises systems. sure that all of our suppliers are as the potential for significant additional Assisted by IBM, the move to a equally committed to environmental procurement savings. Similarly, the SaaS procurement solution alone sustainability as we are, and that they company is working with IBM to has helped us to achieve significant stay on track to meet our 2022 target.” discover how it can further increase savings, and we hope to see further efficiency across its supply chain by improvements as we work to continue He continues: “For suppliers that don’t expanding the use of robotic process increasing the efficiency of our meet our sustainability objectives automation in SAP Ariba, removing procurement activities.” initially, we will use our scoring tool manual work and increasing efficiency to provide them with a clear set of across its procurement processes. Leveraging the API-connectivity actions they can take to improve the of SAP Ariba, Iberdrola worked sustainability of their business model. Zumárraga concludes: “We’re looking with IBM to implement a third-party This way we can incentivize positive forward to deepening our partnership solution that helps the company change, not just within Iberdrola but with IBM and SAP as we double-down score suppliers on their commitment across the energy sector as a whole.” on our commitment to providing to sustainability and responsible affordable and clean energy to more corporate governance. Looking ahead, Iberdrola is exploring people across the globe. With IBM the possibility of using IBM Watson® and SAP at our side, we are even “Integrating SAP Ariba with our technology to conduct detailed better placed to play a key part in supplier sustainability scoring tool tail-spend analysis to unlock new building a more sustainable world for gives us a detailed view of the savings, and has completed a proof of future generations.” Iberdrola builds greener, more efficient supplier relationships with support from IBM and SAP 11

About Iberdrola Iberdrola (external link) is a leading global energy supplier— the third-largest by market capitalization in the world and the leader in renewables. The group supplies energy to over 100 million people in dozens of countries and has renewable, grid and commercial activities in Europe, the US, Brazil, Mexico and Australia, while also counting markets in Japan, Ireland, Sweden and Poland as major growth areas.

Solution components • IBM Services® • SAP® Ariba®

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