Introducing our CFIN+ blog series where TruQua experts cover topics relating to the future of finance transformation and best practices for driving value using the next generation of SAP finance solutions.
Authored by Marius Berner, Senior Business Analytics Managing Consultant, TruQua, an IBM Company
In Part 1 of this blog post, we discussed:
In Part 2, we will discuss some complementary tools which can enhance a Central Finance implementation by increasing both the information that can be leveraged and the flexibility for the overall performance management solution to be owned by business users.
SAP Analytics Cloud, or SAC, has evolved from primarily an analytics tool into SAP’s next-generation software-as-a-service (SaaS) solution to power the “intelligent enterprise” and allow business users to plan, discover, predict, and collaborate all in one place. While many longtime SAP users are likely familiar with SAP Business Planning and Consolidation (BPC) as a planning option, SAP is moving towards a cloud-focused planning strategy. Part of this includes seamless integration with S/4HANA architecture, not only on-premise, but also with S/4HANA Cloud. This is done by leveraging the virtual Core Data Service (CDS) views that sit as the underlying layer of the Fiori applications we have been discussing. Combined with the shift towards SAP Data Warehouse Cloud (DWC) as the next generation cloud-based data warehousing approach (versus BW or BW4HANA), SAP is aiming towards a cloud-focused platform architecture with SAC as a key focal point for planning and analysis.
Image 1: Example of a Gross Margin performance dashboard in SAP Analytics Cloud
SAC as a compliment to Central Finance provides a variety of advantages over simply using the latter in a standalone closed-loop performance analysis architecture. It provides more streamlined, strategic oriented planning capabilities that allow business users to take greater advantage of predictive analytics and simulation without IT intervention, at least at a high level. It also allows integration with a variety of data sources through both physical and virtual data access, expanding the scope of drivers and analysis axes outside of the data in S/4HANA alone. And compared to the creation of new reports and applications in Fiori, SAC provides a much easier experience for business users to create self-service analytics through “Stories.”
SAP Analytics Cloud includes features for running driver-based planning calculations off these drivers, predictive analytic modeling for identifying key drivers and modeling simulations, and allocations for running allocations on actual and plan data. While the table-based configuration provided for allocations is generally easier for a business user to work with than the configuration in S/4HANA, it has severe limitations with respect to the volumes of data it can efficiently process. You will see longer than ideal runtimes running an SAC allocation on a high volume of transactions or down to granular dimensions of detail. In addition, the table follows a very simple “sender->driver->receiver” format, with limited ability to customize offset postings, iterative cycles, or handling of unassigned items. Lastly, attempting to execute performance management allocations in SAC reveals a few integration challenges:
A Central Finance standalone architecture, or even one complemented with SAP Analytics Cloud for planning and analytics, can still struggle with more granular allocations of financial and operational KPIs or with providing a strong foundation for sustainability management. SAP Profitability and Performance Management (PaPM) provides a new generation of integrated performance management applications that can use and reuse existing information models from other SAP and non-SAP applications in the cloud or on-premise, providing an additional option for augmenting the architecture to close these gaps.
Image 2: SAP PaPM Cloud includes access to a visual modeler that makes it easy for business users to create powerful calculations without writing code.
Image 3: SAP PaPM includes a wide library of best practice content for building out ESG calculations and performance management scenarios
PaPM adds a lot of value when designing a performance management architecture that utilizes Central Finance deployments as the system of record. However, customers should understand that this is an additional license and should assess if their requirements are complex enough to justify that. The most pervasive drawback at present is that the integration with SAP Analytics Cloud isn’t as seamless today as it is with S/4HANA. Options for consuming planning data from SAC in PaPM today require either consuming it as external OData through an API (an option only available in PaPM Cloud but not on-premise), or pushing the SAC data into another system (for example, pushing the plan data from SAC into ACDOCP in S/4HANA and consuming it from there into PaPM calculations). Comparatively, accessing outputs of PaPM calculations into SAC for analytics is significantly easier. This can be done by connecting SAC to the BW (for PaPM on premise) or HANA (for PaPM Cloud) backend artifacts that are automatically generated when the PaPM functions are activated. Additionally, integration between SAC, Data Warehouse Cloud, and PaPM Cloud promise to become more tightly connected as SAP continues investing into the vision of the Business Technology Platform.
With these complementary solutions SAP offers; how does a customer ultimately determine what they do and don’t need to provide end-to-end performance management and analysis for their business leveraging their Central Finance deployment as the financial system of record? While there is no “one size fits all” answer, the following decision tree can help guide your assessment of these options.
Image 4: A sample decision tree to assess the complexity of your performance management scenarios and understand which set of tools may best complement your Central Finance deployment.
Additional factors will include the appetite for beginning to manage ESG KPIs in addition to financial and operational ones. Although custom performance management content and reporting could be developed for any combination of these solutions, the best practice accelerators available in PaPM mean that including it within the architecture will drastically speed your time to value in this area.
For more information about the complementary SAC and PaPM solutions, customers can visit the SAP Help pages. Customers can also access a range of own thought leadership publications and insight blogs from TruQua experience across CFIN, SAC, and PaPM implementations through their website.
Marius Berner is a business analytics senior managing consultant at TruQua, an IBM company, with eight years of experience designing, implementing, and delivering solutions for planning, budgeting, forecasting, analytics, performance management, and financial consolidations. Marius’s project experience ranges from end-to-end implementations, business/finance transformations, and process automation and optimization; his strong blend of functional and technical knowledge allows him to fill roles ranging from project management, business process and solution design, and technical configuration and development. Marius is a specialist in a variety of SAP technologies that support the FP&A process including SAP Business Planning and Consolidation, SAP Profitability and Performance Management, and SAP Analytics Cloud, and he is also the author of multiple blogs, webinars, and e-bites providing tips and expertise about these solutions.