Direct Procurement Roundtable: Customer Journeys, Product Direction, and the Reality of AI

Earlier this year, SAP welcomed senior procurement leaders from automotive, industrial manufacturing, aerospace, and defense organizations to our annual Direct Procurement Customer Roundtable in Walldorf. These companies manage some of the most complex product portfolios and supply networks in the world. Direct materials represent their largest spend category—and their largest risk surface. They understand deeply where value is created, where it erodes, and where operational risk accumulates.

What made the event distinctive was its candor. Customers did not come to present polished success stories. They came to compare realities. And those realities were refreshingly honest.

Why direct procurement is hitting a breaking point

The pressure on direct procurement is not coming from one direction. Geopolitical instability and accelerating technological change are forcing sourcing decisions earlier in the product lifecycle, at precisely the moment when many organizations are least equipped to act. Meanwhile, institutional knowledge is leaving faster than systems are modernizing. The experienced individuals who once held fragile processes together are retiring or moving on, and the systems meant to replace that knowledge are not yet ready.

The result is an operating model that prevents procurement leaders from influencing value at the moments that matter most. Several customers described a tension they are actively dealing with. Sourcing is being pulled upstream into design and development, while the tools and processes that support it are still anchored downstream.

What customers shared about their reality

While all participants operate with a strong SAP footprint, spanning SAP ERP and SAP S/4HANA, many acknowledged that direct materials sourcing remains fragmented and disconnected from the digital core. The picture they described was familiar but worth stating plainly: engineers, buyers, and suppliers still collaborating through e-mail, local tools, and disconnected applications; there’s an overreliance on a small number of experienced individuals to make things work; and multiple ERP landscapes run in parallel, with direct sourcing living largely outside all of them.

One observation stood out clearly. The real friction is not the sourcing events themselves. It is the handoffs, the gaps between systems and teams where decisions get made too late, data is reconciled manually, and no single digital thread connects product intent to sourcing execution.

In other words, the process functions, but it functions in silos.

Participants also noted that traditional indirect source-to-pay approaches simply do not support direct materials adequately. They lack native support for procurement embedded in new product development, sourcing scenarios that evolve with engineering change, demand aggregation across programs, and contracts treated as executable objects rather than static documents. That last point came up repeatedly, particularly the need to treat contracts as executable objects. This is also where the SAP Ariba direct materials sourcing add-on in SAP S/4HANA is starting to resonate more strongly in ongoing customer discussions.

Where customers are focusing next

What emerged from the discussions wasn’t a long list of priorities, but a firm shift in where companies are focusing their efforts.

Moving sourcing upstream into product development—rather than reacting after design decisions are already locked—was a consistent theme. So was reducing dependency on hero buyers: individuals whose personal expertise and relationships are currently holding critical processes together.

Commodity volatility and renegotiations also came up as structural challenges, not one-time events. Organizations want to handle these systematically rather than heroically. And several participants raised the reality of managing multi-year SAP S/4HANA journeys without stalling progress in the meantime—a genuine tension that demands honest road map planning.

While the direction is widely understood, most organizations do not yet have the setup to execute against it at scale.

These priorities help explain why customers are increasingly adopting the SAP Ariba direct materials sourcing add-on alongside SAP Ariba Procurement Planning, SAP Integrated Product Development, and SAP Business Network—capabilities that together can support the connected execution model direct procurement actually requires.

How AI fits into direct procurement

AI generated significant interest, but expectations were measured and, I would say, appropriately so.

The consistent message was this: AI only matters once the fundamentals are addressed. Agent-based capabilities depend on clean processes and consistent data. Without a unified digital thread across product design, sourcing, contracting, and execution, AI does not generate insight—it amplifies noise.

Leaders also expressed clear skepticism toward black-box automation. They want AI that is explainable and embedded directly into sourcing, negotiation, and execution workflows, not layered on top of broken processes and presented as a fix.

This thinking aligns closely with SAP’s vision for the Autonomous Enterprise, introduced at SAP Sapphire just weeks after our Walldorf discussions. The vision anchors AI agents directly in transactional business processes, data, and governance—exactly what customers said they needed before they could trust AI in direct procurement environments. Hearing them articulate that requirement so clearly, before the announcement, felt like meaningful validation.

Where this is all heading

The Walldorf roundtable confirmed a clear trajectory. Direct procurement organizations are moving away from heroics and spreadsheets and toward system-led execution. They are aligning sourcing transformation with their SAP S/4HANA road maps and preparing their organizations—not just their systems—for a future where AI supports decision-making across the full procurement lifecycle.

Direct procurement, seen through this lens, is not a standalone transformation. It is a foundational building block. Connecting product, sourcing, contracts, and execution through a single digital thread is what enables AI to operate accurately, compliantly, and at scale. That connection has to exist before any of the more ambitious automation goals become realistic.

For SAP, conversations like the one in Walldorf directly inform our product direction and investment priorities. There is no substitute for sitting in a room with people navigating these challenges every day, without a script.

What was clear in Walldorf is that the direction is no longer in question for participating organizations. The challenge now lies in execution and in how quickly organization can move from fragmented, person-dependent processes to cohesive models that reflect how direct procurement operates today.

Karolina Bombardelli is global go-to-market lead for Direct Procurement at SAP.