What-if analysis with SAP Analytics Cloud: Simulate your future business
This blog post is a deep dive of the previous blog post SAP Analytics Cloud, Scenario and What-If Analysis, which is published by Chris PRITCHARD
Nowadays optimizing decisions has become a vital factor for companies who want to stand out in our highly competitive business environment. In order to evaluate beforehand the impact of a decision, managers might want to analyze the different outcomes based on different assumptions.
SAP’s brand new What-if analysis/Simulation fills this gap by enabling users to test and inspect the behavior of a complex system under some given hypotheses. Differentiated from forecasting which provides an estimate of next year’s sales in a particular market, strategic simulations are used to understand the likely consequences of a change in advertising on sales, or a competitor’s response to the introduction of an unforeseen product improvement.
In SAP Analytics Cloud, you can effectively achieve simulation according to your different needs. Let’s have a look at the all-around simulation experience from simple to complex!
The slider is the most basic and easiest way to achieve what-if analysis in SAP Analytics Cloud. In the story, you can set a value by moving the indicator in the slider widget, and then view the results corresponding to different values, so as to achieve simulation. A slider can be created by setting up a measure input control. Here is an example:
In the example below, a company selling fresh fruits and vegetables needs to urgently select one of many suppliers to quickly supply some fresh products. The company can accept a delivery within 18 hours, and the budget is 60,000 Euros. Playing with the sliders, the manager could easily see the potential suppliers under different constraints.
In analytics designer for SAP Analytics Cloud, you can have more operation options regarding the slider simulation. With a slider or range slider, analytic application users can input and change values dynamically and trigger what-if scenarios based on the value.
Here the slider is used by the end-user to simulate the discount percentage of the juice price, and the different results are displayed.
Here we have more information about sliders in analytics designer.
In what-if on a dataset, one can easily import a dataset and change the future period values, to evaluate the potential impact without building any model. This means some of the planning capabilities are available without requiring a planning license. This is a huge value-add that the new what-if capabilities of SAP Analytics Cloud bring to end-users.
In the example below, the manager of the national park wants to know how the number of visitors will be changed under the influence of the Covid-19 epidemic. The end-user can easily change the value of two critical factors: Bus Capacity and Fleet Availability to see the potential impact on the visitation, so as to adjust the park’s ticket system and shuttle bus frequency.
Smart Discovery is one of SAP Analytics Cloud’s Augmented Analytics features that auto-generates pages of analyses to help you reveal hidden patterns inside the data and discover the insights.
When Smart Discovery is triggered, the analysis results are displayed as automatically generated pages of visualizations. The simulation page will display the key influencers and their positive or negative impact. You can simulate a new record of data by setting the values of the key influencers to see the value of the new entry in your dataset.
In the example below, the manager of a manufacturing company can simulate the different factors in order to gain higher revenue.
Here we have more guidance about simulation in Smart Discovery.
Simulation is key to defining planning scenarios.
With the Version Management capability, you can easily create different versions of your forecast, make different assumptions, and evaluate the potential outcome perform variance analysis against actuals. There are two ways to make assumptions, either using tables or the Value Driver Tree visualization.
Value Driver Trees (VDT) in SAP Analytics Cloud is a great way to visually and interactively set drivers and growth rates. You can explore the relationship between the different drivers to obtain a full financial picture of your business.
Here is a series of top videos of the Value Driver Tree.
Also, you can find out more step-by-step guidance here about how to create a Value Driver Tree.
The video below integrates both Version Management and Value Driver Tree capabilities in a bike company. See how we can simulate the different factors to have a better gross margin.
Simulation is a process of discussion and exploration. The strategic simulation could help you to make thoughtful and critical decisions in a complex business environment. Choose different types of simulation scenarios in SAP Analytics Cloud based on your needs!