Few can argue against COVID-19 being probably the single largest agent of change for businesses and markets across the globe in the last decades.
In general, organisations have been largely affected by reductions in sales, driving down revenue, profits and cash, liquidity issues and increases in unexpected costs and overheads, putting a squeeze on margins and profitability. This is evidenced in the latest publication from the Office for National Statistics on Coronavirus and the economic impacts on the UK, which analyses businesses’ responses to the ‘Business Impact of Coronavirus (COVID-19) Survey’.
Fundamentally, organisations are working tirelessly to understand their financial position and what decisions they need to make. Budgets – that took months to prepare, review and approve – have been turned upside down and, for most companies, they no longer reflect their current market situation.
The CFO and finance functions are now under pressure to deliver forecasts based on real time positions and predicted market conditions to determine the rebound and help shape company strategy for the ‘new normal’.
Most organisations lack the right planning toolset
In a continuously evolving situation, many organisations lack the flexibility in their current planning toolset to allow them to quickly generate and analyse budget simulations and scenarios.
Offline and disparate spreadsheet models still prevail, which are uncontrolled, error-prone, not visible to key stakeholders and require significant manual efforts on low value add activities and reconciliation.
In response, a Rapid Scenario Planning solution, delivered in SAP Analytics Cloud, gives organisations advanced planning simulation capabilities quickly so they can focus on making data-driven decisions and increase efficiencies.
Rapid Scenario Planning solution in a nutshell
A Rapid Scenario Planning solution enables organisations to quickly – within as little as five days – implement a solution that gives them the basis to rapidly create and analyse budget simulations for the areas of cost and revenue.
The solution uses SAP Analytics Cloud (SAC) and it is a pre-configured toolset for cost and revenue planning. It leverages standard business content enhanced with best practices for planning & forecasting, providing a robust yet simple solution for planning and simulations.
The solution takes advantage of SAP Analytics Cloud’s (SAC) two main pillars: Analytics (as the names implies) and Planning. Pre-configured stories translate in a quick deployment to any SAC tenant and, because it is a cloud-only application, customers that are not using SAC can request a tenant with various subscription options available.
Financial data is uploaded using flat-files, which allows organisations to take advantage of the Rapid Scenario Planning solution irrespective of their existing source system(s). Organisations using SAP S/4HANA, ECC or BW, could look to extend their solution by directly connecting SAC to their source systems to automate the data inputs – which can be delivered as an additional enhancement to the planning solution.
Now let’s dive a little deeper in the solution and, first, let’s have a look at the planning capabilities.
Rapid Scenario Planning with SAP Analytics Cloud – Planning Capabilities
The pre-configured and easy to use planning stories of the Rapid Scenario Planning solution support and speed-up the creation of revised budgets for cost and revenue, as well as simulations and scenarios.
SAC native planning features, combined with pre-defined drivers and calculations, allow users to take their existing budgets and transform them into a revised budget. Bottom-up and top-down planning are both possible, as well as the use of simulation drivers to, for example, model the behaviour of specific accounts or clients.
In addition, a simple to use version management allows to create and store multiple simulations, where users can test different hypothesis and provide answers to diverse what-if scenarios – for example, which clients/regions are more profitable? What would happen if prices or discounts change? What’s the impact of a reduction in overhead costs?, etc.
Rapid Scenario Planning with SAP Analytics Cloud – Analytical Capabilities
SAP Analytics Cloud combines planning and visualisation, and the Rapid Scenario Planning solution leverages SAC’s feature-rich analytical capabilities enabling users to gain deeper insights on their planning data and simulations.
The Rapid Scenario Planning solution comprises a pre-configured dashboard with Key Performance Indicators (KPIs) for cost and revenue. The dashboard that supports the solution has been tailored to aid the analysis of the various budget simulations by providing frequently used metrics for financial planning combined with graphical visualisations and multi-dimensional analysis. For example, variance analysis and version comparisons are available as part of this bespoke analytical dashboard.
The combination of planning and analytics in the same solution provide all the capabilities required to improve the decision-making process. By understanding the impact to key drivers, organisations can make decisions faster and act with confidence.
Rapid Scenario Planning with SAP Analytics Cloud – A Stepping-Stone
The Rapid Scenario Planning solution aims to provides the simulation and scenario planning capabilities required to Respond to the current situation. Looking ahead, in order to Restore and Rebound, the solution can be enhanced to build a full-fledged planning solution for budgeting and forecasting.
In our experience, by improving and automating Financial Planning and Analysis (FP&A) capabilities, organisations can achieve up to 50% reduction in cycle times and up to 30% increase in efficiency.
Companies looking to improve these capabilities, can leverage the Rapid Scenario Planning solution as a stepping-stone to develop a robust and automated financial planning solution in SAP Analytics Cloud. For example, it’s possible to integrate with S/4HANA and SAP BW or to incorporate hybrid planning scenarios with SAP Business Planning and Consolidation (BPC), amongst others.
The impact of COVID-19 to businesses and their operations has forced financial departments to revisit and adapt their forecast figures rapidly.
Having a toolset that rapidly allows simulations and analysis of different business scenarios is paramount to support decision-making process in what has become the new normal for business.