Unified database instead of silos: How integrated planning creates real added value

In the recent past, there has been a trend in business planning away from Microsoft Excel towards specialized planning tools. However, this development has often only led to local, poorly integrated subplans in companies. Today's technologies, on the other hand, offer the possibility of implementing modern, integrated business planning with a highly efficient driver-based planning model as well as flexible automation and simulation options.

White paper: Successful implementation of integrated business planning

Subplans are often not integrated

Depending on the industry, integrated business planning is made up of various subplans. Components can include, for example, sales and profit planning, operational expense planning, product cost planning, investment planning and balance sheet/P&L planning. For various reasons, these subplans are often implemented within different planning solutions (e.g. Microsoft Excel or different planning tools) and are only weakly integrated or not integrated at all. As a result, companies have to contend with redundancies, a lack of coordination, a great deal of effort to create the plans and a lack of simulation options.

Using SAP Analytics Cloud and business content for planning

SAP Analytics Cloud (SAC) is the suitable platform for implementing modern integrated business planning on a unified database. The “Integrated Financial Planning” business content provides the blueprint for the integrated data model, including a driver-based planning logic that links the subplans with each other. This results in the following advantages:

• The use of standardized business content as a basis for customer-specific adaptations reduces implementation costs.

• Standardization facilitates future maintenance and adaptation, as planning solutions that can be adapted quickly and easily are needed, especially in times of ever faster change.

• Integrated business planning is aligned with SAP's analytics and planning strategy. Planning in SAP Analytics Cloud can use SAP Datasphere as a data repository by integrating the SAC models and dimensions (“Seamless Planning”). This avoids redundancies and enables simple plan/actual reporting. Planning is thus integrated into the entire SAP Business Data Cloud (BDC) via SAP Datasphere and can use the data supply via data products.

• The business content can be used flexibly in all of these combinations (Seamless Planning, SAP Datasphere, SAP Business Data Cloud).

• Integrated business planning works ideally with financial accounting and management accounting in SAP S/4HANA. This ensures direct or subsequent integration with SAP S/4HANA.

• The creation of an integrated overall plan can be automated on the basis of a few driver variables and the underlying driver model.

• Automation and the driver model minimize the effort required to manually enter plan data.

• End-to-end simulations can be carried out with high performance. For example, the effects of an increase in sales volumes, prices and cost rates are immediately visible in the budgeted balance sheet/P&L at the touch of a button.

• The “Integrated Financial Planning” business content is integrated with planning solutions outside the SAP Financials area, such as SAP Integrated Business Planning (IBP) or SAP SuccessFactors.

In recent years, business planning has evolved from a purely financial dimension towards sustainability. Accordingly, greenhouse gas emissions planning is also part of the business content. It evaluates the quantity and value structures of the business planning with factors for calculating CO2 equivalents.

How modern integrated business planning works

The illustration shows how the subplans of integrated business planning typically work together and are implemented in the “Integrated Financial Planning” business content.

• Based on sales quantity planning, the required resources (material and service quantities) are calculated using a quantity structure (bill of materials, routing).

• Operating expenses are typically planned on cost centers either as fixed costs or variable with regard to the activity quantities.

• Variable expenses can be allocated between the cost centers via a quantity structure (internal activity allocation), while fixed expenses are allocated via allocations. Data integration with SAP S/4HANA makes it possible to optionally carry out the allocation in the plan in SAP S/4HANA in parallel to the allocation in the actual.

• Investments are planned, the resulting depreciation is calculated and transferred to operational expense planning.

• Product costs are calculated based on the quantity structure of the required materials and services and their cost rates.

• Profit planning compares the total product costs with the planned product sales.

• Product-related costs and sales are aggregated from profit planning into the planned P&L. The product-independent costs can be taken directly from the operational expense planning. The system uses correct debits and credits to ensure that no costs are transferred twice.

• The budgeted balance sheet can be derived in part from the income statement, asset additions are taken directly from investment planning and other items can be planned directly.

• Finally, a cash flow statement can be derived from the budgeted P&L and balance sheet using the direct and indirect method.

Conclusion: Implement NextGen Planning with the right tools

The combination of the powerful and flexible planning tool SAP Analytics Cloud with the best practice business content for integrated business planning provides the ideal basis for modernizing business planning. Possible triggers for this step could include the upcoming SAP S/4HANA implementation or the desire to increase efficiency in the planning process.