Hello Reshma,
The main benefit of using Follow-on projects (and subprojects) is that fields can be automatically passed from the predecessor/parent project to the follow-on project (you can define what fields are passed). This is also a good example of how Ariba can help improve process efficiencies (our goal is to have users only enter the same data once and only once. If it is shared across multiple objects (requisitions, Orders, Workspaces, contract terms) then the application should automate this sharing in some fashion).
We do not use follow-on projects but we do use sub-projects. The two are very similar in function. For example when we have a sourcing event that results in multiple contract awards, a workspace for each contract is created as a subproject of the parent sourcing project. Doing this automatilly pushes all of the contract fields from the parent to the subprojects that share the exact same data. This saves users having to enter this contract data in the workspace a second time (and possiblly making an error).
Ken