The coming of the information age brings with it a number of
challenges, including a quickly changing market environment, shorter
product lifecycles, new threats to customer loyalty, and increasingly
demanding stakeholders. But it also provides opportunities to apply
new business models - and to leverage IT as an increasingly important
source of competitive advantage.
The result is a dramatic change
for the business as a whole and for finance functions in particular.
In fact, financial management teams find themselves in a key role,
confronting some critical new questions for business decisionmaking,
such as these:
- How can we leverage our existing SAP implementation to
speed up, enhance, and integrate financial closing, reporting,
and rolling forecasting? Internal management and external
stakeholders require more and more up-to-date information on the
current and expected business situation.
- Can we move from static budgeting and short-term planning
to predictive and perpetual management? Strategies and operations
need to be updated continuously and be forward-looking.
- How do we link corporate strategy with management and
staff action throughout the organization? As management strategies
change more frequently, staff will need tools to guarantee fast,
- How do we describe the real value of our business? Balance
sheets and income statements have proven inadequate to fully describe
the intrinsic value of the business. Non-financial measures and
indicators need to be integrated into the performance measurement
- How can we better manage financial performance and link
feedback to closed-loop planning and reporting systems? This
requires benchmarking and ranking of the actual results of key
performance indicators against internal and external peers, and
establishing real-time assessments and automatic linkage to incentive
- How can we manage the collaboration between the business
partners in the company's value chain? Establishing and maintaining
the right network of value-chain partners and outsourced services
can generate new revenue and reduce costs.
- How can we better manage communication to the financials
community? Shareholders want information - in real time over
the web - about the current and future performance of the company.
Strategic Enterprise Management (SEM), mySAP Financials' integrated decision-support
environment, incorporates five key capabilities:
- Performance Measurement
- Strategy Management
- Planning & Simulation, Budgeting,
and Rolling Forecasts
- Business Consolidation
- Shareholder Relationship Management
These capabilities are designed to help
speed up financial consolidation and reporting, integrate budgeting, planning,
and forecasting, and shorten planning cycles.
SAP SEM makes it easier to measure and
manage financial performance along the whole business network, with a
business balanced scorecard, value drivers, and a business repository
of KPIs, measures, and benchmarks. This technology enables you to describe,
simulate, and execute the business strategy more efficiently, with functions
for collaborative planning and reporting across departments and tools
to better manage external communication for increased shareholder intimacy.
Business Planning in Action: SEM at Work
Whether you want to simply increase the operational efficiency of your
current management processes, or completely revamp your approach based
practice SEM methodologies, SAP SEM key capabilities (see Table 1),
include end-to-end support for strategic management, specifically:
Effectively monitoring performance demands more than just simple analysis.
It requires an efficient way to define the right measures - both external
and internal - and pass those results along, up and down your financial
supply chain, to update your organization's strategy, planning, incentives,
and compensation. Defining measures, such as key performance indicators,
is the first step.
The SEM Key Performance Indicator (KPI)
catalog comes with more than 200 predefined measures in the area of mySAP
Financials, mySAP CRM, mySAP SCM, and mySAP HR, in addition to the more
than 70 measures already connected to the SAP Business Information Warehouse
These KPIs are then available to the SAP
SEM Balanced Scorecard, Management Cockpit, and Business Planning functions
to help you set targets, report those targets against the actual, plan,
and benchmark data. The screen shown in Figure 1 is an example
of an executive performance analysis. From here, an executive can drill
down to more detailed information in SAP BW reports. SEM Performance Measurement
capabilities can also be linked to:
- Compensation Management capabilities in mySAP Human Resources
- Strategy Management in SEM, to correct strategies in real time
- Business Planning in SEM, for the immediate updating of rolling forecasts
and action plans
|Performance Measurement in mySAP Financials SEM
When indicators show that a strategy is going off course, the business
plan needs to be adjusted accordingly. But even the most responsive, well-constructed
strategy is of little use if it is not communicated to the management
SEM Strategy Management is designed to allow management to quickly make
necessary changes and provide real-time updates to others in the financial
Figure 2 is an example of the "Enhance
Customer Management" strategy for a company's division, with three
strategic elements (objectives) assigned to the strategy. The objective
"Grow Revenue" is measured through three KPIs: Gross Profit,
Net Sales, and Sales Growth vs. Segment Average. SEM Strategy Management
automatically calculates a score for the objective, so that if the strategy
is going off course, the appropriate people are alerted to the need for
|Balanced Scorecard via mySAP Workplace
Simulation, Budgeting, and Rolling Forecasting
Organizations are finding that to be responsive, they not only have to
devise business plans more quickly, but also adjust them more frequently
- thus the focus is moving away from static, rigid budget processes and
toward rolling budgets and continuous updates.
Once targets are set using SEM Strategy
Management, budgets and plans can be quickly created with SEM Business
Planning and Simulation (BPS). SEM-BPS provides flexible OLAP-based functions
and ready-to-use applications for instant planning functionality. Moreover,
SEM-BPS supports business modeling and simulation for predictive business
SEM Business Planning and Simulation promotes
the "perpetual" management of budgets and forecasts.2
It provides a single interface from which you can plan sales, costs, profits,
asset acquisitions, etc., along with the pro forma P&L, Balance Sheet,
and Income Statement - all with real-time planning aids by SEM.
For a faster, streamlined "close" at the end of the month,
SEM Business Consolidation creates consolidated financial statements -
including balance sheets, income statements, and cash-flow statements
- for external reporting, and for timely flow of information to management.
Business Consolidation automates data collection and consolidation processes,
and integrates other SEM components for synchronized processes. You can
ensure, for example, that the same legal consolidation methods for inter-unit
elimination in SEM-BPS are also implemented in Business Consolidation.
More and more, market analysts and shareholders are demanding timely
and accurate company information,
especially when it pertains to future strategy. At the same time, the
goal of management is to provide markets and major shareholders with information
that effectively communicates the full value of the business, and in that
way to prevent undervaluation.
SEM's Shareholder Relationship Management
functionality provides an effective way to manage such communication.
SEM-SRM includes shareholder and contact databases that contain information
requirement profiles for each shareholder. By offering an information
channel (e.g., a Document Download Center) in conjunction with an investor
portal, such as the one in Figure 3 (below), information can be
distributed quickly, and timely feedback can be easily collected.
|The SAP Shareholder Investor Portal and Document Center
SAP SEM's Tight Integration with Your Business Data
No matter how complicated the systems landscape, SAP SEM offers a decision-support
environment that is highly integrated with the rest of your financial
supply chain. The SEM architecture is designed for closed-loop planning
and reporting capabilities without disruption to the production environment.
The main decision-support components for
reporting, planning, performance management, and shareholder relationship
management - the Corporate Performance Monitor, Business Planning and
Simulation, and Shareholder Relationship Management capabilities - are
bundled in one main SEM instance. With a relatively simple and short process,
SEM can be installed as an add-on on top of SAP BW, or separately from
any SAP or non-SAP data warehouse.3
SAP SEM supports full integration with
SAP BW or any third-party data warehouse. In either case, SEM runs separately
from the productive OLTP system to avoid altering master data and to prevent
any direct impact on the productive environment. This offers an environment
where you can work on independent, flexible, and denormalized data structures.
To ensure integration to SAP or non-SAP OLTP systems, SEM periodically
extracts the meta, master, and transaction data from the system and changes
it with respect to future plans.4
An example of an SEM implementation is
shown in Figure 4 The Coca-Cola Company's SEM installation. In
this case, the company's divisions and regions have local SAP systems
running together with SAP BW for reporting purposes. SAP SEM is located
in the groups and corporate center, and is integrated with the divisional
and regional systems. A next step could include installing SAP SEM on
top of the regional and divisional SAP BW systems in order to include
these units in SEM management processes.
|Overview of The Coca-Cola Company's SAP SEM Implementation
Web-Enable Your Enterprise Planning with SAP SEM
SAP SEM takes advantage of one new opportunity for faster dissemination
of strategic information across all areas of your business: web enablement.
All SEM components are web-enabled in conjunction with ITS 4.6D and the
Release 4.6D Internet Graphics Server.5 SEM
is compatible with mySAP Workplace 2.11 and SEM-specific MiniApps, Internet
services, and roles for all key functional SEM areas. For example, you
can add a Balanced Scorecard MiniApp to your mySAP Workplace, and use
it to look up the current status of individual KPIs and objectives. From
there you can navigate into the SEM component system for more detailed
Look for additional web integration with
the next shipment release,
SAP SEM 3.1A, planned in the first quarter of 2002. From that release,
SEM's Corporate Performance Monitor and Business Planning and Simulation
capabilities will be fully web-enabled
on the basis of the new SAP Web Application Server. Companies can use
Internet capabilities with SEM in a variety of ways:
- Collaborative enterprise-wide planning within the company and across
- Using a web GUI to submit financial information (P&Ls, balance
sheets) for processing
- Online monitoring of consolidation and planning tasks
SAP SEM to Gain
With over 700 shipments and a fast-growing number of live customers,
SAP SEM continues to be a widely accepted and robust decision-support
application, highly integrated with your SAP and non-SAP systems, and
available across your financial supply chain. As part of your financial
strategy, SAP SEM provides financial management teams with a decision-support
environment that leverages IT to answer the challenges presented by new
technology and new business models.
Ulrich Hauke joined SAP
in 1997 and is a mySAP Financials Product Manager in SEM. He accompanied
the SEM rollin and rollout from its beginnings in 1998 and gained experience
in the area of analytical applications. From the business perspective,
he is an expert in Strategic Planning, Performance Management, and Value-Based
For details on simulation and business modeling in SAP SEM, see "Powersim's
Powerful Business Modeling and Simulation Tools Are Built Right In to
SAP SEM" in this issue of SAP Insider, and online at www.SAPinsider.com.
For more information on new business models that incorporate rolling budgets,
see "Go 'Beyond Budgeting' with mySAP Financials to Become a More
Adaptable and Responsive Organization" in this issue of SAP Insider,
and online at www.SAPinsider.com.
SEM customers have found SEM installation to been relatively simple, based
on feedback of the first Partner Shipment program of SEM Release 3.0,
where the average SEM installation took about two to three days.
The automatic push back of transaction data from SAP SEM back to the SAP
system is currently supported for CO-PA (Profitability Analysis) and IM
The Internet Graphics Server is an add-on service for the ITS and provided
by SAP as part of the SAP GUI delivery.