Even though there has been and continues to be significant investment in enterprise software, business intelligence solutions, and performance management tools, the vast majority of companies still rely on spreadsheets, fragmented reporting, and anecdotal pieces of information to guide
their decisions. In some cases, line managers suffer from a complete lack of analytical insight
that could help them better manage day-to-day decisions.
There are staggering opportunities for greater productivity and effectiveness of corporate performance management processes. Consider, for example, what some industry experts have observed:
- A study by Korn/Ferry International revealed that less than 40 percent of business executives are satisfied with the quality of their management reporting.1
- The Harvard Business Review revealed that for every $1 billion in revenue, the average company spends nearly 25,000 man-days on planning and performance management, of which approximately 80 percent is spent collecting, aggregating, reconciling, and agreeing on the correct use of data, and only a fraction of time is used to conduct actual analysis and interpretation.2
- A 2004 CFO Research Services survey revealed that 70 percent of respondents plan to invest or actively explore investing in advanced business intelligence, corporate performance management, or enterprise analytics solutions.3
Many companies have come to realize that there is an analytical gap — a disconnect between analytics and decision making. Bridging this gap, in the minds of many, represents the next challenge within the business information ecosystem.
Mind the Gap
Analytics were formerly the realm of MBAs and mathematicians in a finance department churning out numbers to create models and then distribute their findings to the top executives of the company. Then came business intelligence applications, and suddenly the responsibility shifted to a new group: Information Technology. When the business required some new report, IT would write the query or, if the technology did not exist, find the application and go live months later, usually long after the business opportunity passed.
At SAP, we have worked with customers to address today's analytical gap. Our customers keep coming back to three fundamental questions related to the use of business intelligence, enterprise analytics, and corporate performance management tools:
- How can we provide real-time insight across all functions of the enterprise in order to improve decision making?
- How can we align all operations so that they support a single set of strategic plans?
- How can we accelerate innovation and process improvement across our entire organization?
From these evolved the concept of mySAP ERP.
Blending Analytics into Processes
Enterprise analytics is the new definition of both the strategic and operational analytical tools delivered in mySAP ERP. As a result of this new design approach, mySAP ERP is set to redefine the traditional definition of enterprise resource planning software. The traditional concept of ERP as a means to improve business transaction flow still remains; however, SAP has enhanced that mission by taking advantage of Enterprise Services Architecture (ESA), which embeds analytical tools and applications within actual business processes.
With ESA you can decompose analytics, get them out of the back rooms, and put them right on the desktop. By presenting analytical information within the context of a business process, the end user can immediately react to the information and take the necessary steps to correct or optimize a work stream. More importantly, the notion of analytics as a tool for only the most advanced users of an enterprise is changing thanks to the newfound ability to embed KPIs, scorecards, and graphical reports into portals and Web interfaces oriented around individuals and their job responsibilities.
mySAP ERP combines SAP Business Intelligence and SAP Strategic Enterprise Management to deliver a powerful analytical platform for the core functions of an enterprise. With a single platform, companies can deploy a unified set of analytic applications and decision support tools for all aspects of their organization. Finance, human capital management, supply chain, and other corporate functions can take advantage of 45 groups of analytics and business process support using 750 predefined KPIs and information cubes through mySAP ERP (see Figure 1).
|One Platform Serving Multiple Needs
Moreover, analytics are embedded in every process flow managed by mySAP ERP, enabling users to access managerial reports and KPIs according to their role and function within the enterprise.
The advantages of this approach are clear:
- More pervasive use of analytics enables better decisions throughout the whole organization
- Role-based design allows only relevant information in the right level of detail to be presented to the end user
- A single platform simplifies the management of your IT environment
SAP Analytics for ERP
Companies that adopt an enterprise analytics strategy with mySAP ERP are afforded greater access to information and are able to align all functions of the enterprise around a single information set managed by SAP Business Intelligence. As a result, companies can spend less time finding information and more time using information to guide their decisions.
No longer is the CFO the only one who needs data and analytical tools to make better decisions. Accordingly, enterprise analytics provide insight across all operations and functions of the business. Here are some examples of how mySAP ERP can deliver value to multiple functions of your enterprise:
CFO can use mySAP ERP to efficiently manage strategy
and measure performance against strategic objectives,
increase shareholder value, reduce financial
risk and surprises with information visibility,
and integrate company finances with customer
relationship management (CRM) and supply chain
VP of Human Resources can use mySAP ERP to perform
real-time budgeting and planning, plan headcount,
and ensure individual performance measures are
aligned with corporate goals.
line of business managers can rely on mySAP ERP
to monitor procurement costs, analyze inventory
levels, dissect processes that influence cash
flow, or perform analysis on how to source direct
goods more intelligently.
Organizations around the world have been able to create value through the analytical capabilities of mySAP ERP. Here are just a few examples:
Analytics to Improve Financial Decision Making
Footwear and accessories manufacturer and marketer Cole Haan struggled to provide its financial managers the proper level of information to set budgets and monitor seasonal sales forecasts. The company wanted to integrate sales, inventory, budgeting, and forecasting information into a single model so that it could make better sales decisions each quarter. After implementing mySAP ERP, the company can now utilize historical sales information, inventory data, and forward-looking forecasts to set accurate sales targets by region and product type.
Analytics for Real-Time Human Resources Decisions
SABMiller, the number two brewer in the US, relied upon a complex network of 50 nonintegrated human resources systems. HR decision making was slow, and line managers could not always accurately predict how to staff their plants. By consolidating HR systems onto the mySAP ERP platform, the organization gained a single view of employee information. Now plant and executive managers are able to make real-time, same-day decisions on how to optimize staffing levels against production levels.
Analytics for Better Insight of Operations
RPM Technology can't afford to make mistakes when it comes to production planning. The Colorado-based, high-tech contract manufacturing company relies on accurate demand forecasting and supply chain analytics in order to optimize the razor-thin margins inherent in their industry. With mySAP ERP, RPM can quickly retool their manufacturing capability and ensure high-quality output by preparing for changes in demand before they happen. The platform also enables RPM to make smarter mergers and expansion decisions, and ensures they can meet compliance requirements as they grow their business globally.
mySAP ERP now combines the capabilities of SAP Business Intelligence and SAP Strategic Enterprise Management into a single platform that enables enterprises to realize the promise left behind by previous generations of corporate performance management of business intelligence platforms — the ability to effectively link strategy with operational execution.
As a result, with mySAP ERP, SAP has defined a new value proposition for companies that want to:
- Provide business users with faster, easier access to relevant information
- Foster innovation by sharing information across all layers of the business
- Improve business performance by enhancing decision making within every work stream of the enterprise
By bringing analytical capabilities to every desktop and embedding these analytics into all business processes, any employee can balance intuition with specific and appropriate insight and make a decision — the right decision.
For more information on enterprise analytics with mySAP ERP, visit www.sap.com/analytics and www.sap.com/erp.
Looking Ahead to mySAP ERP 2005: Enterprise Analytics in Practice
Among the new analytics to be offered in mySAP ERP 2005 will be the express planning process, which takes a user step by step through planning and budgeting for the next fiscal year. The advantage of this innovation is that a manager can plan for the coming year using sophisticated software that requires no training. The entire process contains embedded analytics that help the user by providing reports on the current state of the planning process, or compare projected costs against actuals for the current fiscal year, among other things.
The analytics accompanying this process can be configured to meet the individual needs of the company or of a specific role. They also can be replaced with other analytical services — for example, services specific to the budgeting process in asset-intensive industries, where planned data is primarily derived from maintenance plans and historic maintenance activities. Because the planning process is a model and not hard-coded, it makes configuration, changes, and modifications comparatively easy and cost-efficient, as well as invisible to the end user.
The following example of an express planning process, which has been taken from mySAP ERP 2005 early screen prototypes, is for a manager, who is presented with a linear, step-by-step process:
1. Review Current Situation — The manager reviews the master data to determine if the right equipment, employees, etc. have been assigned to their respective cost centers (see Figure 2).
|The Express Planning Process — Reviewing the Current Situation
2. Review Strategy and Targets — The supervisor then reviews the pertinent corporate strategy that applies to his or her area within the company.
3. Enter Goals and Tasks — After reviewing the strategy, the supervisor breaks the big picture down into specific objectives for his or her group.
4. Enter Planned Data — Once the preliminaries have been completed, the planning process begins. The user is presented a list of areas to address. In this example, the manager will be asked to enter plan data for employees, third parties, equipment, internal orders, other costs, and risks. If our manager selects "employees" (see Figure 3), he or she will be confronted with a list of cost centers that can be selected one by one, and from there presented with the projected FTEs (full-time equivalents) required to properly resource that cost center. There is also a spreadsheet that automatically calculates planned costs based on this data and shows the previous year's budget against the projected future budget.
|Entering Planned Employee Data
5. Review and Submit Planned Data — The manager can review all the plans and change any value if necessary (see Figure 4). Once completed, the plan can be submitted electronically.
|Reviewing Entered Data
6. Completed — The manager's plan is submitted to his or her supervisor and is now subject to approval or rejection. In case of rejection, the manager needs to revise the plan and adopt the required changes. This whole process is workflow triggered, meaning that everybody who participates in the planning exercise will always know what is required from him and when it is due.
1 For more information, visit www.kornferry.com/Library/Process.asp?P=PR_Detail&CID=357&LID=1.
2 According to
Gartner analysts F. Buytendijk, B. Wood, and L.
Geishecker, "Drivers and Challenges of Corporate Performance Management," Gartner,
3 Don Durfee,
'spreadsheet Hell," CFO IT (June 15, 2004).
Frank is a Solution Manager for mySAP ERP at SAP, having joined the company in 1998. Within this role, Andreas is responsible for strategic direction setting and business development of SAP Analytics for mySAP ERP. He holds a degree in Business Administration and Computer Science from the University of Mannheim, Germany.
Say is a Director of Solution
Marketing for SAP, responsible for
product strategy and marketing of SAP's
financial, corporate performance management,
and compliance solutions. Through his
work at SAP, Philip serves the needs
of over 26,000 global customers that
operate across more than 32 industries.
Philip earned his Bachelor of Arts
degree in Biochemistry and Molecular
Biology from the University of California,
San Diego, and a Masters of Business
Administration in Finance from the
University of San Francisco.