Just over a year after being acquired by software company SAP, working capital solutions provider Taulia has been fully integrated into the SAP Business Network, a B2B platform where companies connect and transact using shared processes and information.
The full integration, which was announced at the SAP Sapphire event in Orlando, Florida last week, will enable businesses on the platform to connect to Taulia’s suite of payables, receivables and inventory finance solutions, helping them streamline payment and procurement processes across supply chains and free up working capital.
“Taulia’s first integration with the SAP Business Network took place towards the end of last year, and that was for its supplier finance offering,” said Tony Harris, chief marketing and solutions officer at SAP Business Network, speaking to GTR on the sidelines of SAP Sapphire.
“The latest connection we have announced at Sapphire is for supply chain finance and early payment discount. We also now have the integration with business sustainability ratings provider EcoVadis on the network, given its tie-up with Taulia this time last year,” he added.
According to Harris, the next step will be to connect the network to Taulia’s new virtual credit cards, a digital payment method that was added to its suite of working capital management solutions in October last year. As of Q3 2023, companies on the SAP Business Network will be able to use Taulia’s virtual cards, which work like traditional credit cards, as payment to suppliers in their procure-to-pay processes.
SAP outlines in a statement that future virtual cards-related releases will aim to incorporate the ability to pay on order and offer early payment options for suppliers.
To better understand what the integration between Taulia and SAP means in a practical sense, and how the development may be shaping the future of working capital management and supply chain finance, GTR spoke to Harris and two other experts: Danielle Weinblatt, chief product officer at Taulia, and Thomas Mehlkopf, head of working capital management at SAP.
GTR: What does Taulia’s integration with the SAP Business Network mean, starting with an overview of the network itself?
Harris: There are two components to the SAP Business Network. The first is that it’s a marketplace for millions of companies, or trading partners, that cover every type of good or service you can imagine.
We started with the Ariba Network, acquired by SAP in 2012, which focused purely on indirect procurement, and have evolved the marketplace over the years to cover the entire supply chain, including direct procurement of materials and processes. More recently, we’ve developed the network even further with asset management, logistics and, with the Taulia acquisition and integration, finance. Our buy-side customers interact with the marketplace to discover, connect to and transact with these suppliers of goods and services. We’re currently managing US$4.5tn of commerce a year on the network.
The second component is that it’s a B2B transactional collaboration platform, which in essence means that it can extend the capabilities of processes beyond the capacity of what a partner company’s system can manage.
Weinblatt: As a company on the SAP Business Network, Taulia’s integration means you only need to either upgrade your cloud integration gateway add-on, or you have one add-on implementation integration that connects you both to Taulia, the enterprise resource planning (ERP) system and the Business Network. One integration supports all three platforms. Practically, this means reduced core IT and implementation costs and maintenance, and faster timelines. And then, when you’re thinking about the end-user experience, it’s seamless. It’s a single sign-on and click-through from the Business Network to Taulia and vice-versa; data is bi-directional.
Mehlkopf: Going back to why SAP acquired Taulia in the first place; it was to achieve the sweet spot of the combination of procurement and finance. It’s a natural fit. Bringing the two together on one platform is something that we see resonating very well in the market.
Many of the supply chain finance programmes you see today have an issue with scaling. Sometimes only the top 10 suppliers are able to join a programme because the onboarding process is quite cumbersome.
Given SAP has millions of suppliers already trading on the network and Taulia has, we believe, a state-of-the-art onboarding process, we’re really able to bring our solutions to scale.
It also means we’re able to service the long tail of smaller suppliers, which is especially important given the current high interest rate environment and the fact that there’s even more pressure on companies to find increasingly favourable financing options.
Weinblatt: There’s a tile embedded in the SAP Business Network that asks, ‘do you want to accelerate your invoices?’ To Thomas’ point on being able to scale programmes more robustly, that’s an opportunity that is made clearly available to suppliers, whatever their size. We believe that this ease of use and seamless experience will really grow the adoption of supply chain finance and help better democratise what we’re offering.
GTR: To date, the supply chain finance industry has been dominated by banks and fintech companies, but we’ve recently seen some big tech firms and other solution providers enter the fray. Do you believe this to be a growing trend, and if so, what’s driving it?
Harris: Yes, we are seeing more tech firms identifying opportunities in this space, particularly those companies with procurement applications, given their proximity to invoices. They’re realising that because they’ve helped manage the order process and overseen the invoice coming into the customer’s system, they may as well also facilitate the payment and take a slice of that action as well. The payment and financing element is a natural progression and I think you’re going to see more and more of that happening.
Weinblatt: At the same time, it’s important to remember that there’s tremendous trust, credibility and experience when it comes to SAP, unlike certain big tech players, given the way they’ve leveraged data, for example. We are transparent with our customers about what we do with their data and how that’s beneficial to them.
The other angle to this is that you need a lot of resources to be able to do what SAP does. There have been a number of false starts in this space. I think we’re now reaching the point where people are realising the real benefits of partnering with a company that has exceptional talent and that can actually deliver upon its promises, because that’s what it has done historically, tried and true. We’re certainly seeing that with the banks that we partner with.
GTR: What are the standout issues affecting your customers today, and how is this guiding SAP’s next steps in the working capital management space?
Harris: There are three business imperatives that we’ve identified by talking to our customers around the world: supply chain transparency, supply chain resilience and sustainability. It’s no surprise that SAP has made these topics the three core themes of the Business Network.
Transparency is all about understanding what’s happening within the supply chain: who are the players and what are the risks that companies might be exposed to, financial or otherwise? Only if I can get visibility into the players in my supply chain, and beyond tier one into tier two, tier three, can I mitigate for those risks. That’s one of the challenges we’re looking to solve for.
Then supply chain resilience, or as I call it, ‘plan B’, what we’re seeing with our customers, and one of the reasons for the growth of the network, is companies are looking for alternative suppliers across their supply chains. In the 20 years I’ve been working in and around procurement software technology, what used to be a common need for consolidation of supplier bases, has now evolved into a search for alternative suppliers in case of supply chain disruptions. Supply chain financing is an important aspect of the resilience angle: companies need cash to keep their businesses going. Again, that’s something they can tap into on the SAP Business Network, through Taulia’s capabilities.
Sustainability, the third element, has only grown in importance across most companies. Whether that’s carbon emissions or fair working policies, everyone wants information along those lines about the companies they’re doing business with. SAP recently released the SAP Sustainability Data Exchange, a new application designed to securely exchange standardised sustainability data, including product footprints, along the value chain. We continue to do more and more in this space.
Mehlkopf: We set out to create a holistic working capital management platform covering payables, receivables and inventory, and we have made strong progress over the last year in all three areas. No other platform covers working capital management as holistically as we do, from providing the right transparency to financing, and on our scale. For finance decision-makers, whether they be CFOs or treasurers, optionality is key. So there might be a time when payables solutions are more relevant; at other times companies may prefer a receivables or inventory solution. Companies want optionality when it comes to partner banks as well. Taulia provides this level of optionality in a very efficient way.
In terms of next steps, we’re very focused on embedded financing. SAP customers generate 87% of total global commerce. We run mission-critical business processes and have access to relevant customer data. Now that Taulia is part of SAP, we’re excited to see how that can be used to make better informed decisions, for example in the payments space, given that SAP touches so much of global trade.
Weinblatt: With embedded financing, it’s about understanding and optimising the customer journey and processes, but it’s also about leveraging the data.
We understand buyer-supplier interactions, and we have all the invoice data. The next step is figuring out how to use that in a thoughtful way to be able to command a lower cost of financing and work with an increasingly diverse set of funding partners through our multi-funder platform. And to then give those funders the visibility to what’s happening on the network, what’s happening inside the ERP, so that they increase their level of comfort. We want to lower the costs, both from an efficiency perspective in terms of embedded experiences, as well as the actual cost of financing based on the data.