SAP Profitability and Performance Management Solution (PaPM) | Top 5 Things You Need to Know Now

For those who are unfamiliar with the terminology, PaPM is SAP’s rebranding of the Performance Management for Financial Services solution (previously known as FS-PER.) FS-PER was initially developed with a focus on the Financial Services industry and it delivered many functions out-of-the-box for funds transfer pricing, insurance valuations, and integration with SAP’s Finance and Risk Data Platform. However, the tool now has been refocused to serve a broader range of verticals outside of the financial services industry.

SAP Profitability and Performance Management provides a new generation of integrated performance management applications that can leverage existing data and information models from other SAP and non-SAP applications in the cloud or on-premise without the need to create additional data models.

Built on top of SAP HANA’s in-memory platform and leveraging the user experience principles of SAP Fiori, it is designed to run simply and comfortably for business users and provide real-time insights through guided configuration of business rules, the ability to quickly process large volumes of data, and the use of flexible simulation parameters.

In our previous post, we outlined five key features of FS-PER:

  1. Role-based user environments
  2. Built-in functions to read live data from database tables, views, and other applications
  3. A powerful, native HANA calculation engine for rapid processing of intensive allocation and calculation rules
  4. Flexible parameter sets for simulation and “what if” scenarios
  5. Built-in integration functions to write data back to HANA tables, BW InfoProviders, and SAP Analytics Cloud

These features are still very much part of the rebranded PaPM solution; however, SAP has also delivered new capabilities designed to frame the tool as a broadly applicable profitability allocation and performance management tool that can be leveraged in any industry (not just Financial Services).

Rich New Sample Business Content

Back when the solution was known as FS-PER, most of the sample business content that SAP delivered was primarily focused around scenarios for banking and insurance, such as funds transfer pricing and solvency management. However, in PaPM, the content base is expanded to focus on needs within other industries, such as:

  • Retail
  • Automotive
  • Mining
  • Engineering and Construction Operations
  • Industrial Machinery and Components
  • Transportation and Logistics
  • Consumer Products
  • Life Sciences
  • Healthcare
  • Utilities
  • Oil and Gas
  • Public Sector
  • Telecom

The content is designed to provide ideas and best practices for how to model scenarios in these different industries. Usage scenarios include:

  • Profitability and cost management and analysis by customer, product, channel, and route
  • Management of IT costs using standardized technology business management activity-based costing rules
  • Assessments and distributions of G/L level data using iterative allocation rules with traceability back to the original cost center/cost element
  • Agile planning and forecasting through driver based predictive and deep learning models
  • Supply chain and overhead optimization scenarios
  • Product/service/branch costing and pricing scenarios
  • Shared services costing scenarios

This content comes prepackaged and can be deployed and customized to fit a customer’s specific needs and achieve fast time-to-value when building complex cost and revenue allocation models to create the data foundation for flexible, high speed profitability analysis.

New Cloud Capabilities

In addition to the delivery of new content, PaPM is now available for cloud deployment:

  • The SAP HANA platform that supports SAP Profitability and Performance Management can be deployed on-premise for maximum control.
  • It can also be delivered from the cloud for fast time-to-value, or through a hybrid model that supports a variety of deployment scenarios.

Deployment Options

PaPM also allows easy integration with SAP Analytics Cloud and the Digital Boardroom by reusing the capabilities of SAP HANA and BW to support both live and imported data connections.

  • Allocations/calculation functions created in PaPM’s Fiori interfaces automatically generate Calculation Views in the native HANA database the tool is run on; SAP Analytics Cloud can connect directly to these views to obtain live access to the calculation results.
  • PaPM can also write the calculations back to BW or post the data back to FI-CO tables in ERP or S/4HANA; SAP Analytics Cloud can then connect to these results through InfoProviders or CDS views.

This connectivity allows additional planning and analytics to be performed on the detailed results of the cost and revenue allocation models.

Enhanced Allocation Functionalities

In PaPM, the Allocation function is used to model a range of allocations, assessments and top-down distributions, including step-down and iterative cycles. The core of the tool’s powerful use cases in profitability and performance management applications stems from the ability to leverage this function type to flexibly define detailed allocation scenarios that can be created with little to no coding, and it can execute on large numbers of records in seconds through the HANA calculation engine.

The capabilities of this function type are enhanced from previous versions. One such enhancement is the ability to include multiple rules (also referred to as allocation segments) using different filters and distribution bases within a single function, making it easier to maintain large environments.

papm allocations

Source: TruQua, Internal Systems

In addition, integration has been enhanced to allow synchronization with existing allocation configurations in an ERP or S/4HANA system. For the most common rule types, the Allocation function now allows you to carry out replication of existing allocation cycles using the new “FI-CO Allocation” allocation type.

papm allocations

Source: TruQua, Internal Systems

The controlling area and the allocation cycle can be selected from the source system, and then the “Sync” button can be used to replicate the cycle configuration with all its segments into the Allocation function, where the modeling user can then continue with further manual configuration (for example, sender and receiver input settings). That way, existing SAP allocation rules can be easily utilized in a Profitability and Performance Management application.

New Flow Modeling Function

As of SP01, PaPM has also introduced a new “Flow Modeling” function type, which can be used to produce a best estimate cash flow using a variety of rule types delivered by SAP to provide encapsulated, reusable logic for flow calculations.

papm flow modeling

Source: TruQua, Internal Systems

In this type of modeling, users will typically leverage one of the delivered calculation types and input various market and economic indicators are such as interest rates, currency rates, inflation rates and growth rates. Based on the inputs and the type of calculation chosen, PaPM will then output a best estimate cash flow (BECF) to attempt and describe the most likely future outcome.

The different types of BECF rules that can be leveraged for modeling can be found in the SAP Help page for the Flow Modeling function type:

New Process Flow and Audit Capabilities

Finally, PaPM has delivered some additional technical-oriented developments in past releases to complement the new business functionality and sample content. One of these new features is the ability to create, deploy, execute, and monitor Processes (a functionality common to many SAP planning solutions.)

papm flow capabilities

Source: SAP Help

The inclusion of this functionality allows users to create guided task lists with deadlines to help assign key tasks in a process to different users, and to track the progress of completing that process overall.

In addition to basic process flow capabilities, there are also new auditing capabilities to trace the changes made to models in a PaPM environment.

papm modeling history

Source: SAP Help

Once an environment is selected, a detailed list of all changes to the environment, functions and fields are displayed on the right-hand side of the screen. It is also possible to restore older versions of an environment, function or field.

By rebranding FS-PER as Profitability and Performance Management (PaPM), SAP is making an effort to expand the target audience of the solution outside of organizations in the financial services industry, and now presenting it as a generic profitability allocation and analysis tool that can be leveraged by companies in more verticals.

To further this effort, SAP has developed a lot of powerful sample content, covering a multitude of different industry use cases. SAP has also further developed the tool’s integration capabilities with other solutions such as S/4HANA and SAP Analytics Cloud, allowing it to easily plug into a variety of planning and analytics scenarios.

This integration has been primarily achieved by enhancing the built-in function types in PaPM, while still keeping them user friendly enough that they can be executed without heavy coding or IT involvement.

For organizations looking to build powerful performance management applications that can be configured quickly and integrated into their existing landscapes, PaPM is a powerful option for achieving this.

For more information about PaPM and how it can help your business, fill out the form below and we will contact you soon.

*Post based off information as of version 3.0 SP02



SAP FS-PER Blog Series: Part 1- An Introduction to the Latest Capabilities in SAP FS-PER for Performance Management

Authored by Marius Berner, TruQua

 

This blog will be the first in a series of five blog posts which examine the benefits and use cases for SAP’s FS-PER solution. Blog posts within this series will cover:
  • An overview of the solution as well as the key benefits FS-PER provides
  • Steps to aggregate and enrich data into FS-PER from SAP and non-SAP data sources
  • Tips to define and configure flexible allocation rules and calculation functions in FS-PER
  •  A process to define and run simulations on your data in FS-PER
  • How to write allocated data back from FS-PER into other applications

Why are leading organizations moving to FS-PER?

SAP’s FS-PER is an application designed to facilitate performance management through allocation, simulation, and analysis, and can provide organizations with the following benefits:
  • A user interface that is built according to SAP Fiori design principles
    • Provides role and activity-based functionality and can extend to fit into the standard Fiori launchpad for SAP apps.
  • A reduction in data redundancy and the need for reconciliation
    • Reads input data directly from a variety of source systems (with no hold of persistent data required)
  • The ability to process large volumes of data in a matter of second
    • Using the power of HANA, the allocation logic can be pushed down to the database layer
  • Ease of use for the business user
    • FS-PER allows for the simple configuration of complex calculation models with limited intervention from IT
  • Flexible simulation parameters
    • Enables the user to quickly perform real time “what-if” analyses to support an iterative configuration and testing approach
  • Calculation results can be written back to a permanent data store
    • Allows processing in other applications if required

5 Key Features of SAP FS-PER

1. Role Based User Environments

FS-PER is organized into Environments into which business data is aggregated and enriched to support complex allocations, calculations, and simulations.
  • Users with a Modeling role can define the data model by can creating, changing, or deleting calculation models and functions
  • Users with an Execution role can run the various functions in the calculation models, as well as change the values of certain parameters to run simulations and “what-if” analyses
  • Users with an Analysis role can use the model by creating and running reports to analyze the results
2. Data Modeling Capabilities
FS-PER pre-delivers a variety of function types to combine information from surrounding systems into a comprehensive data model. Within FS-PER, Read Access to source data can be configured through:
  • On-the-fly SQL based access to database tables and views directly from the HANA database or from remote tables and views in other databases (using HANA Smart Data Access).
  •  If permanent network read access cannot be achieved for the desired source data, temporary data stores can be created to replicate data to provide permanent high-speed access for use in calculation models.
 There are also a number of pre-delivered function types that can be used to group, reformat, and enrich the source data. Once data is read into FS-PER and logically grouped, it can easily and effectively be utilized for various modeling scenarios through the power of the application’s native HANA calculation engine.
3. Calculation Engine: Process Complex Allocations/Calculations with the Speed of HANA
FS-PER is built natively on the HANA database, allowing it to completely push code down to the database layer, fully leveraging HANA’s in-memory capabilities when running calculations. The calculation engine is able to process high volumes of granular data records in short period of time as the logic is executed directly in SQL Script.
FS-PER is packaged with several pre-delivered function types for executing a variety of allocation and calculation scenarios. The flexible configuration includes built-in step-by-step roadmaps to guide users through the building of complex calculation models with minimal IT intervention.

 

4. FS-PER as a Simulation Application
Execution users are able to use configured templates for “Input Sets”, “Output Sets”, and “Run Sets” to adjust the values of certain parameters when running calculations. For example, an Input Set can be used to simulate different values for cost rates (IT, HR, Material, etc).
Each function run also provides a built-in drill-down to trace results all the way back to the source.
In addition to simulating and analyzing data directly from the function execution, FS-PER also allows users to orchestrate reporting according to predefined formats and structures.
5. Write back from FS-PER to other applications 
Once source data has been read, aggregated, enriched, and manipulated in FS-PER, we can permanently transfer the results to other applications by writing back to :
  • HANA tables
  • SAP BW InfoCubes or DataStore Objects
  • Predefined Results Data Layer areas (specific to SAP’s Insurance Analyzer and Bank Analyzer solutions)
  • SAP’s future roadmap also anticipates expansion of FS-PER’s write back capabilities to support additional integration scenarios for SAP Analytics Cloud.

Conclusion:

In conclusion, FS-PER is positioned to provide SAP’s customers with a powerful new option for building performance management models, providing customers with a number benefits including:
  • Real time access to source data without the need for Data replication
  • Full transparency of costs down to the individual line item level
  • Flexible configuration and calculation capabilities that empower business users with minimal IT intervention
  • Powerful simulation capabilities that allow for an iterative configuration and testing approach in real time
With these capabilities as well as SAP’s continued investment in the products integration and write back capabilities, FS-PER will only grow to be more effective as a tool to help companies analyze and control their costs and profit margins.
For more information on the latest functionality in FS-PER or an exploratory call on what an implementation would like within your organization, contact us today at info@truqua.com.

 

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