Change is afoot in the world of SAP Supply Chain Planning. Some of you might have heard the rumor – SAP APO is dead, and there’s some fancy replacement with an equally non-descript acronym that’s taking its place, one that promises faster performance and better usability.
Actually, there’s only one fallacy in that “rumor” – the part about APO being dead. That of course is completely false. The rest of it is true. There is a new evolution of APO out now called Integrated Business Planning (IBP, there’s that new acronym) that is being developed to help organizations make the transition from traditional supply chains to more customer-centric demand networks. What’s a demand network? Think of a fully integrated and aligned collection of capabilities (both internal to an organization and external in the form of partners) that are collectively focused on capturing and fulfilling customer demands as quickly and efficiently as possible. That’s a demand network. And that type of integrated orchestration requires a sophisticated planning platform to enable real-time decision making and visibility across the extended network, among other things. And that’s what IBP is intended to do.
However, as with any evolution, there is some confusion, fear and doubt in the marketplace. For example, current APO users are asking what happens now. Potential APO users are wondering if they should just sit this out for a while until the landscape seems more clear. And SAP competitors with their own solutions to sell are muddying the waters a bit with claims that SAP will discontinue all support for APO well before IBP becomes fully operational. So what’s the truth? Let’s take a look.
· Fact #1: SAP has not announced any discontinuation to standard support of APO, and has committed that at a minimum it will be supported through 2025. This provides current and future APO users with nearly 10 years of product support.
· Fact #2: as of today, IBP is not meant as a complete replacement of APO. It simply hasn’t been developed enough yet, and is lacking in some key functional areas. There are additional areas in which APO provides far greater capabilities than IBP right now. Today’s version of IBP is much more suited to complement APO or to be used stand alone in support of processes such as S&OP.
· Fact #3: SAP is actually still investing in APO. Recent developments include porting APO to SAP’s memory resident HANA platform (some customers have reported up to a 40% overall performance improvement and some processes reported 5 times faster). The APO UI has been improved, and new real-time supply chain analytics are also now available.
So based on these facts, here’s what I’m telling my clients when it comes to this whole APO/IBP issue. For those that are already using APO, I’m advising them to see if elements of IBP would complement their existing APO solution in key areas such as S&OP, scenario planning, demand sensing and multi-echelon inventory optimization, areas that typically deliver a lot of value and that IBP supports quite nicely. For those clients that are considering APO, the message is similar – depending on their process requirements, a hybrid solution of APO and IBP, integrated together, can provide a very effective and holistic planning solution that leverages the strongest capabilities of each.
The key is to develop a roadmap that is reflective of both process / organizational maturity and IT solution landscape, coupled with strategic supply chain objectives. For example, we worked with a manufacturing client last year to help them figure out what their APO/IBP roadmap should look like. For them – seasoned users of SAP ECC but with little experience with advanced planning capabilities – we recommended a phased approach that starts with IBP SOP to support an integrated S&OP process across their lines of business, as well as IBP Inventory to optimize stock levels across their network. We’ll follow this with APO Demand Planning and Supply Network Planning to support more sophisticated demand and supply planning processes. Finally, we’ll introduce Global Available to Promise to support advanced order fulfillment. The rationale for this approach is:
· It gets some quick wins in the high impact areas of S&OP and inventory optimization. This will allow the client to get momentum and confidence, and enable them to channel savings from these areas into the next phase.
· It leverages the capabilities that IBP and APO – in their current forms – do best and provide the most value.
· It balances the need to improve overall planning processes and capabilities with the ability of the organization to absorb change. Move too fast and you might overwhelm the organization with new tools, processes and org structures, possibly causing adoption issues. Move too slow and you drag out the value realization cycle. Each company has their own balance that should be reflected in their own roadmap.
So what might your SAP SC Planning roadmap look like? We at Capgemini would be happy to help you figure out your own path to supply chain planning success using APO and IBP. Just give us a call.