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SAP’s Commodity Management Focus

Like many businesses, SAP has shuttered its Russian operations in response to the Russian invasion of Ukraine. It has also carefully monitored developments because of the war and sees that resilience is set be a growing requirement for companies, SAP’s Anja Strothkaemper told me recently. She and her team gave me an update on SAP Commodity Management and related software.  It saw that COVID slowed down demand and decision making but that things have returned largely to normal post-COVID. The pipeline is pretty much filled across all regions and segments, I was told. SAP also benefits from its own ecosystem in which customers are upgrading to SAP S/4HANA, but it also sees RFPs as well as upgrade plans for homegrown software, Anja told me.

Meanwhile, SAP has been very busy it seems delivering across all fronts. Among those developments were developments for livestock procurement, improved FIORI-based trade capture for mining and the ability to handle complex derivatives. In the latter area, SAP has added functionality to support things like swap futures and balance of month swap futures, for example. It is also adding a good deal of functionality to its SAP Agricultural Contract Management application often via customer co-innovations including areas like delivery and contracts allowing drivers to show up at weighbridges without contract numbers or farmers asking for allocation to different contracts than originally planned. Much of these improvements also feature increased automation and exception management handling to optimize the user’s interaction with the system. Another area of innovation has been prepayments to farmers to finance crop cycles.

On the Commodity Management side, a couple of huge enhancements are in the process of addressing gaps in SAP’s solution. The first is in and around commodity hedge accounting that delivers a whole host of functionality in this area including a hedge cockpit for traders and triggered hedging and hedge accounting for FX risks. Again, this functionality includes significant automation to reduce the hedge accounting workload, I was informed. Another big area of enhancement is the recently launched SAP Broker Reconciliation for Commodity Derivates application.

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The focus on agriculture is also producing innovations that include solutions such as SAP Intelligent Agriculture helping agribusinesses optimize and manage farming processes to increase profitability and sustainability, or the SAP Agricultural Origination Portal to deliver information sharing and later e-contracting, bids and offers and so on. These initiatives plan to deliver incremental functionality over the next set of releases.

Meanwhile, SAP continues to win new customers and complete implementations. For example, it has recently successfully implemented  major energy companies and agribusinesses and a cable company, I was told. New customers were in areas like agrichemical, feed processing, chemicals, and non-grain agricultural commodities.