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Analytics technologies has evolved today to a great extent to help business and best run companies transform the way they run business reporting and planning – that is business sensitive, dynamic and REAL. In this blog, I plan to share the transformation that customers have embarked with SAP BPC on HANA.

Year 2012 has been a year where we have seen many CFOs and finance that we work with embarking on a transformation journey, questioning the very basics of reporting, budgeting and thinking beyond budgeting. This has seen several new use cases and requirements propping up for reporting and planning.

Stepping into 2013, this is likely to become more demanding, as many best run companies that have already solved the basic problem of getting the right data for monthly reporting used for forward planning, are moving into defining a more transformational way of running their reporting and budgeting/planning process. Planning technologies have been rated as the highest priority in analytics by CFOs for 2013, from a Gartner survey with CFOs.

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The below picture represents the reporting and planning best practices that many companies have embarked on, and they are looking at SAP BPC on HANA as key technology enabler for achieving these objectives:

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Let me explain the above aspects in more detail, including how SAP BPC on HANA is helping companies achieve these objectives in their transformation journey.

Data & Monthly reporting: 

Many companies have gone for a BI, Analytics or Reporting initiative in the past present and future for one good reason – single version of truth. Data quality and accuracy is something everyone cares a lot, for decision makers can reference a single data point as they make decisions. Organization would like to align, manage the enormous volume of data, structure it in a uniform way and present to various decision makers and stakeholders. This also becomes the foundation for planning for the near to long term business execution. But no data is useful if it’s not relevant and timely.  Timely reporting has become a top priority for decision makers to quickly start thinking about the next steps in this ever changing dynamic environment. One of the other elements of this monthly reporting is Variance analysis. Financial analyst and various business teams spend precious time explaining the cause of change or variances of Budget vs Actuals, Q1 vs Q2, Q of Curr year vs Q of Last year etc etc. Variance analysis allows management to really analyze the root cause of what went right or wrong eg the right product mix that can help increase profitable revenue, the higher inventory than planned hitting the bottom lines or additional fixed costs investment in increased manpower not yet resulting in immediate revenue.

SAP BPC on HANA has become reliable system of management reporting for many companies. As it serves the multiple needs of financial consolidation, budgeting/planning and management reporting, integrated into the SAP ERP backbone, it’s a trusted system. While the EPM add-in for Microsoft Office user interface and the easy integration to Business Objects Business Intelligence for some cool visualization, allows users to slice and dice the accurate data in a very seamless and flexible manner. Getting to the volume and the timely (speed), powered by HANA, SAP BPC provides solution to handle any volumes of data and also at a real time desirable speed. Automated Variance Analysis feature in SAP BPC allows quick look through the top changes that contribute to the variance and makes it an easy analysis tool for business. In addition several customers have implemented all kinds of variances such as Price volume mix, yield, headcount utilization etc that helps identify the key cause of change variances for decision makers.

Transforming Planning Process:

Having overcome the first hurdle of data & monthly management reporting (still 40-50% of companies are trying to solve this problem), many best run businesses are moving towards revisiting the way they run their planning and budgeting. Many CFOs (especially in developed countries, large enterprises) are even questioning if they need this annual budgeting exercise that becomes already redundant by the beginning of the year. One key aspect is that companies do want to balance the long and short term term needs of managing their business, and often have to necessarily create strategic long range plan supported by financial numbers. This plan is in the context of those BIG objectives and goals the company wants to achieve, and the high level plan to execute. Remember you cannot launch a new car without having such a long range plan. Supporting this long range plans, companies are looking at building more continuous and rolling period plans, that can be adjusted more frequently than the annual budgets. This is especially relevant for the more variable aspects of the business – Demand and Revenue, variable supply and costs to support the demand eg. Re-allocation of headcount resources. In addition to this, over the past few months we have seen a sudden spurt of interests to adopt a more dynamic forecasting and planning model that allows for revisiting the plans as we hit a business opportunity or see a foreseeable risk that could affect the top or bottom line numbers. Often companies want to run a couple of what if scenarios that allows to project a best case and worst case outcome, which can be reviewed and discussed with decision makers.

SAP BPC on HANA has become a key technology enabler to achieve such planning transformations. Companies have implemented these solutions to achieve best practices planning. Different user interface such as Web, Microsoft Office and Mobile have enabled companies to adopt these best practices planning in the most optimum way. Usually for the strategic long range planning, companies have adopted a more static web interface that can help set the top down targets cascaded down. Microsoft Office interface through EPM add-in especially Microsoft Excel has been used for the rolling period plans, where companies can analyze one quarter actuals and next 4 quarters plans. Microsoft Excel for what if scenario planning and Mobile for dynamic adjustments are other preferred user interface. With BPC on HANA – robust back end and very flexible multiple front end options, companies can realize huge benefits as they embark on the planning transformation journey.

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Integrated Business Planning:

Finally one of the key objectives laid out by customers and CFOs on their transformation journey is to solve single integrated vision and detailed plan for the organization and business. Each business CFO is very passionate about getting the visibility of how the various business line leaders, support leaders are all razor focused on achieving the goals with common mission, removing redundant and overlapping initiatives to reach the goal, planning beyond finance and have a driver based plan where operational drivers drive integrated business plan. CFOs play a pivotal role as a trusted advisor to the Board in trying to bring all this plans together, in order to achieve Forecast Reliability. Technology is a great enabler for supporting the move to integrated business planning.

Top baker in Europe runs their business across the entire business value chain – from farm to production to customers through chain of retail stores. They looked at BPC on HANA for designing the planning system that runs across this value chain and now they are reaping the benefits. This is a great example of how integrated business planning can help the business react faster. Watch the video from the presentation their CFO made at Sapphirenow.

http://www.sapvirtualevents.com/sapphirenow/sessiondetails.aspx?sId=3835

BPC on HANA is real time mission critical application for best run business such as the above company, no more a high level nice to have application.

We welcome 2013 as a year of helping best run businesses achieve their reporting and planning transformation goals with SAP BPC on HANA.

Wishing you a very happy and transformational 2013 !

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12 Comments

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    1. Former Member Post author

      Thanks Andrea.

      Currently BPC on HANA is supported in the BPC10 NW version (from sp6 onwards), leveraging BW on HANA. BPC Microsoft does not support HANA as it is based on Microsoft Analysis Services and SQL background.

      regards

      Muthu

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  1. Former Member

    Hi Muthu,

    Brilliant effort!

    I read this other post of yours in which you tried to touch on integration aspects of BPC and S&OP on HANA to achieve seamless IBP objectives. Is the “how-to” guide coming anytime soon or possibly any other resource that builds on that line of thought?

    Regards,

    Omar Amjad

    (0) 
    1. Former Member Post author

      hi Omar,

      thanks. We do have a technical integration document but not sure if you are looking for that. From a process perspective, we are seeing customers looking at integrating Financial planning process in BPC to S&OP process using S&OP where annual financial plans serves as targets to S&OP and later the S&OP plans which is done usually on a monthly basis, serving as a feed into as input the to the financial forecasting process.

      We plan to provide RDS on S&OP which will integrate to the financial planning RDS that we have now on BPC 10.

      Will be presenting this in the Financials 2014 in Orlando this march, at the sap insider event Financials 2014 as well.

      thanks

      Muthu

      (0) 
      1. Former Member

        Hi Muthu,

        I wasn’t looking for a technical document rather a bit of clarity on drawing distinction between the financial planning we do “as-is” within scope of BPC and the financial KPIs that should reside within S&OP model.

        In my understanding, the detailed working of financial KPIs (revenues, margins etc) that we do as part of the forecasting within BPC can also be done in S&OP, to gauge the impact of various drivers that impact those KPIs. Those variable can be forecast demand volumes or enhanced production resources or supply capacities etc.

        If that is the case and assumption is correct, then does that mean that S&OP on HANA can “potentially” serve as a detailed financial planning tool as well or just a rough cut estimate on your key financials? Its’ more in terms of re-evaluating BPC functional scope when it comes to financial planning/ forecasting.

        Regards,

        Omar 

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        1. Former Member Post author

          hi Omar,

          Very good question. The distinction is about how much of financial kpis that you would like to build into your S&OP process which as you rightly said is more deep dive process and usually led by the Supply chain/operations team in the company. From a tool perspective S&OP is purpose built to support the S&OP process but also can result in some of the financial KPIs in the process. For example, S&OP can derive more detailed kpis such as cost of good sold, operational cost, revenue by products etc. Essentially you can come to a good operating margin perspective from S&OP. But when you would then like to build other cost center expenses and overheads , and the overall financial plans that gets into Balance sheet items, cash flows, capex, strategic long range financial planning  etc, BPC is the right tool for such things. This includes doing headcount/workforce planning. This is where some of the RDS that we have which are based on  BPC would help further.

          By integrating these two tools which are more purpose built for their respecitive areas, we can realize integrated business planning

          regards

          Muthu

          (0) 

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