If you visit SAP.com to learn more about the SAP BusinessObjects portfolio and if you are new to the Enterprise Performance Management (EPM) subject matter you might have the question of which is the right application to use for your organization's planning and cost allocation requirements. I know this since this is a question we receive often in the EPM RIG when talking at events and at various meetings we have with customers and consultants, despite the wealth of useful product information at the links provided above. The fact that this question arises is not surprising because from a high-level viewpoint business planning and cost allocation can occur in either of two applications.
SAP BusinessObjects Planning and Consolidation (BPC)
SAP BusinessObjects Profitability and Cost Management (PCM)
BPC can be used to allocate values from one set of dimension members to another set of members using a predefined syntax of parameters defined within the script logic keyword known as *RUNALLOCATION. BPC can allocate any type of value you require to be allocated. It can perform an allocation on a quantity or it can allocate a currency amount and it can do this for any account type (income, expense, asset, liability, or equity). The important concept to take away about the BPC allocation engine is it transfers values from one or more members to one or more alternative members WITHIN a dimension. Thus the allocation of planned department expenses from a sending cost center to several receiving cost centers is a very typical use cases for BPC.
PCM, on the other hand, has a purpose-built assignment technique to handle the allocation of costs from one dimension's level of detail to another dimension's more granular level of detail. This concept is sometimes thought more of a distribution or disaggregation of costs, rather than an allocation. PCM is not limited to only costs. It could also be used to support scenarios where quantities and values other than costs need to be allocated, but cost allocation is its typical use case. Thus the allocation of department expenses to activity costs is a commonly used business process that PCM supports, as is the allocation of overhead costs to customers and/or products.
To further help address the question above, I am providing a summary of unique capabilities within SAP Profitability and Cost Management and SAP BusinessObjects Planning and Consolidation. You can use this list of features to evaluate each product's capabilities against your requirements for business planning and cost allocation.
Product features which are unique to PCM:
- PCM offers predefined dimensions and measures representing best practice for profitability reporting and cost analysis, as well as a number of predefined calculations like price per unit, activity rates, plan verses actual variance, etc . The number of dimensions and key figures in PCM is fixed by SAP.
- An internal activity-based costing engine provides out-of-the-box ABC data flows which follow the industry standard methodology known as the CAM-I Cross of Activity Based Management.
- Costs which exist at the account and responsibility center level can be assigned to activities using a resource driver and the activity costs can be further assigned to cost objects (such as customer or product or channel) using an activity driver.
- One simple screen is used to setup cost assignments within a model. Costs can be cascaded, for example, first to customer and then to product, or they can be assigned multi-dimensionally to all cost objects.
- PCM supports an unlimited number of alternative dimension member hierarchies and attributes to support any cost allocation scenario or reporting summary which may be requested by the business.
- Hierarchies can be modified on the fly -- even adding new parent levels -- without any database reorganization required and the model automatically updates all data which is impacted by the changes.
- PCM runs in memory, with real-time model calculations used for cost allocation and what-if analysis without any jobs to run.
- Data loads and model calculations can also occur via a job scheduler and results can be exported to a data warehouse for reporting, if this is a requirement.
- Trace back is a standard feature which allows visibility of the final allocated cost at the cost object level back to the sending activities and further back to the source line items and responsibility centers.
- PCM supports driver-based planning scenarios whereby changes to the activity drivers can flex the resource requirements as represented in the model by costs, headcount, machine capacity, or any other inputs.
- Wizard driven functions allow custom formulas & rules and alerts to be easily written using point-and-click interaction and then enhanced using a full featured Visual Basic scripting language.
- PCM has its own proprietary reporting framework including customizable layouts which can be visualized on the web as PCM Books built using an extensive toolbox of design elements.
- Note: PCM runs on a Windows Server environment with an underlying SQL Server or Oracle database. PCM does not run on SAP NetWeaver. However the PCM Data Bridge ETL tool can import BW data using BEx queries.
Product features which are unique to BPC:
BPC means Business Planning AND Consolidation and both disciplines are contained in one integrated application which allows plan data to be consolidated, if that is needed, and it allows easy reporting of plan verses consolidated actual comparisons.
- The BPC data model is customizable to the extent that you define as many dimensions as which are needed for a given application; however, there can be only 1 value field (key figure) in BPC.
- The BPC administration module features an embedded Excel sheet that makes dimension member (master data) maintenance easy and familiar for everyone.
- The BPC for Microsoft Office add-in allows BPC to easily retrieve, combine and display BPC transactional data from Word, PowerPoint, or Excel and to modify or send data into BPC from Excel.
- The Excel add-in provides more than 100 new Excel functions to interact with BPC data, while providing access to all native Excel features.
- Predefined report and input schedule templates offer immediately useable views for reporting or posting data into BPC, and that which may be copied and easily adapted to business requirements.
- Powerful reports or input schedules can be easily created from a wizard and provide dynamic row, column, or worksheet expansions based on user driven selections of dimension members. The dynamic expansion philosophy even allows Excel-based formulas like percent of total, and Excel based formatting to be inherited by a changing range of data.
- Reports and input schedules can be parked for off-line updates and then have the changes automatically imported into BPC when back on-line.
- Reports and input schedules can be sent to e-mail distribution lists and updates can be collected to submit changes to the application.
- Business Process Flow templates can be created and reused to define guided instruction steps for users, as well as e-mail enabled workflow approval processes.
- Prebuilt logic for tracking work states (such as draft, submitted, and final) and which can be customized is delivered with the application and can be used to set read/write access to data.
- The BPC Data Manager ETL tool can import transactional data directly from BW data sources including cubes and data store objects.
- The BPC Data Manager can also import BW master data, texts and hierarchies.
- When importing or exporting data to/from BPC the transformation and conversion mappings are maintained easily in Excel spreadsheets.
- Note: BPC can run on a Microsoft Windows Server with a SQL Server database platform or it can run on the SAP NetWeaver platform with any database supported by NW.
- If running on NetWeaver each BPC application is a BW cube, each BPC dimension is a BW characteristic InfoObject and each BPC property is an attribute.
In summary, BPC is to be used for the most typical business planning scenarios found in organizations like departmental cost budgeting, financial statement planning, and, of course, financial consolidations. BPC cost allocations should be used for moving amounts from member to member within a dimension like from cost center to cost center or profit center to profit center. While BPC can be used for driver-based planning scenarios, the allocation logic is your own to define using the tools contained mainly within Excel and BPC script logic.
In contrast, PCM handles cost allocation very differently. It delivers an easy to use assignment technique to distribute costs from one dimension to another, adding more granularity along the way. PCM easily handles cost allocation scenarios that follow an ABC methodology and PCM is especially useful for driver-based planning and cost allocation without the need for much, if any, customization.
