Expanding Scenario Analytics Capabilities by Leveraging SAP Data
Nearly 30 years ago, companies began the process of retiring custom legacy systems in favor of an end-to-end, integrated system that could manage all of their important business data. With ERP tools like SAP and this integrated approach to maintaining data, these companies vastly improved their ability to generate financial statements that accurately reflected their performance.
As time passed and the business landscape became increasingly more global and competitive, business leaders needed access to information that could provide ideas on how changing conditions, both internal and external, would affect their company’s performance. The value of reporting past activities diminished in importance as these business leaders wanted to answer the question “What will happen next week, next month and next year?”.
At its core, SAP is a transactional system that is capable of managing massive amounts of financial and operations data. While this capability is important for recording activities and reporting results, it is limited in its ability to provide true analytical tools, especially in the areas of costing and profitability.
With today’s focus on forward-looking planning and analytics, companies are often challenged when it comes to answering what-if scenario questions. The first approach for most companies is to determine what analytical capabilities are available through SAP. And while SAP certainly has many analytical tools, often the time, money and resources required to make them operational is not practical. Companies will also attempt to create work-arounds by generating fictional products, BOMs, and routes to use for analysis, but this approach causes lots of problems with data maintenance and integrity as well as system performance.
Next, companies turn to business intelligence and reporting tools for help with scenario analysis. These systems are very adept at pulling together data from different parts of the organization, but they are not capable of “calculating” a result based on changed inputs or assumptions. True scenario analysis allows you to re-calculate and restate the entire data set once a change is made.
The final approach – spreadsheets – is equally challenging for scenario analysis for a completely different set of issues. Spreadsheets are readily available to anyone with a laptop, but they are impossible to track, prone to errors and inconsistencies, and limit collaboration. According to Deloitte, nearly 35 percent of spreadsheet users are fully aware that the spreadsheets used to run their businesses’ most important processes have errors. Also, spreadsheet analytics rarely have the sophistication to include every assumption and data point needed to perform a true comparison.
What companies need is a way to unlock the potential of their data using the granular, transactional data from within their SAP systems as a basis of advanced scenario analysis and planning activities. By using a tightly-integrated, external financial modeling platform, SAP users can leverage their data to create a forward-looking analytical models that can run an unlimited number of scenarios.
With this approach, business leaders can:
(1) Access one version of the truth: To reduce errors and expand the reach of critical data, create an environment where everyone works from the same information. A financial modeling platform makes it possible to centralize data from SAP, finance, operations and database systems.
(2) Eliminate manual processes and improve productivity: Building integrated models that connect with SAP reduces the number of manual tasks by connecting data sources, creating workflows, and automating tasks.
(3) Reduce time and resource commitments: The cost of customizing SAP often outweighs the ability to derive value. By creating an external modeling environment that is tightly-integrated with SAP provides the best of both worlds – a rapidly implemented solution managed by business users without significant investments in IT expenses.
(4) See clearly into the future: Ad hoc spreadsheet analysis is only as valuable as the assumptions made and data included. With an integrated modeling platform, it is possible to see the effect of adjusting any variable using the same assumptions, calculations, and base data as SAP.
World class organizations need a solid view of their past, as well as tools to help them see into the future. By leveraging financial and operations data from SAP within a fully-integrated, end-to-end financial modeling platform, business leaders can gain access to valuable planning and analytical capabilities designed to provide a view of the future.