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Planning & forecasting on SAP: 5 ways to boost productivity

March 7, 2007

Planning is a critical component of performance management. Effective planning tells you what you should be doing to react to shifting markets, to seize emerging opportunities, and to maximize the return on your investment in resources.

With SAP, you have a strong ERP foundation for storing and organizing the transactional data needed for operational management.

But your planning productivity is largely determined by how well you leverage and extend that foundation to focus on the planning activities that really matter.

Time spent chasing data, redesigning financial models, or reconciling spreadsheet inconsistencies won't reap the benefits that accrue from well-executed "what if" analyses geared toward the effective management of risk and opportunity.

Customers that have leveraged and extended their SAP investments with IBM Cognos 8 Planning – the planning component of the Cognos Performance Management system – report significant gains in productivity.

Here are five of the ways they say that Cognos on SAP has helped them plan more productively.

1. Enable self-service planning for faster reaction to change

To plan productively in an environment characterized by constant change, Finance must be able to develop and refine financial models quickly, matching internal cycle times with faster-paced market cycles. Waiting for IT to do it kills productivity.

Before implementing IBM Cognos 8 Planning, SAP customers tell us that model creation required specialized technical skills and involved building and managing special InfoCubes and relatively fixed hierarchies and dimensions.

Finance was dependent on IT for model creation, and tied to IT schedules for managing changes associated with evolving plans and business models. The planning process just wasn't timely or flexible enough to keep up with the speed and volatility of their business environment

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With IBM Cognos 8 Planning, the planning process is fully owned by the Office of Finance. Self-service model creation and report authoring reduces the time lag between questions and answers, requirements and solutions.

Planning cycles are shorter and more accurate, freeing the Office of Finance to be more proactive in their reporting and analysis. Finance can respond quickly to changing conditions and make faster, better decisions.

Swedish insurance company Folksam®, for example, once spent 60 percent of its planning time collecting and consolidating data from SAP R/3 and other sources, and only 40 percent actually using the information for planning.

Implementing IBM Cognos 8 Planning enabled it to change these figures to 15 percent collecting and consolidating and 85 percent focusing on productive, future-oriented work.

2. Implement flexible "what if" capabilities for competitive advantage

Another key component of effective financial planning is the ability to recognize inevitable uncertainties, and to use them to provide decision makers with well-defined options. Only then can they take advantage of emerging opportunities as situations become clear.

To do this, planning models must be able to accommodate ad hoc information designed to explore specific potential opportunities or to manage possible risks. They must also be capable of reusing information in different ways to match resources around market opportunities.

Well-defined SAP data hierarchies are ideal as a baseline for assembling the nuts and bolts that make up these sorts of flexible models and plans. But focused as they are on the current state of affairs at the transaction level of detail, and on a predefined, serial approach to using data, they are only the starting point for generating flexible "what if" scenarios.

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Plans, which are typically executed at different levels of granularity than transactions, require the flexibility to quickly adjust that level of depth to model future or alternative scenarios. They must not be restricted by the here and now.

IBM Cognos 8 Planning leverages SAP data hierarchies and goes beyond them to provide the flexibility that planners need to be agile and create competitive advantage.

This sort of agility is used to advantage by Quick, Europe's largest fast-food chain. When their franchise restaurants are up for renewal, IBM Cognos 8 Planning on SAP enables them to quickly evaluate and compare four or five operating modes to determine the most profitable for future operations.

3. Ensure completeness and inclusiveness to get the full picture

Effective planning is based on all of the data from all available sources, including multiple SAP instances and versions. And, whether they are contributing planning data or basing decisions on their understanding of planning goals, people throughout the organization must buy into and participate in the planning process to ensure that it leads to the desired outcomes.

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United Biscuits, a leading European snack manufacturer, knew this when they chose Cognos, an IBM company, to leverage their central SAP system and put in place plans to meet ambitious growth and profitability targets.

They realized their existing "bottom up" approach to planning, which left managers swamped in detail and unable to gain a high-level view of the business, wouldn't enable them to achieve the results they wanted.

With Cognos, they are able to collect data from multiple sources and locations and combine "bottom up" and "top down" planning to provide everyone in the organization with a clear picture of where they stand and how to get where they want to go.

IBM Cognos 8 Planning integrates data from any number of heterogeneous sources, including structured data from HR, manufacturing, and financial systems; external industry data that provides competitive metrics; and unstructured data that includes rationalization for resource allocation.

As a result, widely dispersed participants in the planning process can contribute the data needed to create accurate plans. And those participants can benefit from an organization-wide, single version of the planning truth that enables them to do their part to meet overall planning goals.

4. Provide immediate impact while maximizing long-term benefits

Cognos customers with SAP are typically large organizations. Like many Cognos customers, they have diverse and varied planning needs, including those shown in the following graphic.

Top planning areas, from a survey
of top 75 best-practice Cognos customers

*220 planning applications across 75 companies.
Each company has at least one finance implementation.

These customers often want to start their planning solution with a single project in Finance where effective planning will have the greatest immediate impact – for example, in the area of headcount and compensation – and then expand it to include other areas of planning.

As with all the components of the Cognos Performance Management system, IBM Cognos 8 Planning takes a modular approach that facilitates this. Finance can select the most critical process for improvement – whether that is profitability, scenarios for revenue or Human Resources, or financial scorecarding or dashboarding – and implement it immediately.

You can then expand your planning and related performance management capabilities by adding modules to encompass ever-increasing portions of the operations.

You can also bring in IBM Cognos 8 Business Intelligence to extend the reach and impact of your planning results by monitoring progress against plans.

This integrated, modular approach means that the Office of Finance can use SAP and other data to address immediate pains quickly, with minimal investment risk, and then expand the solution to address more and more of their planning requirements.

5. Follow proven practices from an industry leader

SAP customers use IBM Cognos 8 Planning to leverage their information infrastructures in a variety of ways. But each of them chose Cognos because they wanted a proven, independent planning solution from an industry leader, and they wanted to be able to use that solution quickly and effectively to meet their planning goals.

As a market leader with proven success across all industries, Cognos realizes that improving an organization's performance through effective planning means following proven practices in both technology and methodology.

Cognos makes doing that easy, by providing Performance Blueprints that enable organizations to apply proven best practices quickly, with less risk and without having to "reinvent the wheel."

Unlike ERP systems, which focus on transaction management, industry-leading Cognos technology, combined with proven best practices, helps focus planning in the most productive ways and reduce the total cost of ownership of your planning solution.

A leading communications firm, for example, implemented IBM Cognos 8 Planning quickly on their SAP infrastructure. By customizing the IBM Cognos Capital Expenditure Performance Blueprint to fit their Capital/Depreciation expense planning requirements, they were able to create best-practice plans in a fraction of the time it would otherwise take.

Their success in applying proven practices in the areas of capital and depreciation has prompted them to turn to additional Performance Blueprints to facilitate their other planning applications as well.

To manage your performance, start with effective planning

Performance management on any infrastructure begins with the kind of effective planning capabilities that IBM Cognos 8 Planning provides.

Our SAP customers have found that IBM Cognos 8 Planning has enabled them to spend less time on the unproductive aspects of planning and more on the activities that really matter.

They apply their efforts in ways that help them leverage and extend their SAP investment with focused planning for faster, better decisions and increased productivity.