Procure-mentally Speaking…

What are the differences between diverse acronyms

such as PTP/P2P, RTP, STP/S2Pand STS? An SAP
Perspective

Introduction
As a SAP Practitioner for over 18 years in the ‘Procurement’ domain, I have
implemented SAP Procurement Suite for procurement transformation for
numerous clients from diverse industry verticals. The SAP Procurement Suite
includes SAP MM, SAP SRM, SAP Sourcing, SAP SUS, Ariba Cloud and SAP FI-AP.
During this time, I have come across acronyms such as PTP or P2P, RTP,
RTC, STP or S2P coined by clients and implementation partners to address the
procurement transformation initiatives. While it may be clearer to a lot of SAP
Practitioners what they are and the difference in delta functionality, but it added
some confusion to the end clients, HR and the recruiters alike.
Dilemma
To respond to a client’s requirement for a specific consultant or a SME, whether it
is a full time in nature or a contracting one, whether a HR manager or a recruiter
expect, the profiles to be submitted exactly match the client’s verbiage or the
above acronyms. They don’t listen to you when you explain to them that the
profile submitted to them shows the required experience even though not exactly
in terms of the same acronym mentioned in the requirement.
The same with client managers too. There is an element of dilemma and
confusion.
So, I decided to make an attempt to analyze the process and the related acronyms
at a high level, group them and also highlight the differences between any those
groups. The emphasis is based on the following premise
- Business process, not any particular IT Application
Initially I will throw light on the process ‘Procure To Pay’ and after that on ‘Source
To Pay’

Procure To Pay (PTP /P2P)

Process steps
Demand generation
- Manual
- MRP Run
Requisition
- Requisition creation
- Grouping requisitions
- Requisition approval and Release
Ordering
- Selection of vendors from whom the current vendors
- Conversion of a Requisition to an Order
- Order creation and release
- Order acknowledgement
- Receipt of ASN
Receipt of goods /services
- Receive
- Return
Invoice
- PO based, non PO based and Contract based
- Matching terms (2-way &3/way)
- Reconciliation
- Exception handling
- Automatic Workflow approval process
Payment Processing
- Paid
Best Practices
In SAP’s terms the best practice is defined as how best and optimal the processes
are integrated. These best practices include application based and also process
based. While, an outline is provided here, the same in detail will be covered in a
separate and focused article on Procure To Pay.
Account Payables (AP)
There are two types of Integration as explained below.
- Vendor master data
One is Vendor master data maintenance such as Account groups, Banking
information, and other financial information
- Invoice Processing
Invoice processing process which includes incoming invoice verification such as
linking to an existing purchase order and receipt, Invoice matching, reconciliation,
exception handling, invoice routing, payment processing and period closing. Using
the scanning and OCR capability facilitates AP Automation.
Purchase Order
- Account assignment in purchase order
Goods receipt
- When materials are received, Inventory account is debited and
- GR/IR clearing Account is credited
Invoice Verification
- GR/IR account is debited
- AP- Vendor account is credited
 Payment
- Vendor account is debited
- Cash account is credited

Software Applications: Procure To Pay

There several software products but some of them are ERP applications such as
SAP, Oracle and JDE and others are only ‘procurement’ vendors such as Ariba
(now SAP), Coupa, GEP etc. While ERP applications have their inbuilt Inventory
and Finance applications for tight integration, the rest have to be integrated to
ERP applications for transactions related to Master Data, Inventory and Finance.
These IT applications not only integrate procurement process with Inventory
management and Account Payables, but also provide visibility to the selected
material or service during its flow from ‘Requisition to Pay’.
The tool facilitates elimination of tons of paper documents and ‘function silos’
between the process steps or functions.
SAP Procure To Pay Application– SAP ERP
Major differentiator
Procure To Pay Vendors
Purchasing department is responsible for maintenance of approved vendor
master data and update periodically with any updates to the same. Please note
that ‘procure to pay’ Vendors are the approved vendors with whom you have an
agreement or a contract on price and other terms.
Note: I am not going to focus on the SAP Business function – SAP MM Procure To
Pay which is not relevant here. The focus is more on the business perspective and
end to end procurement process from SAP perspective.
SAP ERP: Procure To Pay (PTP/P2P)
The basic definition of Procure to Pay is integrating the process functions such as
Requisitioning, Ordering, Receiving, Invoicing and Payment and eliminate any
function silos In between.

Benefits
By automating the end to end process using SAP has the following benefits.
- Integration of Master data across the procurement process(eliminate data
entry errors)
- Integration to approved Vendor master data such as multiple address data,
accounting and banking data
- Integration of MRP run to and automation of the ordering process
- Integration of Catalog procurement to the procurement process (OCI)
- Seamless Integration of process functions such as Requisitioning, Ordering,
receiving, invoicing and payment
- Ability to Monitor of the process parameters such as time to create and
approve a business document, ease of operation, invoicing and payment
process, resulting in continuous improvement of the process,
- Process automation by auto creation of the business objects such as
Requisition, Purchase Order using referencing technique
- Workflow approval process (for requisition, purchase order and invoice) and
compliance of regulatory requirement such as SOX and audit requirements
- Procurement Integration to Finance
- Integration to a VIM(OpenText or Ariba Invoicing) for Account Payable
Automation (which automates such as invoice matching, invoice
reconciliation, invoice exception, invoice routing)
- Integration to Logistics for receiving and reversing
- Integration to other Sourcing Applications such as SAP SRM, SAP Sourcing and
Ariba Sourcing
- Payment Processing
The software companies use the acronyms PTP or P2P which are freely
interchangeable is very frequently used by domain and software application
experts alike. While the word PTP represents end to end procurement process,
the same in SAP is used more to represent the process in SAP ERP

At the end PTP, P2P and RTP are interchangeable as all of them define the same
end to end process.
Analysis
The major process variants to the procurement process with minor differences
- Procure To Pay (PTP/P2P)
- Request To Pay (RTP)
- Req To Check (RTC)
- Source To Pay (STP/S2P)
- Source To Settle (STS/S2S)
These acronyms or phrases are loosely maintained and used by the Software
Application vendors, professional services companies and the clients alike and
sometimes they are easily interchanged without any strict adherence to the
definitions. Here I would like to analyze the similarities and differences and
provide an SAP perspective.
These acronyms are not distinct and unique and let us discuss them first.
PTP, P2P and RTP
- PTP
While the industry usage of the acronym PTP is very prevalent to describe Procure
To Pay, some consulting and product development organizations use the term
P2P, perhaps to distinguish them from their competitors. I have seen a few
manufacturing clients use the acronym RTP to describe their procurement
process.
- P2P
Coming to P2P, as per Chartered Institute of Purchasing and Supply, P2P is the
process of obtaining and managing raw materials needed for manufacturing a
product or performing a service. It is a seamless process, outlining the
procurement process from Requisition to Payment.
- RTP
Some of the Global customers coin the acronym RTP otherwise, in all senses, it is
same as PTP or P2P to define and support Procure To Pay. The process starts from
Purchase Requisition and ends with payment function. This is no different from
other acronyms which we discussed, in representing Procure To Pay process
- RTC
The acronym RTC stands for Req-to-Check, which refer to the end to end
procurement process which includes requisitioning, Ordering, receiving and
payment by issuance of a check. This acronym also represents Procure To Pay
process. But it is not that appealing because payment type cannot be confined to
issuance of a check, which is a bi outdated. Of course, one can argue that ‘check’
is symbolic and informal alternate to Pay. Other than GEP, I don’t think no one
applies the acronym and is in usage in the business. For our argument sake, we
consider RTC represents Procure To Pay.
Procure to pay (purchase to pay or P2P) is the process of obtaining and managing
the raw materials needed for manufacturing a product or providing a service.
Technically it enables data integrity during the data flows across the business
objects from end to end process and elimination of multiple data entry.
According to the Chartered Institute of Purchasing and Supply, procure to pay
should be a seamless process from point of order to payment. Technology can
assist this process.
Source To Pay
In most of the SAP transformation projects I led and participated, Sourcing
transformation is a part along with Procurement transformation.
Though, sometimes the word ‘Procurement’ is used loosely to encompass
Sourcing’, Sourcing is always a distinct process. It may be the ‘process’ which
precedes Procure To Pay or it is triggered as a part of a business scenario of
Procure To Pay.
The acronyms in the usage to represent Source To Pay are
Source to Pay – STP/S2P
Source to Settle – STS
End to End Process: Source To Pay
As I mentioned above, I will provide an outline of Sourcing Process.
I will explain Source To Pay process later in a separate article.
Sourcing process is triggered when the procurement organization
- Needs to identify potential suppliers for the procurement of new materials or
services when the current vendor base cannot supply
- Needs to identify alternate suppliers to leverage better savings and minimize
risk of supply and logistics
Sourcing Process consists of the following process steps
1. Capture of sourcing vendors/Supplier on-boarding process
- Sourcing vendor profile evaluation and qualification process
- Supplier Approval process
- Supplier
2. Bid Preparation
- RFx(RFQ,RFP and RFI) preparation
3. Bid Invitation
- Supplier Invitation
- Supplier participation
4. Supplier Response
- Process Bid Response
5. Review Award scenario
- Sole award vs split award
-Contract/Purchase Order creation
- Contract Approval process
6. Operational contract creation
7. Procure To Pay Process
Sourcing Vendors (Bidders)
Sourcing Vendors are active bidders who are invited to participate in a customer’s
bidding process. Based on the customer’s sourcing process, a bidder may
continue participate in bidding but never registered as an approved and
established ERP vendor until they are awarded any business.
Software Applications: Source to Pay
The leading ERP software application vendors like SAP, Oracle, Peoplesoft have
Sourcing application. In addition to them, there are other Application vendors
who are small in size but innovative ones are also in the market. ERP vendors due
to integrated applications and seamless transfer of Master Data and transactional
data from end to end, have better Integration capabilities between Sourcing with
procure To Pay.
The tool facilitates elimination of tons of paper documents and ‘function silos’
and manual efforts and repetitive entry of data.
Sourcing Application –SAP
Among all ERP Application vendors, SAP has a few Sourcing applications such as
- SRM Sourcing
- SAP Sourcing
- Ariba Sourcing (recently acquired Cloud application).
SAP ERP has virtually no ‘Sourcing’ functionality though it has a screen
RFQ/Quotation, which is a place holder or
- Integration point to integrate SAP Purchase requisitions to be transferred to
an external ‘sourcing’ application to trigger ‘sourcing process.
- Integrating point to receive RFx from an external sourcing application and
create a purchase Order.
Source To Pay - Best Practices
As it was mentioned that in SAP’s terms the best practice is defined as how best
the processes are integrated. The ‘Best Practices’ are system based as well as
process based. While, an outline is provided here, the same will be discussed in
detail in a separate article on Source To Pay.
Sourcing Vendor Integration to ERP Vendor
- On approval of a sourcing supplier in terms of supplier profile and
qualification process, system replicates the data to the backend ERP to create
an ERP Vendor
Sourcing Process Integration to Procure To Pay
- ERP requisitions(Procure To Pay)can be replicated to ‘external’ Sourcing
application to convert to RFx
- An agreement can be distributed to ERP to create an ERP Contract
- Awarded Bids can be distributed to ERP to create a Purchase Order (Procure
To Pay)
- ERP Master Data and Purchasing Data integration to ‘Sourcing’ application
At the end, we can safely that Sourcing process is integrated to Procure To Pay,
then it becomes Source To Pay(STP/S2P).

Source To Settle (STS)

It also represents the same end to end process which includes Sourcing and
Procure to Pay together called as Source To Pay.
Settle means monetary ‘settlement with procurement vendor for the goods
supplied or services performed which is nothing but ‘Payment’. So, Source To
Settle is nothing but Source To Pay.
The acronyms STP, S2P and STS are interchangeable to represent Source To Pay.
Source To Pay= Sourcing +Procure To Pay
Conclusion:
# End To End Process Acronyms
1 Procure To Pay PTP, P2P, RTP and RTC
2 Source To Pay (Sourcing + Procure To Pay) STP, S2P, STS

Comment: While I attempted to provide an analysis on different acronyms for

Sourcing and Procurement processes, I might have overstepped and provided
more details. This article should clear the confusion, which client managers and
recruiters have alike.
Next step
In my next article I will discuss Source To Pay, End to End Sourcing and
Procurement process from different angles. The major emphasis would be on the
business process and occasionally throw light on the SAP Sourcing &Procurement
Suite – Cloud and On Premise.