SAP EPM, The “ERP” of Performance
Management & Decision Making
Thierry Bruyneel & Michel Haesendonckx
22-5-2015
History of Delaware Consulting
• Founded in 1981; has been part of Bekaert, Andersen and Deloitte
• Independent partnership since 2003 with 124 professionals, now 1.000 people
Suzhou
2005
Antwerp
Global Delivery Center
Harbin
2006
2007
Atlanta
Delaware
Consulting Internatio
nal
Den Bosch
Lyon
2009
MergerAlliance Consultin
g
Wavre
Shanghai
2010
2011
Singapore
Nantes
New partnership Netherland
s
Luxembourg
2013
2014
New York
Paris
Manila
2015
1000 professionals worldwide
2008
Delaware Information
Solutions
2003
Independent partnership
2012
MergerB&M
Our Value Clusters
Strategy & Transformation Business Controlling
Analytics Accounting
Strategy &
DisruptionDigital TransformationOmni-channel Experience
Lead-to-service processesInsights & Personalization
Enterprise Resource Management (ERP)
Process Integration
& MobilityEnterprise Information
Management (EIM)
Global Managed Services
(GMS)
Infrastructure
Services
4
Agenda
Lunch & Learn with Thierry Bruyneel Performance Management as a Continual Process
SAP EPM, the “ERP” of Performance Management and
Decision Making The combined strengths of BPC & PCM… and beyond… to drive Value for the Business
Problem statement
85% of exec teams spend less than one
hour per month discussing strategy
execution
No consistent way to describe
strategy
95% of the work force does not understand the
strategy
70% of middle managers do not
have incentive compensation
linked to strategy
60% of the companies do not
link budgets to strategy
Need for a motivating strategy and performance management process
Performance management defined
A process of motivating and inspiring managers and employees to perform actions
that contribute to the achievement
of the organization’s goals and to the implementation of its strategies
7
Mastering performance management
Develop the strategy
Mission, Values, VisionStrategic AnalysisStrategy Formulation
Translate the strategy
Strategy Map / ThemesMeasures / TargetsInitiative PortfoliosFunding / Stratex
Align the Organization
Business UnitsSupport UnitsEmployees
Plan the operations
Improving key processesSales PlanningCapacity PlanningBudget
Test & Adapt
Profitability AnalysisStrategy CorrelationsEmerging Strategies
Monitor & Learn
Strategy ReviewsOperating Reviews
12
3
4 5
6
Processes
Initiatives
Performance
Management
Process
Mission
Strategies(Making choices)
What is changing in the environment
What’s our role to fulfill (Stakeholders Expectations)
How to compete?(Competitive Strategy)
Values
GoalsWhat do we want to achieve
Δ Industrial Environment
SH1
SH2 S
Hn
Giving Strategic Direction
Where to Compete?(Corporate Strategy)
A Story of… Strategists…
10
About making Choices…
Mission
Strategies(Making choices)
What is changing in the environment
What’s our role to fulfill (Stakeholders Expectations)
How to compete?(Competitive Strategy)
Values
GoalsWhat do we want to achieve
Δ Industrial Environment
SH1
SH2 S
Hn
Putting Strategy in Action
Where to compete?(Corporate Strategy)
Performance Indicators
Strategic Initiatives
What actions do we take to implement the strategy
Did we accomplish the targets
12
The Choice !
13
The Choice ! …
Was not Explicit
14
Excellence
for the
shareholder
Market
Share
New
Customer
Acquistion
Lean
overhead
services
Sales &
Marketing
Skills
Delighted
Customers
Account
Managem
ent
Product
innovation
Total
solutions
provider
Expertise
and
experienc
e
R&D
Employee
Satisfactio
n
Customer
Loyalty
Service
quality
Describing the Strategy (Strategy Map)
15
The Chrono/Pulse
16
Excellence
for the shareholder
Market
Share
New
Customer Acquistion
Customer
Loyalty
Lean
overhead services
Sales &
Marketing Skills
Customer
Satisfaction
Account
Management
Product
innovation
Service
quality
Total
solutions provider
Expertise
and experience
R&D
Employee
Satisfaction
Measuring the Performance (KPI’s)
17
Corrective Action !
18
Excellence
for the shareholder
Market
Share
New
Customer Acquistion
Customer
Loyalty
Lean
overhead services
Sales &
Marketing Skills
Customer
Satisfaction
Account
Management
Product
innovation
Service
quality
Total
solutions provider
Expertise
and experience
R&D
Employee
SatisfactionStrategicInitiative
Strategic Initiative
StrategicInitiative
Putting Strategy in Action
19
Corrective Action !
Funding?
STRATEX
20
Aligning the organization: creating consistency
“Alignment means creating consistency between all activities of an organization and its strategy.” Michael Porter.
21
How to organize Strategy as a Continual Process
The Office of
Strategy
Management
(OSM)
The OSM
1. Scorecard management
2. Organization Alignment
3. Performance Reviews
4. Strategy development
5. Strategy communication
6. Initiatives management
7. Planning/ Budgeting - CFO
8. Human capital alignment -HR
9. Best practice sharing - CKO
The office of strategy management is
responsible for integrating & coordinating
activities across functions and business units to
align strategy with operations.
Core Roles
Desirable Roles
CoordinatingRoles
Control & monitor data access, update-rights and change history
Making “Analytics” Perform
STRATEGY
(OSM)
Disruption
&
Creativity
DATA
(CDO)
Health
&
Enablement
Unlocking the true potential of
Data
Analytics
&
Data Scientism
(CAO) OPERATIONS
Commercial
&
Business
Key Success Factors
1. Integrated in Performance Management Process
Continual Process
2. Start from the decisions to be madeBusiness Relevance
3. Data as a ServiceTrust & Enablement
You can’t collaborate unless you agree on the Challenge !!!
23
Agenda
Lunch & Learn with Thierry Bruyneel Performance Management as a Continual Process
SAP EPM, the “ERP” of Performance Management and
Decision Making The combined strengths of BPC & PCM… and beyond… to drive Value for the Business
What is Enterprise Performance
Management ?
Budgeting, Planning &
consolidation
SAPBPC
SAP HANA
The typical technical answer…
(optional, mandatory in specific scenario’s)
My budgetingprocess starts in august, and takes 3-4 months…
… and once it is ready, it ‘s alreadyoutdated
Basic budgeting…
• Continuous change• IT can’t cope with the rate of change• Finance can’t implement the changes
Rate of Business Change
Rate of System Change
Acquisition Product Issues Missed Qtr
RequirementsPrototyping
Implementation
Testing
Deployment
Typical challenge
The “technology” answer: SAP BPCA solution owned by the business user
• Familiar and easy to use Integrated with Microsoft Office Leverages a central database User owned and managed
• Process-centric Configurable and controlled process with security
and business process flows Promotes process consistency
• Unified Single, integrated application
for budgeting, consolidation and reporting Centralised database Low maintenance, improved integrity Simplifies deployment
Basic budgeting…
My budgetingprocess starts in august, and takes 3-4 months…
… and once it is ready, it ‘s alreadyoutdated
SAP BPC supports the process, but…
… performance is an issue
… I need to add quite some script logic in order to get in allcalculation logic
… how do I integrate with myERP logic ?
The answer to these issues – part 1
Automation with in-memory technology
30
The blue bar is the original result on BPC on Oracle. The red bar shows the runtime of the same report on BPC on HANA – but without pushing the report execution into the HANA TREX engine. The purple bar is the same report executed on BPC on HANA where the execution is pushed into HANA via the new add-on HANABPC.
Execution of calculations in HANA
Operational Planning
Tactical Planning
Strategic Planning
SAP BPC
SAP ERP
Draw the line where it fits your business needs
The answer to these issues – part 2
Typical trade-off question is in the past…
Budgeting & forecasting using SAP software: what are the options ?
Budgeting in ERP Budgeting in BPC Classic model
Embedded model IBPF
What to use when ?
Basic budgeting…
My budgetingprocess starts in august, and takes 3-4 months…
… and once it is ready, it ‘s alreadyoutdated
Too granular detail (SKU/Sold To) & static budgeting process
Controlling department = Financial Figures Production center
No time for action planning and learning from insights
Is this the Value Creation you have been dreaming of?
You really want to automate this further?
Taking Enterprise Performance
Management to the next level
Mission
Strategies(Making choices)
What is changing in the environment
What’s our role to fulfill (Stakeholders Expectations)
How to compete?(Competitive Strategy)
Values
GoalsWhat do we want to achieve
Δ Industrial Environment
SH1
SH2 S
Hn
Putting Strategy in Action
Where to compete?(Corporate Strategy)
Performance Indicators
Strategic Initiatives
What actions do we take to implement the strategy
Did we accomplish the targets
This is where “EPM” really comes in
Strategyformulation
Strategyexecution
Putting strategy into action…
Agility
Business relevance
Forecasting accuracy
Automation
Driver-based
Run the business better
Sustainablecompetitive advantage
Mission
Goals
The role of predictive analytics and driver models foroperational budgeting
Resources requirements
Financial impact
Predictedvolumes
Business Activity Driver
38
Step 1: Demand proposal and the use of predictive analytics
39
Predictive analytics using SAP
Option 1: Using SAP PA (and offline BPC data)
40
Predictive analytics using SAP
Option 2: Using SAP PA with direct access to HANA data
41
Predictive analytics using SAP
Option 3: Using the SAP HANA PAL
A short example…
Rolling Forecast (Driver-based Budgeting)
• Direct Expense
• Indirect Expense
•Revenue
•Gross Margin
•- Sales- Logistics-
Administration
• R&D
•Contribution
• STRATEX
• ITDA•EBITDA
•Net Income
•$$•XX•(XX)•X
X
•(XX)•(XX)•(XX)•XX
•XX
•XX
•(XX)•(XX)•(XX)
•%
•100%
•(40)•60%•(10)•(5)•(15)•30%
•20%•15%
•(5)•(5)
•(5)
Opera
tional
Costprice calculation & profitability-analysis
DRIVER
MODELS
Step 2: Driver based modeling(as part of the “closed loop”)
44
Step 2: Cost to serve – How does it work ?
Rules Based Cost Assignment
If((caseWgt < 35,.25* NumCases, 1 * NumCases) + (Location == ‘Lawn&Garden’, 5, 0))
Transactions or Process Drivers
GL Accounts
Processes
• Picking
• Packaging
• Receiving
• Stocking
Business Dimensions
• Customers
• Orders
• Products
• Vendors
Operational P&Ls
• Customers
• Product
• Vendors
Resource Pools
• Customer Services
• Sales
• Warehouse
• Customer Service
• Finance
• Information Tech
• Sales & Marketing
• Supply Chain
Decision Makers
Costing Engine
CORE DIMENSIONS Customer
Product
Category
Channel
DC
etc.
BUSINESS ACTIVITIES Inbound Handling
Outbound Handling
Outbound Transport
Value Added Services
Administration
Storage
OPERATIONAL
DIMENSIONS Cases, pallets,
Weights
Air/Road Fleet
FTE
… For example, we’re able to see
for a given Customer, the Loading
& Transportation cost incurred
per Case & Pallet split out by
Product Category and source DCCost Assignments
ERP Other
What Cost to Serve brings to decision makers…CTS allows you to connect information that traditionally wasn’t possible…
Rapidly build models using best
practice methodology
Mo
de
l an
d
Un
de
rsta
nd
Costs
Cost Objects
Activities
Co
llect
Ide
nti
fy &
A
nal
yze
Collect and collate system and
non system data
Analyze results to develop a deep
insight into where profit is made
and what drives costs
Test out scenarios to assess
the impact of possible changes
– then actTe
st a
nd
Im
pro
ve
“All-in-One”:
Cost and profitability modeling
Shared services modeling
Integrated business modeling
Calculation
Reporting engine plus on-demand analysis
Fast model build and Business user owned and managed
Enterprise Scalable
Full Transparency and Audit Trail of all costs/revenues
Supports all ABC and Allocation methodologies
Taking advantage of SAP Profitability & Cost Management
Co-existence of SAP PCM and SAP COLeveraging the best in both tools
Profit Center
Accounting
EC - PCA
Cost Object Controlling
CO-PC-OBJ
Profitability
Analysis
CO-PA
Product Cost Planning
CO-PC-PCP
Cost and Revenue
Accounting
CO-OM-CEL
Cost Center Accounting
CO-OM-CCA
Order and Project
Accounting
CO-OM-OPA
Activity Based Costing
CO-OM-ABC
Product Cost
Controlling
CO-PC
Overhead
Management
CO-OM
SAP Controlling
IMPROVED COST AND
PROFITABILITY
REPORTING
?
ERP
GL
Other data
SAP
BusinessObjects
Profitability and
Cost Management
Putting strategy into action…
Current situation
Too granular detail (SKU/Sold To) & static budgeting process
Controlling department = Financial Figures Production center
No time for action planning and learning from insights
- 500 k euro/yr for 60 % off budget
Our Proposed solution
Predictive analytics to increase speed & accuracy of forecast
Collaboration with the business to control the drivers
Is this the Value Creation you have dreamt off?
AccurateForecast
2 % in resource planning
ProcessAutomation
2-5 fte extra available for value adding activities
Business Ownership
Agility and increased mobilization for action
Value Identification
Leverage your data into value
You really want to automate this further?
Cost to serve is agile, actionable, detailed, scalable and accurate
+ 500 k euro/yr in revealing new profit potential
Integrated Performance Management Platform
Budgeting, Planning &
consolidationCosting & Profitability
Management
Analytics Front-Ends
Mobile Self service BI Collaborative BI
FINANCIAL COMMERCIALOPERATIONAL
SAPPCM
SAPBPC
SAPMargin Analysis
Simulation & Scenario
Analysis
SAP HANA (or equivalent platform) + Predictive Analytics Library
Our proposed solution…Supported by the SAP Integrated Performance Management Platform
Putting strategy into action…
Agility
Business relevance
Forecasting accuracy
Automation
Driver-based
Run the business better
Sustainablecompetitive advantage
Mission
Goals
Ensuring intiatives are business relevantExcellence
for the shareholde
r
Market Share
New Customer Acquistion
Customer Loyalty
Lean overhead services
Sales & Marketing
Skills
Customer Satisfaction
Account Manageme
nt
Product innovation
Service quality
Total solutions provider
Expertise and
experienceR&D
Employee Satisfaction
Introdution to SAP Strategy Management
The closed loop
Rolling Forecast (Driver-based Budgeting)
• Direct Expense
• Indirect Expense
•Revenue
•Gross Margin
•- Sales- Logistics-
Administration
• R&D
•Contribution
• STRATEX
• ITDA•EBITDA
•Net Income
•$$•XX•(XX)•X
X
•(XX)•(XX)•(XX)•XX
•XX
•XX
•(XX)•(XX)•(XX)
•%
•100%
•(40)•60%•(10)•(5)•(15)•30%
•20%•15%
•(5)•(5)
•(5)
Strategy
Strategy mapBalanced Scorecard
• Themes
• Objectives
• CSF
• KPI’s
Strategic Initiatives
Str
ate
gic
Opera
tional
Costprice calculation & Profitability analysis
DRIVER
MODELS
HOW ?
SAP Enterprise Performance
Management
Putting the pieces together
Integrated Performance Management Platform
Budgeting, Planning &
consolidationCosting & Profitability
Management
Analytics Front-Ends
Mobile
Strategy &
Transformation
Management
Self service BI Collaborative BI
On Premise
Full solution
delivered as a
Service
Hosted
Traditional
model
(Licenses +
Services)
FINANCIAL COMMERCIALOPERATIONAL
SAPSSM
SAPPCM
SAPBPC
SAPMargin Analysis
Simulation & Scenario
Analysis
SAP HANA (or equivalent platform) + Predictive Analytics Library
SAP Integrated Performance Management Platform
EPM in the cloud
Step 1: Cloud for Planning
(integrated with SAP BPC )
Michel HaesendonckxSenior Manager, Business Insights
[email protected]: +32 472 491 699
Contact info
57
Thierry BruyneelPartner, Business Insights [email protected]: +32 473 862 153
Denis VanwaetermeulenBusiness Insights Sales [email protected]: +32 497 511 128
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