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Multiple SAP BusinessObjects (BPC) NetWeaver

Implementations: All with a Common Theme of


Prepping to Go Beyond Budgeting

Edmund Manrique
April 1, 2011

[ CHAVONE JACOBS
ASUG INSTALLATION MEMBER
MEMBER SINCE: 2003

[ ALLAN FISHER
ASUG INSTALLATION MEMBER
MEMBER SINCE: 2008

[ COREY PEARSON
ASUG INSTALLATION MEMBER
MEMBER SINCE: 2008

Agenda

Introduction

Understanding the Need

Business Case, Estimating, ROI, TCO to Buy In

Case Studies

SKCEP - Starter Kit for Cost and Expense Planning

Q and A

4/1/2011 - Slide #2

[ Give Away

April 1, 2011

Real Experience. Real Advantage.

[ Give Away

April 1, 2011

Real Experience. Real Advantage.

Agenda

Introduction

Understanding the Need

Business Case, Estimating, ROI, TCO to Buy In

Case Studies

SKCEP - Starter Kit for Cost and Expense Planning

Q and A

4/1/2011 - Slide #5

Common Themes
What is Beyond Budgeting?
Beyond Budgeting is about rethinking how we manage
organizations where innovative management models
represent the only sustainable competitive advantage. It is
also about releasing people from the burdens of stifling
bureaucracy and suffocating control systems, trusting them
with information and giving them time to think, reflect, share,
learn and improve.

Written by BBRT co-founders Jeremy Hope and Robin Fraser

4/1/2011 - Slide #6

Business Analytics Solutions from SAP


Achieve Remarkable Results
Analytic Applications

Enterprise Performance
Management
Strategy
Management

Planning,
Budgeting, and
Forecasting

Profitability and
Cost Management

Financial
Consolidation

By Industry

By LoB

Financial Services
Public Sector and Healthcare
Manufacturing
Consumer Products
Retail and Telco
Utilities and more.

Service, Sales, and Marketing


Procurement
Supply Chain
Finance
Sustainability
IT, HR, and more

Governance, Risk,
and Compliance
Enterprise GRC

Access Risk
Management

Global Trade
Services

Continuous
Transaction
Monitoring

Disclosure
Management

Enterprise Information
Management

Business Intelligence
Reporting and
Analysis

Dashboards and
Visualization

Data
Services

Master Data
Management

Data Exploration

Mobile

Event
Processing

Content
Management

Information
Governance

BI Platform

Data Warehousing
Enterprise Data
Warehousing

2011 SAP AG. All rights reserved. / Page 7

High-performance
Analytic Solutions

Data Mart
Solutions

BPC for NetWeaver

Source: SAP
4/1/2011 - Slide #8

Agenda

Introduction

Understanding the Need

Business Case, Estimating, ROI, TCO to Buy In

Case Studies

SKCEP - Starter Kit for Cost and Expense Planning

Q and A

4/1/2011 - Slide #9

Top Issues found across Surveys


The following 3 issues came up consistently in all surveys reviewed:
 Time it takes to create forecast and annual budgets
 Alignment of Strategic and Operational plans
 Forecast Accuracy

Source: A Study of Planning Best Practice 2008

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4/1/2011 - Slide #10

Forecast Frequency Actual vs. Desired

The gap between the current and the desired forecast frequency remains unbridged. 70.6% want to increase the frequency of their re-forecasting.

Source: The Reforecasting Report (CIMA and Business Objects)


Source: ALG Re-forecasting the Future

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4/1/2011 - Slide #11

Inhibitor to more Frequent Forecasting


78% reported that preparation time was the main barrier to more
frequent re-forecasts in their organization.
 The average time to reforecast: 2-3  The average time to prepare an

weeks

annual budget: 3 months

Source: The Reforecasting Report (CIMA and Business Objects)


Source: ALG Re-forecasting the Future

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4/1/2011 - Slide #12

Budgeting Approaches 1
Traditional Budgeting Process
Focus on achieving specified dollar
objectives
Establishes finite planning horizon typically one year
Creates environment of continual
trade-offs between predetermined
financial targets
Often disconnected from currently and
changing market conditions

Rolling Forecast Process


Establishes rolling planning
horizon of 68 quarters,
Rapidly assimilates changes in
marketplace and facilitates
reformulated plans
key operational metrics to keep
strategic plans in focus
project key operational drivers,
such as revenue and volume, for
the entire planning horizon

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4/1/2011 - Slide #13

Budgeting Approaches 2
Key Performance Indicators
Driver Based Planning
Identifies key performance
indicators (internal and external) that
are appropriate for the business
Includes KPIs for operational and
financial metrics
Cascades the KPIs throughout the
company
Leaves specific details for achieving
a KPI goal to local management
Requires that KPIs be integrated
and that they represent a balanced
set of measurable goals

Identifies key activities conducted


by the company and isolates
resources and costs associated
with the activity
Identifies key drivers of activities,
both revenue-producing and
others
Examines relationships between
drivers and activities and
develops forecasts for the
drivers, which dictate required
resources and costs

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4/1/2011 - Slide #14

Next Practices Budgeting and Forecasting

Source: Budgeting and Forecasting: Issues and Leading Practices

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4/1/2011 - Slide #15

Three Steps to Better Budgeting

Source: Three Pragmatic Steps to Better Budgeting and Rolling Forecasts

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4/1/2011 - Slide #16

Agenda

Introduction

Understanding the Need

Business Case, Estimating, ROI, TCO to Buy In

Case Studies

SKCEP - Starter Kit for Cost and Expense Planning

Q and A

4/1/2011 - Slide #17

Business Case Basics


 The equation to calculate ROI is: ROI = (return on investment - initial
investment)/investment * (100)

 TCO, when incorporated in any financial benefit analysis, provides a


cost basis for determining the economic value of an investment.
Examples include: return on investment, internal rate of
return, economic value added, return on information technology,
and rapid economic justification.

4/1/2011 - Slide #18

Cash Flow Analysis (NPV, IRR)


Net Present Value (NPV) and Internal Rate of Return (IRR) are
calculations that firms use to help them decide to accept or reject
a capital project.
ILLUSTRATION

To help decide in which projects to invest, firms


conduct financial analysis to determine the expected
value of the different project opportunities.

NPV Approach
Measures inflows and outflows of an investment
over its economic life at a given discounted rate

CF1

CF2

CF3

Project valuation itself is fairly straightforward: cash


is invested in a project to produce cash flows in
future years. Projects should be accepted on if the
present value of the future cash flows generated
exceeds the cash investment made in the project.
The real difficulty in this type of analysis is
developing the cash flow forecasts for the capital
projects.

CFn

Discount rate = R
i=1

NPV=

CFi
(1+R)i

-I

i=n

Initial Investment = I

IRR Approach
The concept of true return yielded by an
investment over its economic life
$250.00

NPV=tt-1

Incorporates all cash flows, both negative and


positive, and also adjusts for the time value of
money. Net present value is the values now of a
future project including all costs and benefits. NPV
uses the discounted cash flow technique to adjust
future cash flows into present value, and
incorporates both revenues and expenses. Under the
NPV approach, capital projects should be accepted
only if the NPV is greater than zero.

Determined by calculating the discount rate at which


the NPV equals zero. If the calculated IRR of the
project is less than the discount rate (typically the
companys cost of capital), then the project should
not be accepted.

$200.00
$150.00

NPV

NPV

IRR

CF
(1+IRR)t - I = 0

IRR = 18.42%

$100.00

Description

A critical shortcoming of the IRR method is that it is


commonly misunderstood to convey the actual
annual profitability of an investment.

$50.00
$0.00
-$50.00
3%

6%

9%

12%

15%

18%

21%

24%

Discount Rate

19 - Slide #19
4/1/2011

Software Evaluation Factors


Customer References

Solution Cost

Conversion Cost

Project Cost

Hardware Cost

360

Product Maturity
Learning Curve

SAP Roadmap

Functionality

Landscape Strategy

Maintenance
Licensing (SAP and MS)

Basis Resources

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Software Fit to Project Requirements


 Measures complexity of implementing of 64 key requirements for IP and BPC
 Used scoring model based on low, medium, high, and very high

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BI-IP vs. BPC Complexity Scoring


 Higher scores represent
more complexity
 More software complexity
drives the cost up

Cost Driver: Complexity

$$$

180
160
140

BI-IP Score

= 114

120
100

BPC Score = 73

80
60

40
BPC

 BPC is 36% less complex


than BI-IP

BI-IP
Series1

Cost Curve

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4/1/2011 - Slide #22

Solution Cost Comparison over 5 years


BPC
License Costs

Finance Planning Project

TCO for 5 years

Licenses @ retail price

750K

Expected discounts

300K

Net Licenses

450K

MS SQL Server

50K

Total license costs

Duration * Resources

7 FTE

500K

2 yrs

$
10 FTE

5m

25K
-

25K

3 yrs

Project Costs

Maintenance @ 22% (5yrs)

550K

27.5K

Hardware

85K

$ 10.7m

Training FTE

0.25

170K

0.5

250K

Basis Support FTE

0.25

170K

0.5

350K

Application Support FTE

1.4m

2.2m

ABAP Support FTE

0.5

350K

Total TCO over 5 years


TOTAL COSTS
Migration from BI-IP to BPC (2013)

BI-IP

Duration

2.3m

$ 3.17m

7.8m

$ 13.88m
1 yr

1,000,000

BPC Licenses

450K

Hardware

90K

Maintenance @ 22% p.a.

100K

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4/1/2011 - Slide #23

Cost Estimate Classification


AACE
Classification
Standard

INCREASING PROJECT DEFINITION

Class 5

ANSI
Standard
Z94.0

AACE
Pre-1972

Order of
Magnitude
Estimate
-30/+50

Order of
Magnitude
Estimate

Class 4
Class 3
Class 2
Class 1

Budget
Estimate
-15/+30

Definitive
Estimate
-5/+15

Association
Norwegian
of Cost
Project
Engineers (UK) Management
ACostE
Association (NFP)
Concession Estimate
Order of
Magnitude Exploration Estimate
Estimate
Class IV-30/+30
Feasibility Estimate

Study
Estimate

Study Estimate
Class III -20/+20

Preliminary
Estimate

Budget
Estimate
Class II-10/+10

Definitive
Estimate
Detailed
Estimate

Authorization
Estimate
Master Control
Estimate

American
Society of
Professional
Estimators
(ASPE)

Level 1

Level 2

Level 3

ADCO
EMPD
Classification

Class 4
+40/-20%
Screening /
Feasibility

Class 3
+30/-15%
Conceptual /
Prelim. Budget
Class 2
+20/-10%
Master Budget

Level 4
Definitive
Estimate
Class I-5/+5

Current Control
Estimate

Level 5
Level 6

Class 1
+10/-5%
Definitive /
Control Budget

Extracted from AACE International Recommended Practices and Standards


4/1/2011 - Slide #24

Analysis by Business Area: Sales


Recommended future state

Existing Scenario/Situation

Executive
 Predictive analysis
 Competitive analysis
 Reliable data

Business Team
 ASI Reporting functionality must be
replicated
 No Ad-hoc capability
 Would like to integrate with Value
Centric Data
 Need additional UOMs
 More flexible drilldown
 Visualization

Business
Impact

Revenue

What if scenario dash-boarding


Replace ASI with integrated BW Cubes
Direct SAP data feed, utilizing standard
business content.
Eliminate flat file loads from SAP and create
integrated feed from ValueCentric
Design Consistent UOM methodology either
in BW or SAP to eliminate quality issues.
Determine more flexible approaches t o
send out data
Determine Customer Profitability reporting
Enable functionality for automatic/timely
sales territory re-orgs

Customer
Satisfaction

Efficiency

4/1/2011 - Slide #25

Impact and Effort: Sales

4/1/2011 - Slide #26

Agenda

Introduction

Understanding the Need

Business Case, Estimating, ROI, TCO to Buy In

Case Studies

SKCEP - Starter Kit for Cost and Expense Planning

Q and A

4/1/2011 - Slide #27

Our BPC Planning and Consolidation solution offered a single platform used to connect all these
operations and provide:
-An income and balance sheet statement that aggregates entities according to their corporate
structure seamlessly
-Provides currency translation on the fly
-Handles intercompany eliminations
-A solution that can be maintained primarily by the business
-Ad hoc reporting and data input capabilities across the business
4/1/2011 - Slide #28

WORK FORCE ANALYTICS: A TOOL TO TRACK HEADCOUNTS


CLIENT:

The company is diversified energy company. Its subsidiaries and affiliates are involved in the
generation, transmission and distribution of electricity, energy management and other energyrelated services. Its seven electric utility operating companies comprise the nation's fifth
largest investor-owned electric system, serving 4.5 million customers

Business
Challenge

Provide consistency across the enterprise in forecasting workforce needs; enable increased
accuracy in forecasting workforce requirements; and enhance integration among planners and
business services budgeting.

ACTIONS TAKEN

RESULTS

Tools used:
BPC 7.5 NW
BI 7.0
SAP ECC 6.0
Modified existing Org Hierarchy to support modified
business and enhanced security needs.
Used VB logic in Input Schedules to manipulate data
Created workbooks with multiple EVDREs one to
refresh and the other to save data.
Created new APDs to support Payroll cost reporting in
line with headcounts
Built input schedules to plan at different Org Levels, but
still maintain consistent reporting formats
Automate the process of creating Security profiles on a
daily basis as org changes occur in SAP.
Created Extracts to support reporting in both BI and
COGNOS.

Allow WFA Planners to analyze data on active


employees
Enhance Performance of existing WFA tool
The data in the WFA tool is more tightly
integrated with SAP
Expand reporting capabilities, including the
ability to see the immediate impact of forecast
entries on monthly headcounts and compare to
budget.
Align workforce planning at organizational
levels with workforce budgeting at cost center
level
Enable workforce planners to run reports and
analyze data on active employees, including
demographics, data by job group, employee
transfers in/out, etc.

4/1/2011 - Slide #29

REVENUE FORECASTING: A TOOL TO FORECAST REVENUE ON A 5 YEAR TIME HORIZON

CLIENT:

The company is diversified energy company. Its subsidiaries and affiliates are involved in the
generation, transmission and distribution of electricity, energy management and other energyrelated services. Its seven electric utility operating companies comprise the nation's fifth
largest investor-owned electric system, serving 4.5 million customers

Business
Challenge

Consolidate an excel, access and disparate Revenue Forecasting process into a seamless
single platform process.

ACTIONS TAKEN

RESULTS

Tools used:
BPC 7.5 NW
BI 7.0
SAP ECC 6.0
Created Applications to handle RATE, VOLUME,
REVENUE and GL interfaces.
Created multiple script logic functions to calculate
revenues at different levels, and to move data between
various applications.
Created new APDs to support loading of tariffs and rate
schedules.
Built input schedules and integrated workbooks to give
users flexibility to maintain complex VBA and macros
based on reports. Used multiple EVDREs in these
integrated workbooks.
Automate the process of creating GL Interfaces and
data export.
Created Extracts to support reporting in both BI and
COGNOS.
Created a platform to maintain a complex version
management process for Revenue Calculations.

Created a working prototype to showcase


Revenue Calculations
Created a GL Interface, to generate data file to
load into SAP
Created an APD to extract data
Currently in the process of developing the
interface for RATE Calculations and its related
links to the REVENUE Application.

4/1/2011 - Slide #30

Sales and Cost Planning: A tool to integrate Sales and Cost of Goods planning into a P&L
CLIENT:

The company is Consumer Packaged Goods company. Its operations include the distribution
of baked goods through two primary channels: Direct Store Delivery and Warehouse. Through
its 40 bakeries the company is a leading producer of packaged baked goods in the United
States with revenues exceeding $2.5 Billion.

Business
Challenge

Provide a single tool that provides planning information entry for sales by plant and cost
planning by ingredients, packaging, labor, and overhead. Data all rolls up into a single P&L
application for high level executive review

ACTIONS TAKEN

RESULTS

Tools used:
BPC 7.5 NW
BI 7.0
SAP ECC 6.0
Enhanced existing SAP account hierarchy to allow for
more flexible planning structures
Created business process for sales entry that could be
rolled out to 40 plants with minimal BPC training
Built security model to control plant/controller access
Built Production Planning solution to input/calculate
ingredients and packaging usage to then be used as
input into COGS application and P&L application
Built Cost Center Application to allocate labor and
overhead costs, which then is sent to COGS application
and P&L
Built largely automated COGS solution that incorporated
corporate level guidance and input from Production/Cost
Center Planning to calculate COGS to be allocated down
to Sales Profit Centers
Built architecture that easily integrates different
applications through script logic and workbooks that
integrate several applications

Executives were able to get more detailed view


of the planning data and quickly navigate
between different plants, and roll-up all plants
to corporate level
Less time spent gathering data
Same look and feel for corporate reporting, but
with more timely data and the data rolls up to
P&L using standard BPC functionality
Standardized calculations across plants for
inputs into the COGS planning process
Uniform planning process for COGS and most
figures calculated from the system decreasing
effort and variance from plants
Architecture that can incorporate new plants
and products dynamically
Several templates that reduce the number of
workbooks users have to access

4/1/2011 - Slide #31

Consolidation and Revenue Forecasting: A tool to forecast balance of year and a consolidated
reporting package
CLIENT:

The company is Consumer Packaged Goods company. Its operations include the distribution
of baked goods through two primary channels: Direct Store Delivery and Warehouse. Through
its 40 bakeries the company is a leading producer of packaged baked goods in the United
States with revenues exceeding $2.5 Billion.

Business
Challenge

Consolidate excel based and disparate Consolidated Reporting and Revenue Forecasting
processes into a seamless single platform process.

ACTIONS TAKEN

RESULTS

Tools used:
BPC 7.5 NW
BI 7.0
SAP ECC 6.0
Created Applications to handle Sales (volume and
dollars), Income Statement, Balance Sheet/Cash Flow
and interfaces.
Created process and account structures to allow for
easy reconciliation between ECC, BW, and BPC
Built input schedules and integrated workbooks to
greatly reduce the number of Excel workbooks.
Built balance of year forecasting process for net sales,
COGS, and SD&A to calculate EBT that integrates data
delivered from prior BPC work for Plan and Actual
reporting
Built schedules to allow for elimination entries at the
segment and division level that arent done in ECC
Built transformation and reporting process to bring in
data from a different non-SAP database (SDW) and
incorporate the data into BPC.
Built highly formatted reporting packages for
management and board of directors

Robust data flow structures from ECC through


to BPC
Income statement, Balance Sheet, and Cash
Flow Statement all in one location, with the
ability of view multiple levels of granularity
Consistent reporting layout for all segments and
the segment roll-up to the division level
Consistent reporting layouts that can be used
for any selection of segments across any time
frame or category
Layouts that could maintain the consistency of
a database, but also have the flexibility of
Adhoc calculations within the templates
Combine data from different sources and
provide ability to make/track manual
adjustments
Allow for input Comments on corporate
reporting that will be tied and stored against a
specific dataslice
Reduce time to put together reporting packages
and eliminated errors from re-keying
information

4/1/2011 - Slide #32

Customer Case Study

Company A
Business
Challenge

Very large multi-national


Implementing SAP company-wide
100s of organizational units countries, entities, etc.

Actions Taken
Consolidation tool selection

Results
Choose SEM-BCS for
 Consolidation functions to
support huge multi-national
business
 Tool consolidation on the SAP
platform
 Full integration with SAP ERP
 Ability to leverage SAP BW for
loading and transformation of
data from non-SAP business
units
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4/1/2011 - Slide #33

Customer Case Study

Company B

Global business with around one billion in revenue

Business
Challenge

Consolidated management reporting


Currently using Cognos and migrating to SAP BPC

Actions Taken
Tool selection for planning and
consolidated reporting

Results
Choose BPC due to
 360-degree view of the software
selection process
 Total cost of ownership
 Integration with SAP landscape
(targeting Netweaver platform)
 Careful consideration of the
SAP roadmap

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4/1/2011 - Slide #34

Case Study

Company C

Car manufacturer with about $70B in revenue

Business
Challenge

Legal consolidation of nearly 400 legal entities

Actions Taken
Tool selection for statutory
consolidation and reporting

Results
Choose Cartesis because the
company required
 Data collection from several
SAP systems
 Complex consolidation rules
 For I/C elimination
 Short implementation timeframe
 Used the Cartesis IFRS
Starter Kit

35

4/1/2011 - Slide #35

Agenda

Introduction

Understanding the Need

Business Case, Estimating, ROI, TCO to Buy In

Case Studies

SKCEP - Starter Kit for Cost and Expense Planning

Q and A

4/1/2011 - Slide #36

Whats the Starter Kit for Cost and Expense


Planning?

Understand what is available within the Starter Kit for Cost and Expense
Planning
 Walk through an example that demonstrates how to use the user friendly
front end for isolated cost center, activity, and profit center planning activities
using ERP CO-like layouts and standard reports
 Get tips for transferring data from and to SAP ERP and BW for integrated
managerial accounting


2011 SAP AG / 37

Starter Kits from SAP & the Eco-System

SAP has been aggressively building a set of industry and cross-industry content to
help accelerate SAP Business Planning and Consolidation Projects

SAP IFRS Starter Kit

SAP Planning & Consolidation for Banking

SAP Planning & Consolidation for Health Care

SAP Planning & Consolidation for Public Sector

SAP Sales and Operations Planning RDS (Rapid Deployment Solutions)

SAP Starter Kit for Cost and Expense Planning

2011 SAP AG / 38

Save Time, Cost, and Resources

Implementation Efforts Significantly Reduced Through Prebuilt Integration:


Pre-defined cost center and profit center accounting data models and
mappings
Pre-built data management packages to load data from SAP ERP and
SAP NetWeaver BW
Closed-loop SAP ERP integration via data management packages to
load data back into SAP ERP and drill-through reporting integration
Reporting and analysis integration with SAP NetWeaver BW via data
management packages to load data back into SAP NetWeaver BW
Embedded integration with Cost Center Accounting via Excel-based
planning and version copy

2011 SAP AG / 39

Accelerate Deployment and Adoption

Ease-of-use for greater business self-service

Visual layout and easy, one-click buttons to enable the business to own and
understand their own data loads

Offline planning capabilities

Built-in functions to spread, weight and trend values

Starter Kit Excel Ribbon functions to further facilitate planning and improve
performance:

Save Data
Refresh Data
Expand Hierarchy
Collapse Hierarchy
Forecast Expenses
Lock/UnLock Cells, Columns and Rows

2011 SAP AG / 40

Copy Rows
Copy Columns
Top-Down Distribute
Equally
On existing ratios

Visual Design for Data Load Management

2011 SAP AG / 41

One-Click EASY Data Loads

2011 SAP AG / 42

Excel Ribbon to Facilitate User Experience

2011 SAP AG / 43

Enable New Business Scenarios & Use Cases

More flexibility in defining processes, data and models

Combine data from any source at any level of detail in your planning layouts
Reference market, forecast, history or benchmarks in input schedules
Add product, customer and channel views to costs and expense planning
Enable integration with operational planning processes and non-financial models
Enable global views of data such as activity prices across cost centers and
controlling areas

Define custom calculation models and business rules such as average pricing,
rate determination and allocation methodologies

Enable rolling re-forecasting and hierarchical formats

Process control with versioning, work status definitions, business process flows
(BPFs) and distribution and collection functionality

2011 SAP AG / 44

Agenda

Introduction

Understanding the Need

Business Case, Estimating, ROI, TCO to Buy In

Case Studies

SKCEP - Starter Kit for Cost and Expense Planning

Q and A

4/1/2011 - Slide #45

Thank you for participating

[
Edmund Manrique
(773)531.6438
http://tli-usa.com/
Edmund.Manrique@tli-usa.com

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