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Powersim's Business Modeling and Simulation Tools Are Built Right In to SAP SEM

by Ulrich Hauke | SAPinsider

October 1, 2001

by Ulrich Hauke, SAP AG, and Kai Berendes, Powersim GmbH SAPinsider - 2001 (Volume 2), October (Issue 4)

There are plenty of tools available to help you obtain a clearer picture of your business's current performance: spreadsheets, tables, graphs, operating results, and status reports. But what about understanding the factors behind future profitability?

     Business forecasting is a thorny area for many enterprises, made even more difficult by the increasingly complex global economy, constantly changing business environments, and the challenges of quantifying uncertainty and risk. It often tests the limits of spreadsheets and status reports, and even current statistical forecasting methods are hard-pressed to explain what is driving future sales, or how competitors will behave when you lower your prices.

     Business simulation can aid in decision-making that projects complex what-if scenarios, offering a reliable way to evaluate the likely effects of different decisions and variables. Simulation and modeling enhance and complement spreadsheets, OLAP tools, and risk-analysis software by combining both historical data and "cause-and-effect" assumptions about future performance.

Business analysts and line managers need a flexible tool that allows them to design, model, and evaluate possible future scenarios while also considering multiple related factors and their expected influence on performance. Business analysts are creating and defining the business model in an intuitive, graphical way, and together with the line managers, they perform "what-if" analysis and analyze "how- to-achieve" questions.

     SAP provides these functions as an extension of SAP's business planning and budgeting capabilities by delivering Powersim simulation tools with mySAP Financials Strategic Enterprise Management (SEM).

Powersim Business Simulation Tools and SAP SEM

SAP incorporated business scenario simulation capabilities with the integration of Powersim's software into its SEM key capability in 1999. Controllers and managers benefit from Powersim's sophisticated dynamic business simulation capabilities teamed with the strength of SAP's planning models and methods for generating strategies, targets, and budgets.

     Managers, analysts, and consultants benefit from a range of features for graphical business modeling, simulation, and risk management - all of which are bundled in the Powersim Studio software suite. Powersim Studio is designed to cope with real-world business situations, addressing complexity as well as dynamic and risk-related issues. The Powersim software suite has a similar look and feel to that of popular spreadsheets, but with the key addition of a built-in time dimension and graphical diagrams instead of a spreadsheet's grid of cells.

     As an integral part of SAP's SEM solution, the Powersim suite is enhanced by powerful multidimensional planning, modeling, and budgeting processes. Simulation models then become part of SAP SEM data, can be shared worldwide within the corporate environment, and take advantage of a scalable client/server architecture, with benefits like:

  • Frontend integration: A single point of entry for both budgeting and simulation.
  • Backend integration: Multi-user capabilities, authorization control, multi-language support, and transport connection.
  • Data integration: Full integration into SEM master and transaction data, and a multidimensional OLAP database (via SAP Business Information Warehouse).
  • Business integration: Ready-to-use business simulation models for profit planning and investment planning, complementing spreadsheet-based budgeting and planning.

Forecasting for the Forward-Looking Enterprise

Powersim Studio includes comprehensive graphical modeling and simulation capabilities, such as:

Easy-to-Use Model Design and Visualization Tools

Powersim Studio lets you draw simulation models easily, using familiar drag-and-drop tools in a Windows environment. For novice users, Powersim can keep the number of elements to a minimum, making it easy to build a simple dynamic business simulation model that can increase in complexity over time (see Figure 1).

Figure 1 Modeling and Visualization of a One-Time Investment Decision

     In Figure 1, the user has accessed Powersim Studio to model a one-time modernization investment in a plant, and is considering financing funded by business operations. Different financial and non-financial performance indicators (e.g., effect of investment on production efficiency) are shown in causal relationships indicated by arrows.

     As with standard spreadsheets, each model can be divided into small logical pieces, which are connected together in a "project," and each section is displayed in a different folder.

Multiple Languages and Easy Localization

Powersim Studio has full multi-lingual support for international use, and the latest release includes complex languages such as Japanese and Chinese to ensure easy localization, independent of core modeling activities.

Support for Object Orientation and Reuse

Powersim Studio not only allows you to draw new models, but to reuse existing models. You can define a library of individual models for reuse. Powersim also provides predesigned, best-practice simulation models, to make the process even faster and easier. Plans for future versions of Powersim Studio include the ability to create hierarchical simulation models. For example, if a divisional manager draws a high-level, aggregated model of the entire division, you can access more detailed views for different parts of the division (e.g., product lines) to drill down not only on data, but also on simulation models.

Detailed Scenario Management

For managers using simulation to perform what-if analysis, Powersim Studio provides a decision panel builder as well as comprehensive scenario management. When managers carry out many simulation runs under different assumptions, you can save and compare not only the results, along with the assumptions behind those simulations.

     In Figure 2, the "Decisions" and "Assumptions" panels in SAP SEM is displayed for the one-time investment simulation shown in Figure 1. In the "Decision" window, you see a slider that determines the percentage of revenues reinvested in the production efficiency. To the right, you see the curve describing the limited effects of investments in production efficiency. Finally the "Assumptions" panel provides those variables that can't be influenced by the decision-maker. (As users simulate what-if scenarios, they can adjust these settings.)

Figure 2 Decision Panel for the One-Time Investment Simulation

More Than Just Better Forecasting: Further Benefits of Business Simulation and Modeling

Business simulation is a versatile tool that can be used in several areas of your business - whether at the operational or strategic level - including:

  • Competitive strategy
  • Product portfolio management
  • Service and support
  • Workforce planning
  • Pricing
  • Financial forecasting
  • Investment planning

     Simulation can be applied to both short- and long-term scenarios, such as to analyze long-term ongoing situations (e.g., market simulations) or on a case-by-case basis (modeling a one-time investment).

     In the end, the benefits of simulation really boil down to improving two key areas: decision support and communication. Beyond allowing you to calculate the impact of decisions on your company's future performance, simulation is also an excellent tool to help managers understand the real impact of certain financial and non-financial indicators. It can also:

  • Prevent expensive mistakes, by prototyping different ideas and strategies
  • Provide more accurate long-term planning
  • Explore business dynamics, including feedback and time lags
  • Allow users to use online capabilities to collaboratively create and compare simulations

Linking Future Scenarios with Current Business Data

The SEM solution of mySAP Financials is based on the OLAP technology of the SAP Business Information Warehouse (BW). Data from both SAP and non-SAP sources are extracted and stored within the SAP SEM OLAP database. By linking the OLAP database with simulation, users can process both models of and information on a business. Importing data from SAP SEM to Powersim, the user can rely on historical data in the simulation model, while simulated results can be transferred back to SEM as plans, budgets, scenarios, or forecasts.

     Powersim Studio provides a ready-to-use connectivity to SAP SEM. You can easily link your simulation model to planning levels (e.g., Investment Planning, Profitability Planning) and exchange master and transaction data in both directions. For instance, by taking sales data from SEM and transferring it into a business simulation model of your sales market in order to test the model against historical data. The output of the simulation model (e.g., expected prices) can then be transferred back to SEM for further use.

     In addition to the easy access to transaction data, you can also transfer metadata and master data, so that the simulation models are based on the same OLAP structure as the planning levels in SAP SEM. The whole integration setup is handled through the "data set" element in Powersim Studio.


The new challenges in managing e-business require new support tools for forecasting and long-term planning. Powersim Studio, together with SAP SEM, provide both the integrated financials planning and budgeting capabilities needed to meet those challenges.

     For documentation on Powersim simulation tools in SAP SEM, see For more information on Powersim, visit

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 Management.

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