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

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.

Conclusion

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 http://help.sap.com. For more information on Powersim, visit www.powersim.com.

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.