Business Analytics is hot. Where ‘Business Intelligence’ is all about reporting, analysis and evaluation, it does not cover the implementation part of management loops. Therefore, having a powerful integrated business planning is just as crucial to become successfully competitive these days. Adding effective financial consolidation functionality guarantees maximum agility. Planned and Actual figures can directly be made available at all organizational levels so every stakeholder can be informed just in time.
Until today, organizations have not been very successful in optimizing their business planning cycles. From an IT perspective one of the main reasons for this is the ‘iron wall’ between analytical and operational applications. With that, we mean a ‘wall’ in terms of separate platforms and lots of data replication, resulting in disintegration. It seems that by leveraging the new SAP architecture based on the HANA platform this ‘wall’ can finally be broken down and an era of standalone analytics has come to an end. It leads to all kind of new opportunities, especially in the area of aligning planning processes. Let’s take a closer look:
SAP BW- IP (Integrated Planning): This part of SAP Business Warehouse (BW) has been there for more than a decade now and contains basic planning functionality. Input schedules can easily be setup on an aggregated level based on information components in SAP BW. Enrichment can be done using a wide range of planning functions, like copying versions, top down distribution and revaluation. With BW running on HANA, this can be extended using BW-IP/PAK in order to fully benefit from the advantages the HANA database brings. With this, even more complex planning scenarios can be supported. However, integration with operational planning is still not real time. It is basically limited because BW and transactional systems have not been integrated into a single platform. Data replication must be used and thus the ‘iron wall’ still stands.
SAP Business Planning and Consolidation (BPC) finds its origin in Outlooksoft which was acquired by SAP in 2007. BPC is a full feature planning and consolidation tool. It leverages MS Office products like Word, Excel and PowerPoint as a frontend which makes it easy for end-users to use. Additionally, users can benefit from a very powerful workflow component which enables to align various parts of the total business planning according to preconfigured steps. When it comes to Corporate Financial reporting, BPC supports a very wide range of accounting standards, like US GAAP, IFRS, etc. It also includes a transparent ‘Audit trail’ and has all the functionalities to setup consolidation rules for complex ownership structures. The current version 10.1 is available running on a Microsoft Database or on BW. On BW, there are 2 options:
The ‘standard’ model requires its own BW namespace. This means that it runs ‘isolated’ in BW where master and transaction data first have to be loaded from existing BW components or manual uploads before executing planning. The MS Office products are enriched with the ‘EPMaddin’ ribbon and various panes to create reports and planning versions. A web client is available for administration purposes.
The ‘embedded’ model can be used only when running BW on HANA. In contrast to the standard model it is fully integrated within the existing BW environment. It takes advantage of existing BW components and combines leveraging existing BW-IP logic with complementary functions from the BPC standard option, like workflow and work status. Also local planning models can be setup easier where the frontend uses the ‘Analysis’ (for Office) ribbon instead of the standard ‘EPMaddin’. The most recent version 2.4 contains lots of new functions and seems very mature when it comes to planning and reporting.
Considering integration, all solutions mentioned so far are still running on separate platforms. In practise this means that for example Sales forecasts or Cost center Budgets on an aggregated level are still difficult to align with operational planning in ERP. This however comes to an end with BPC optimized for S/4 HANA Finance. Preferably used in combination with SAP IBP (Integrated Business Planning) true integration is reached. Let’s find out how to break the ‘iron wall’.
BPC optimized for S/4 HANA Finance leverages the BPC embedded model in combination with a single HANA databases running both S/4 and BW running on it. The high performance of the HANA database makes this possible, even in combination with big data volumes. Data replication and ETL is no longer needed which makes the ‘Iron wall’ fall down. Looking at finance for example, cost center plannings or COGS values adjusted in BPC input schedules can be directly available in S/4 HANA. SAP delivers standard content for quick implementation.
In the logistic area, integration can be even further achieved using IBP. IBP (Integrated Business Planning) is a new family of applications in SCM under S/4 HANA. Its origin lies in Sales and operational planning that we still know from ECC. With the acquisition of SmartOps in 2013 the application was further enriched whereas the current version also contains BPC components. In short, the IBP platform is all about optimizing Sales, demand, inventory, supply and capacity planning and includes various statistical instruments, automated workflow and powerful features for end to end monitoring. Just like in BPC, most of the work is done using an excel based frontend (‘IBP” ribbon) where also a web client is available.
Where IBP can easily run as SaaS, this is still not very commonly used for Analytical applications. SAP BusinessObjects Cloud is the first initiative in this area. It has been setup to support the business end-user in the most optimal form, running on the HANA Cloud Platform. Therefore, it combines BI, planning and predictive capabilities where the accent is mainly on visual aspects and collaboration. Stories and dashboards can be simply setup combining a wide range of charts, maps and other visualizations. Also business planning on a more aggregated level can be performed using predefined functions for spreading and distribution. Basic predictive algorithms can be used to support this process in the most straightforward way. When it comes to integration, data can be easily imported from both on premise as well as cloud sources. Remarkable is that BPC is the only SAP product where it can export natively to. This makes it possible to adjust FP&A figures from BPC directly according to new insights and discussions that took place inside BusinessObjects Cloud. Finally, a digital boardroom can be added where stories and visualisations are divided into the 3 main screen areas of the boardroom concept.
Using the HANA platform, cloud based or on premise, leads to better integration. That is one conclusion we can make. More and more examples will become visible in the near future. IBP can take f.e. input from BPC for Annual Operation Plan (AOP) or a Monthly Finance Plan and use this information for Demand/Supply/S&OP planning. For Product Costing purposes activity cost can be planned better and integrated into various operational forecasts so the most profitable scenarios can be planned. Using workflow in both BPC and IBP, processes that evaluate and revise time-phased projections for demand, supply, new product development, strategic projects and even include financial results can be executed in a 24-month rolling horizon nowadays. Whether this increases profits will depend more on quality of the decisions made. It will definitely boost business agility.