What a year it has been for Analytics at SAP Business Objects. It’s been a year marked by great innovations and market leadership. It’s been a year where customers have started realizing how important Business Analytics is for running their business better and it’s been a year where SAP has been viewed as the best
business applications solutions provider across transaction business process solutions and business analytical solutions, best integrated as well as best of breed.
Meeting several customers in the past year, discussing Enterprise Performance Management (part of Business Analytics) solutions, the problems most of the companies face seem to be similar. Though the magnitude of the problems varies based on the maturity levels and best practices culture these companies are in. I have picked about 10 key themes from the several interactions and tried to highlight how innovations at SAP in 2010 will help solve some of these problems using the SAP Business Objects Enterprise Performance Management solutions.
1.Accelerated Financial Close(Relevance: Controllers/CFOs)
I was surprised that many companies still struggle to get out their financial results, in an orchestrated and efficient manner. Finance teams still burn the midnight oil, seriously affecting their work life balance. Also they hardly have any time to perform good analysis of the results and support corrective action for business. Lot of manual work from the preclose preparation to disclosures and filing of financial results.
SAP also annouced intention to acquire Cundus AG Disclosure Management solution, which is further going help close the end to end close cycle from preclose planning to filing of financial results.
SAP provides an end to end solutions portfolio to support the Accelerated financial close leaving more time for the Business to analyze the information and take corrective actions/provide insights to leverage opportunities.
2. IFRS (Relevance: Controllers/CFOs)
For more than 100+ countries, IFRS is an unknown elephant coming up as they have to relearn their accounting and reporting. Every company is gearing up to see how they can comply to IFRS. To the many controllers I have had the opportunity to discuss IFRS, they are seeking more and more help to better converge to IFRS.
SAP has been investing strongly and continuing to invest on solutions that would help customers to adopt IFRS. Given its European base where IFRS has been existing from 2005 and before, SAP solutions have been built to support IFRS enabled through SAP.
3. Budgeting and Planning for Banks (Relevance: CFOs/Business Heads)
I got opportunities to meet few CFOs of Banks. Their challenges are unique and different when it comes to budgeting and planning. While they have some of the common processes like planning for workforce and capital expenditure, the core of their business is rather different and the planning needs are unique. Balance Sheet planning is a very key component of the planning process and the income statement planning is a derivation of the same. The methodology is also not very consistent and its done so very differently by different banks. All the data required is so disparate lying in different banking solutions, further makes it very difficult to get a consolidated view across the bank. The planning exercise need to be also reconciled with the actual data flowing in, to make variance analysis and correct the forecasts.
SAP responded very effectively to the above needs and launched their Business analytics solutions – Planning and Consolidation for Banking.
This solutions allows best practice methodology and approach to performing planning for banks with preconfigured Business Process Flows, Data Model and Logic, Reports and Analysis that would appeal to branch/department managers as well as senior executives, Capital Expenditure and HR planning that are typical time consuming activities. This solution leverages best of breed technologies in SAP Business Objects.
4. Strategic Sales and Operations Planning -> Integrated Business Planning (Relevance: Cross LoB)
Strategic view of supply demand matching and also ensuring a profit based matching is still a problem and often managed by just the experience of the people involved, more than a very matured way of addressing it through Strategic Sales and Operations Planning. Also I had the opportunity to interact with few heads of Supply Chain Planning as well as head of Financial Planning & Analysis. Always get a sense they do not do an aligned planning of business. When I worked in a leading CPG company decade back, this was the case. But I still see the same problem continuing. This leads to decisions made in wrong predictions of demand, or overrunning on cost due to last minute adjustment arising out of forecast accuracy. The cost of such forecast accuracy is very huge and serious for the business. This observation is supported by a recent survey that indicates that only 31% of companies are indicating that they have some alignment between financial planning and operational planning.
SAP launched its application on Sales and Operations Planning, a very exciting innovation that would solve the exact problem of Strategic Sales and Operations Planning. And given that its built on the same SAP Business Objects platform, it can seamlessly be extended to financial planning and achieve “Top Ten ePM trends for Next Decade - #5”.
5.Liquidity Planning (Relevance : Treasurer and CFOs)
Cash is king for the business. It’s always been and it will always remain. Predicting liquidity has always been a key requirement. Liquidity planning is also key need from a medium to long term view, where it’s more difficult to predict, about 72% of companies from recent survey say they cannot predict beyond 2-3 months. 
Liquidity Planning starter kit using SAP Business Objects Planning and Consolidations allows for capabilities that would address liquidity forecasting more accurately. The best part is it would natively integrate to SAP Netweaver system (while also having ability to integrate to other transaction system), allows for better seeking clarity on cash flow forecasts. Calculates mid-to long-term forecasts (up to 2 years), by integrating committed transactions, with forecasted financial data. Also allows simulation and sensitivity analysis on source data and calculation rules.
6. Cost and Expense Planning (Relevance: CFO/ Cost Center Managers)
Many SAP FICO customers that I have met have already been asking if they can have a better way of creating cost center or profit center budgets, as it is not possible with the FICO except for capturing the numbers. They need a solution that is more intuitive (Excel like), allows more flexibile modeling and can capture budgets in summary and hierarchical forms. Another often required functionality is to be able to retract the plan data into FICO.
Cost and Expense Planning starter kit would exactly address the above needs through preconfigured solution to handle cost center/profit center planning using SAP Business Objects Planning and Consolidation. The solution allows flexible planning levels and additional planning dimensions. Retraction to CO would allow for leveraging CO standard reports, cost allocations and other calculations such as inventory valuations.
7. Predictive Profitability (Relevance: Business Unit Heads and CFOs)
This is a very desired topic whenever I discuss with CFO. Often his/her CEO wants to know about the Top 50 customers who are profitable or Bottom 25 products that are not profitable. While CFOs with help of his team is able to pull such information, he is always not confident of the results as the method of allocation adopted is not very convincing for him. Especially given that future decisions on investment focus or customer relationship investment is based on this, the CFOs are generally not comfortable this analysis. This is especially a challenge in industries where the cost to serve is significantly higher e.g. Banking, Telco, Professional services etc.
SAP Business Objects Profitability and Cost Management solution with its comprehensive allocation engine is the best answer to this problem. Number of customers have benefitted by this solution and the ROI is very high given that you make very strategic decisions on products/projects or customers based on this. This certainly allows for predictive profitability.
8. Analyze spend and accelerate savings in procurement (Relevance: Chief Procurement Officer)
For Chief Purchasing officers, there is constant pressure to show savings year on year by analyzing the spend categories to accelerate savings, supplier categorization to better negotiate. They also needs to make sure there is no supply chain disruption for non availability of material, essentially which means to manage supplier risk. I had couple of interesting conversation that I had when CPOs were sitting in our discussion with CFOs on Business Analytics. The CPO were asking why are Business Analytics solutions focusing mainly on finance.
The answer to the above question, SAP focuses on all Line of Business/Functions. Procurement function is a very important one, especially given the effect analytical solution can make to the bottom line directly. Spend Analytics solution is the solution that allows for all the above needs and is a well invested solution, based on the customers who have implemented this solution. The new innovations such as ‘Spend Advisor’ in this solution are compelling for CPOs of any organization.
9. Supply chain performance management (Relevance: Chief Operations Officer)
Head of Supply Chain or Operations always wanted visibility into inventory levels, perfect order fulfillment, optimize supply chain and bring impact to bottom line. While they have done several initiatives around this, they have still not got success into the visibility aspects to better analyze and make decisions.
Here is where SAP BusinessObjects Supply Chain performance management solutions would address these issues. This solution is built to bring visibility into the supply chain using best practice SCOR models.
10. Strategic Workforce Planning (Relevance : Chief HR Officer)
Employees are the most important asset. Managing the planning around optimum workforce and ensuring visibility into critical employees is a challenge for HR, at group level. Also workforce planning is not based on business drivers. Also there is a need for what if simulations to plan workforce based on different business driver assumptions.
SAP BusinessObjects Strategic Workforce Planning provides a great platform for HR, LoB heads and Business Managers with capabilities with complex workforce models driven by strategic revenue, FTE, attrition rates, hiring rates, cost, retirement age etc. The solution built on HANA allows simulations in “real” real time. It allows for headcount planning and analytics, including the cost. Also supports analyzing of current workforce including key critical employees at group level and provides real-time insight and analysis of workforce demographics, distribution, and skills.
The above was the top 10 innovations (amongst many) that would immensely benefit SAP customers in 2011 and beyond.
Wishing you all a very happy and prosperous 2011 !!!
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