BOOST ENTERPRISE PLANNING

with SAP IBP & SAP Analytics Cloud

PUBLIC
 What is PLANNING?

Why is PLANNING important?

How to enable PLANNING?

Jay Foster Robert Kepczynski Alecsandra Dimofte

SAP - Director, IBP Solution Management E&Y - Director, Supply Chain Operations SAP – Product Manager, SAP Analytics Cloud
 WHAT DOES ENTERPRISE BUSINESS PLANNING (EBP) LOOK LIKE?

Strategic Enterprise Business Planning:

• Markets / products
• Investments / projects
• Long Range
• connects planning processes
to cover whole planning
Financial horizon from short to long
 Budgeting / reporting / ROA term
 Cash for operations
 All time horizons
• manages different granularity
needs
S&OP/IBP
 Financial alignment /commitment to marketplace
 Technical feasibility • considers volume and value
 Mid to long term time horizon

• deploys business strategy

Operational Planning & Execution through planning to
 Manufacturing / Distribution
 Transportation / Warehousing
execution
 Short term inside and up to cumulative lead time

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 RELEVANT PLANNING HORIZONS FOR EBP

0-12W 3-24M 2-7Y

Dimensions Frequency
GROWTH

Annual STRATEGIC PLANNING

(Platforms / Technology, SC&O assets, CAGR)

FIN GOALS, PERFORMANCE

Annual/ Quarterly/ FINANCIAL PLANNING*

Monthly
(Budgeting, Financial planning)

PROFITABILITY

Monthly INTEGRATED BUSINESS PLANNING*

(product-demand-supply- reconciliation-management business review, P&L)

SYNCHRONIZATION,LEAN FLOW

Weekly OPER.PLANNING &

Daily
EXECUTION

* Financial planning and IBP should be combined to leverage synergies in processes,

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stakeholders, objectives and technology.
4
 WHY IS EBP SO IMPORTANT?

Drivers Benefits
Revenues impacted through poor customer service 10%-50% 2%-15% 10%-30% 5%-30%
and lack of product availability Service Sales increase Cash cycle EBIT

Effectiveness
improvement reduction increase

Inefficient working capital: excess, slow and

obsolete inventory
20%-27% Up to 25% 10%-50% 10%-30%
Forecast OEE / On-time Inventory
Competing priorities challenge the ability to accuracy Productivity delivery reduction
balance resources against demand improvement improvement increase

EBP

Efficiency
Product launch misalignment to customer needs 15%-35% x2-x5 80%-90% 10%-30%
and slow time to market E2E planning Faster financial Data New product
automation forecasting reconciliation time to market
reduction reduction
Competing, misaligned performance metrics by
team / function

Alignment
Customer Harmonized Standardized Reliability to
satisfaction processes and KPIs the aligned
focus open trust plan
Multiple sources of truth driving key business culture
decisions

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 HOW EBP CONNECTS TIGHTLY VOLUME AND VALUE PLANNING

Annual (Strategic) and Monthly (S&OP/IBP) planning are connected Rolling monthly IBP considers past and is combined with
integrated plan in P&L structure
Strategy Budget Revenue stream products EUR 165.000

Phased overhead Revenue stream services EUR 30.000

Driver
Input budget Baseline Revenue stream licenses / other sources EUR 10.000
Range & Market input for
Lean Fin. Forecast Commercial provision EUR -12.375
Planning Sales/GM
1 2 Total Net Revenue EUR 192.625
Key Sales,
Target 6
financial Supply,
Break- Supply, Write off Provisions EUR 6.000
Metrics GP
downs
Direct Materials/Transformation EUR 80.000
SC&O/Network
Capability planning 3 Direct Labour EUR 17.500

Integrated Business Planning Distribution & Logistics EUR 30.000

Manufacturing overheads EUR 10.000
Management Business Review Indirect labour EUR 5,000
Baseline Machine depreciation EUR 5.000
GP Scenarios 5 input
Total COGS EUR 143.500
4 Reconciliation
Product Review 1 Gross Profit EUR 49.125
Supply & Inventory 4
Cost Phase in/out Gross Margin 26%
3 Supply Review Sales & ops Demand Review 2 Selling expenses, G&A expenses, R&D expenses EUR 40.451
6 EUR
Operating Expenses 40.451
Annual Strategic process Monthly IBP with financials process Operating Profit EUR 8.674
Operating Margin 5%
Integrated Business Planning Dimensions
Fin items loss, gain, taxes, other expenses EUR -1.801
Volume Value Assumptions
6 Net profit EUR 6.873
Gap to last fin. fcst. / 5 Net Profit Margin 4%
Revenue Cost Gross Margin
budget
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 HOW EBP ONE CALENDAR INTEGRATES SUPPLY CHAIN, COMMERCIAL AND FINANCE

4 MDs 5 MDs 5 MDs 11 MDs 6 MDs

02.10 05.10 06.10 9.10 10.10 14.10 15.10 19.10 20.10 30.10 31.10 05.11

Flash Core Package Enhanced Package Performance (Management Report) Performance (Review Meeting)

Publication of
quarterly Reports

Management BS/ P&L

Product Review Demand Review Supply Review Reconciliation Release review & comment
Business Review Planning + Derivates
01.10 05.10 6.10 9.10 10.10 14.10 15.10 16.10 17.10 19.10 20.10 25.10 26.10 30.10 31.10 05.11

4 MDs 5 MDs 2 MDs 3 MDs 6 MDs 5 MDs 6 MDs

Build P&L and Quarterly statement through IBP + Lean Fin. Forecasting process steps

Backward schedule IBP review meetings from Quarterly Financial Reporting and Financial Forecast submission dates

Financials Financial SC & Commercial

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 EBP ENABLED WITH SAP IBP AND SAP ANALYTICS CLOUD

PREDICT PLAN
Out-of-bound
Events External Events

EXECUTE CONTROL

Sales & Operational Planning BI & Predictive

Demand Planning &

Budgeting & Planning
Forecasting SAP Integrated SAP Analytics Cloud
Business Planning for planning and
for SC planning analytics
Inventory Planning &
Collaboration
Optimization

Supply Planning & Optimizer,

Analytics App Designer
Order Scheduling

OPERATIONAL SYSTEMS

S/4HANA ERP CRM HR …

Treasury xlsx Production / Logistic Execution

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HOW EBP PROCESS MODEL COULD LOOK LIKE

Strategy Budget No Process step objectives SAP IBP SAC

Phased
Driver overhead 1 Manage portfolio lifecycle, connect stage gate process, effectively manage
Input budget usage of segmentation to increase planning effectiveness
Baseline
input for
Range & Market
Fin. Forecast Sales/GM
Planning
Key 6 2 Align commercial, marketing, finance, demand planning function on demand
Target
financial streams predictions, monetize product , services and commercial fin. Items.
Break- Fin. items, P&L
Metrics Agree volume and net revenue plan
downs

SC&O/Network B
Capability planning Enterprise
Performance 3 Provide supply plan for internal and external resources, ensure inventory
Overview levels and optimize utilization of asset, plan costs and cost elements which are
fixed and variable
5
Management Business
Review
Baseline
Scenarios 4 Align functions on volume and value plan with risk and opportunities exposed
input
4 P&L in proceeding steps, create full view (actuals plus plan) per scenario and
1
propose most profitable ones for decision making
Integrated
Integrated
Business Product Review
Reconciliation
Planning 5 Decide on scenarios prepared in volume and value, assess business risks &
Inventory Phase in/out opportunities, validate assumptions, allocate resources to operationalize plans.
3 Supply Cost 2 cascade decisions

Supply Review Demand Review B Provide analytical insights to whole company performance and respective
Projected Sales functional areas. Enterprise performance overview → big picture analytical
overview of company fin. status based on latest integrated business plan
combined with fin. forecast
Annual Strategic process
6 Complement volume and value integrated plan with financial items required to
complete full P&L refresh. Prepare all financial reporting based on month
Monthly IBP with financials process closing and aligned prediction from A.1 to A.5 steps.
 WHAT EBP SOLUTION COULD CONSIDER

SAP IBP Demand planning SAP IBP Supply planning SAC Scenario planning with driver tree impact on COGS planning
Key Features:
1. Statistical forecasting
and machine learning
for volume predictions
and sensing
2. Heuristics and Supply
optimization
3. Driver trees to model
SAP IBP New Product Intro. planning SAC Revenue planning & analytics
forecasting business dependencies
4. Predictive functions in
value planning
5. Revenue, Cost, Gross
profit planning
connected to volume
planning
6. Integrated planning
SAC Gross profit gap to budget SAC Scenario planning with full P&L impact generating full P&L
management 7. Full blown analytics
SAC Performance waterfall for full P&L capabilities
8. Native integration
between SAP IBP and
SAP Analytics Cloud and
S/4

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 Thank you.

Jay Foster Robert Kepczynski Alecsandra Dimofte

SAP - Director, IBP Solution Management E&Y - Director, Supply Chain Operations SAP – Product Manager, SAP Analytics Cloud