SAP BPC Online Training from KMR

SAP BPC OVERVIEW
BY

KMR Software Services

http://www.kmrsoft.com
Email : info@kmrsoft.com
Ph: +91 9966003349
Skype : KMRSS.SAP
SAP Trainings by KMR Software Services Pvt Ltd. Email :
info@kmrsoft.com / kmrss.bpc@gmail.com

Planning & Budgeting with SAP BPC

SAP Trainings by KMR Software Services Pvt Ltd.
Email : info@kmrsoft.com / kmrss.bpc@gmail.com

Agenda
Introduction of SAP BPC(EPM 10 NW)

Fundamentals of BPC
BPC Architecture & Administration
Reporting in BPC
Integration of BW to BPC
BPF, Work Status


How BPC evolved?
In 2004, SAP decided to create a next generation planning solution called Integrated
Planning (BW-IP), which would be the successor of BPS. It looked like it would be a strong
solution. However impressive , the technical advantages of BW –IP only solved part of the
equation; the reality was that many businesses were growing tired of IT departments having
to own and maintain planning and consolidation solutions with IT support, not ownership. In
2007 SAP formed a new organization focused on the business user. So a Enterprise
Performance Management team was launched under this area to address the needs being
expressed by the CFO suite. So EPM team evaluated potential acquisitions that had the
desired ease-of-use and simplicity, and discovered them with OutlookSoft. The user
environment was native Excel, which Finance users live and breathe by.
Members of OutlookSoft and SAP were summoned to SAP headquarters in Walldorf. A
business scenario was created and two teams were formed. The first was SAP and included
BW experts, ABAP developers, web application development members and finance
personnel. In the other corner was the OutlookSoft team made up of a couple finance users
with no data warehousing or development skills. The two teams split up and started building
their planning applications using the two different solutions, BW-IP and OutlookSoft. After
thirty minutes, the OutlookSoft team came back with the completed application; it took SAP
team over six hours to build the same application using BW-IP. This sealed the deal within
SAP and the acquisition of OutlookSoft gave SAP the best user experience in the
industry, planning and Consolidation in one product. The rest is history.

Concepts of Planning
Planning : It involves thinking ahead and formulating a set of activities
you will execute in future; in other words, it is the process of modeling
or projecting future business activities. It is on high level.
Budgeting : It is the process of allocating resources once the planning
process is approved and accepted by the company’s management. It is
on detail level.
Forecasting : It deals with the realization of the plan, and is used as a
monitoring mechanism to facilitate the success of planning. Business
environments do not remain the same – what was planned yesterday
may not be same today. It is done during the course of the current
budget year with a key objective to provide visibility on the current
state of the business in a timely manner so that corrective action can be
taken when there is significant difference between the current state of
the future and what was planned for during the planning process.

“People do not plan to fail, but they fail to Plan”.
 The planning, budgeting and forecasting concept is critical to the
success of the corporation. Common error is the fact that they
didn’t plan enough and didn’t plan proactively.
 Its very difficult to plan, budget, or forecast in an accurate, timely
and consistent way.
 Planning is not like consolidations, where someone else (GAAP or
IFRS rules and regulations from the government) is telling you how
to do it and when to do it, the consolidation process.
 Planning process is done on its own and is somewhat unique to the
different industries.
 Planning process is the lifeblood of the short-term and long-term
revenue stream of a corporation and the overall income/expense
process within a corporation.

Concepts of Planning - Planning Horizon
The Planning horizon determines the time frame for planning. Planning
horizons are divided into
Short Term Planning:
The planning time frame in short term is usually a year or less. Business
use this when it has clear cut goals such as cutting costs, increasing labor
productivity by freezing new hires and effectively training the work force.
Medium Term Planning:
It covers a period of one to three years. Business uses this when it
plans to increase market share in a particular segment of the business.
Long Term Planning:
When the duration of planning exceeds more than three years. Business
uses this when there is a long gestation period between initial investment
and final realization of sales and profits especially in Manufacturing
industries or Infra Structure industries.

Concepts of Planning - Planning Types
Operative Planning:
It is used for short term and is generally conducted at company’s
operational level. It rely on a bottom-up planning approach.
Employees at the bottom level of the hierarchy may be a part of the
planning process to make it successful.
Tactical Planning:
It is associated with planning for the medium term and is generally
conducted at company’s divisional level. Company’s Mid level
management plays a vital role.
Strategic Planning:
It is associated with the planning for the long term and is generally
conducted at the Organizational level. Company’s Management
usually plays a major role in this type of planning.

Concepts of Planning - Planning Types


Concepts of Planning - Planning Areas
Planning is a generic function applicable to all area of business.
Finance:
 Liquidity Planning : focuses on planning for maintaining optimal cash flow to be
able to run the business. For AR and AP estimation.
 Cost Center Planning : is done for operational, non operational, and capital
expenditure costs the company will incur at various cost center levels.
 Asset Planning : is concerned with the planning for the purchase of new assets
and the disposal and maintenance of existing assets, based on the company’s
objective.
 Profitability Planning : determines profitability by identifying sales revenue and
costs that will be incurred in the future.
Production: how much to produce and when and where to produce it in order to
meet the market/customer demands. Variables such as seasonal
behavior, geographic demand are considered when planning for production.
Human Resources: This area of planning is especially important in industries that
require large numbers of employees and where specialized skills are required for
realizing the objectives of the business. Costs associated with it has direct impact
on the financial planning.

Concepts of Planning –
Common Scenarios for Planning in Business






Gross Profit Margin Planning
Profit & Loss and Balance Sheet Planning
Investment Planning
Labor Planning/HR Planning
Sales Planning

Considerations in Planning:
 Importance
 Skills
 Internal
 Data
 Governance
 Communication
 Monitoring
 Planning Method
 Participation

Planning Execution Time Frame


Integrated Planning


What Problem Are We Trying to Solve?
The Gap between Execution and Strategy

Today, companies struggle to bridge the gap between strategy
and execution to optimize their business performance.

Strategy disconnected
from operations

Decisions made
without context

Strategy / Vision

Information locked
in storage

Execution

Misaligned action
across organization


Examples and Typical matters
In practice, key issues

of the process could be summarized as follows:

Strategically disconnected:
a great number of companies report
have no link or weak link between the
strategy and the budgeting process

Slow:
a large number of organizations have not
a single tool supporting the budgeting
process and as result completing an
annual budget usually takes many days

Expensive:
the budgeting process requires the
collaboration of all departments and the
aggregation of all single data

Unreliable:
management is routinely surprised by
the variances between communicated
expectations and results


Why is there a Gap?
 Employees don’t understand how the strategy affects them, and how
their decisions impact others.
 It’s unclear as to who is accountable for ensuring execution of
initiatives, projects, and tasks.
 Management systems don’t empower employees to make their own
decisions.
 There’s no formal mechanism for tactics to influence strategy or to share
best practices.
 There’s no link between the budgeting process and strategy.
 Very often strategy is managed using inadequate tools that require much
manual tracking and updating e.g. spreadsheets, powerpoint, word
documents, email
 Plus … there needs to be Executive Commitment and a culture of
performance management

Concepts of Planning - Solution
Alignment and Communication is key


Fundamentals of BPC
Welcome to the “The budgeting process with SAP BPC” course
aimed at:
 Introducing SAP BPC features and benefits for planning and
budgeting cycle management
 Pointing out common matters and issues to take into account
and clear out whenever you analyze, assess, and design the
planning and budgeting cycle
 Providing you with consistent guidance as well as hits and tips
to roll out an effective budgeting process efficiently
empowered by SAP BPC
 Sharing experience


Fundamentals of BPC
What this course is not about?

 Not a genie with 3 wishes, black art, crystal ball
gazing
 Not a guide to successful project Management
 Not the perfect project approach


Fundamentals of BPC
The budgeting combines historical data
and economic trends with the Top
Management vision, as a result
budgeting is key to establish, keep, and
maintain a tight linkage between
strategy and operations
…Nothing more than:
 spending money
 knowing what targets need to be met
to get a bonus
 driving action
 influencing behaviors
 adjusting direction
 beating the competition
 creating value more effectively and
efficiently

EPM Methodology – Where we are…

ALIGN
Strategy

Plan

CPM

Culture

Governance

Data
Technology
Management


Process

Fundamentals of BPC
Implementing a EPM framework enhances management effectiveness and overall
performance in a variety of ways:
 Improves decision making capabilities
 Improves progress by allowing line of sight into operational performance and
compliance
 Allows management to spot potential problem areas and address them
proactively
 Enables management to focus on areas requiring their attention and decisions
 Facilitates process improvement and provides a common yardstick to measure
goal attainment
 Potential for business intelligence (BI) capabilities (predictive, forecasting, root
cause, etc.)
 Provides quick analysis of functional areas
 Aligns employee performance with corporate and business unit goals
 Enables more collaborative processes
 Increases employee awareness of corporate strategy
 Reduces costs involved in Management Information1

Advantages of SAP BPC tool
How SAP BPC can support the budgeting process?
SAP Business Planning and Consolidation is a single, unified, Enterprise–wide solution. It represents
a web–based, collaborative solution that unifies the business planning and performance management
process, and integrates and manages the financial process
Provide modeling capability to
develop plans and budgets
and link to KPI’s/Strategic
Plans

Created, maintained and run
by the business users

Unified planning, reporting
and consolidation

Agile planning process driven
by end users

Strengths of
the tool

Fast end users acceptance
means immediate
time–to–value

Microsoft Office provides a
familiar user interface
SAP Trainings by KMR Software Services Pvt Ltd. Email
: info@kmrsoft.com / kmrss.bpc@gmail.com

Budget Process Types
Some types of budgeting processes…

Top–Down

Flexible

Blended

Zero–based

Bottom–Up

Rolling
Forecasts

Budget process types
Approaches to Budgeting: Top–Down budgeting
Works well for organizations with highly inter–related divisions, those in
crisis situations, and for budgeting over longer time horizon
Pro:
 Fewer iterations required, often a better fit with flexible budgeting
Cons:
 Line managers may feel removed from the process; innovation
may be stifled
 Most annual budget processes encourage and reward “gaming”
 “Stretch numbers” used for target setting are usually unsuitable
for resource planning purposes
 Overly tight control from the centre may stifle innovation and
reduce agility at a local level

Approaches to Budgeting: Bottom–Up budgeting
A good fit for diverse organizations that require creative
management at the unit level
Pro:
Increased department–level responsibility and sense of ownership
Cons:
Can lack control and consistency, may overlook certain corporate
objectives and can be time–consuming
Too infrequent to provide actionable information
Annual performance contracts hard wired to budget targets, make
it difficult to respond to unforeseen opportunities or threats
Most annual budget processes encourage and reward “gaming”

Approaches to Budgeting: Blended budgeting
In practice, most organizations use some manner of
blended or “counter–current” budgeting process.
All too often, these blended processes combine the time–
consuming and costly nature of bottom–up budgeting with
the minimal sense of unit–level ownership and lack of
innovation that can result from the use of top–down
budgeting
While often the right answer, organizations need to be
particularly vigilant to avoid falling into a “worst of both
worlds” scenario

Approaches to Budgeting: Flexible budgeting
Flexible budgeting predicts results over a range of possible
operational outcomes

Segregates controllable from non–controllable expenses
at a high–level
Uses key drivers and activity bases for predicting
performance
More effort is involved upfront, but rework is reduced

and budgets stay more relevant throughout their useful life

Approaches to Budgeting: Zero–based budgeting
With the traditional budgeting techniques, every department must
justify only the increases over the previous year’s budget level. With
the zero–based budget, every function is reviewed and all
expenditures must be approved rather than only the increases.
Pros:
 More efficient allocation of resources as it is based on the actual
company’s needs
Identifies and eliminates wasteful and obsolete operations
Cons:
In a large organization, the volume of forms may be so large that no
one person could read it all
Time Consuming

Budget Process Types
Approaches to Budgeting: Rolling forecast
The most forward–thinking organizations are replacing the annual budget
with a rolling forecast.
Making this move makes sense for organizations that are:
 Empowered at the unit level; line managers have access to actual
performance information in near–real time, and have the tools and
know–how to translate recent performance information and
experience into accurate near to mid–range forecasts
 Disciplined at the unit level; keeping the forecast accurate and up to
date is an imperative
 Managed by a corporate management team comfortable with
reduced detail (but presumably higher accuracy) in near and mid–
range performance estimates

Actual Data

+

Budget Data


Project approach
The main steps of our operative methodology for managing a BPC project
are:

Analysis
• Understanding the

Prototype
• Realization, based on

organization
the identified business
business model
requirements, of a
• Understanding the
prototype which takes
As–Is of the
into consideration all
planning and control necessary
process
data, reports, and
• Design of the new
processes
scenario (To–Be)
• Plan and execute
workshop aimed to
show defined solution

Realization
• Testing of the

application in order to
identify potential
misalignment
• Data loading through
automatic systems
• Reconciliation of
historical data
through control
reports


The tools used for managing SAP BPC Planning Project

Fundamentals of BPC - Project approach
Analysis

Prototype

• Business Blueprint
• Project Plan

• Typical BPF
• Reporting package

• Test documentation
• Technical documentation
Step del BPF

Modello SAP BPC

Budgeting & Reporting process with SAP BPC

Dimensioni – AccdetailB (2 di 3)

Business process flow

Soluzione: la dimensione AccdetailB viene utilizzata secondo lo schema seguente:

BPF Budgeting / Pre-closing:

Conto Economico
Gen

Feb

1a
Mar

Apr

Mar

Giu

Lug

Ago

Set

Ott

Nov

Measure “Periodic”

Per i dati di Conto Economico, viene caricato/elaborato mensilmente il saldo del periodo di riferimento

Estimation
details

Balance Sheet

Inizializzazione

Stato Patrimoniale
Gen

Feb

Mar

Apr

Mar

Giu

Lug

Ago

Set

Ott

Nov

3

Dic

Check

F_APE
F_MOV …

Per i dati di Stato Patrimoniale, é acquisito a gennaio il saldo di apertura (F_APE) e sono acquisiti mensilmente i
movimenti del periodo (F_MOV), secondo i flussi necessari all’elaborazione del Rendiconto Finanziario. Il saldo del
periodo è dato dalla somma (F_TOT)

F_TOT

4
Logic
LEGEND

La Measure consente poi di sommare i movimenti del periodo (PERIODIC), sia di CE sia di SP, per determinare in
automatico i valori progressivi alla data (YTD)

Pagina 38

Report

BPF Consolidation flow

5

Input schedule

Task

7
Submit/Approval

PricewaterhouseCoopers Advisory

Page 30

6
Versioning

Report

Quick Reminder: F_CLO: saldo del periodo di riferimento
F_APE: saldo di apertura
F_MOV: movimenti del periodo (incrementi / decrementi)
F_TOT: somma del saldo del periodo

PricewaterhouseCoopers Advisory

BPF Reporting flow
BPF Budgeting/Pre-closing
flow

Measure “YTD”

Example of deliverables

Intercompany

Profit & Loss
1b

F_CLO

2

Opening

Dic

Application
maintenance

Realization

STEP 1 - SET-UP
Apertura Actual da preclosing
Apertura Actual da consuntivo
Apertura Budget
Inizializzazione Preclosing
STEP 2 - PARAMETRI
Imposte
Aliquote ammortamento
Assumption di budget
Curve di mensilizzazione CE
Curve di mensilizzazione SP
Giorni incasso bollette
Giorni incasso fatture
STEP 3 - ACTUAL
Import da SAP R3
Import da SAP R3 con stime
Inserimento dati di CE
Inserimento dati di SP
Inserimento dati di RF
Controllo dati
Elaborazione dati
Report di CE
Report di SP
STEP 4 - PRECLOSING
Controllo dati
Elaborazione dati
Report di CE
Report di SP
STEP 5 - BUDGET
Inserimento dati di CE HQ
Inserimento dati di SP HQ
Controllo dati
Elaborazione dati
Report di CE
Report di CE HQ
Report di SP
Report di SP HQ
STEP 6 - OFFICIAL
Controllo totale
Dashboard Budget
Versioning
Approvazione dati
Report ufficiali

%
completamento

Test

To do

• Typical Proposal

Note

100%
100%
100%
100%
100%
Creare scheda per imputazione aliquote ammortamento
100%
100%
100%
Creare scheda per imputazione giorni di incasso
Creare scheda per imputazione giorni di incasso
100%
100%
100%
100%
90%
100%

Verificare correttezza scheda input RF
Creare logica

100%
100%
100%
100%
90%
80%

Creare report
Creare logica

100%
100%
100%
100%
100%
100%
90%
80%
100%
100%
100%
100%
100%
100%
100%
100%
80%
100%

Creare report

Definire work status


Different component of a budget process
Both in the analysis / Design phase and after
in the implementation phase, we will use
Invenio reference model to realize the
improvement to the actual budget process in
terms of:
 a more Efficient and Simple process;
 accuracy e accountability (data
collection through secure processes
managed centrally and delegated to
local user/function);
 Speed up the process through
automatism and closed calendar
 Flexibility: realization scenario
simulation (market, currency, etc.)
 budget/actual coherence for obtaining a
compliant variance analysis
 Provide the users with an independent
vision and real time/quick information

Reference Framework
Sales
Plannig
Purchase
cost Budget

Quantity, Prici
ng,
Payment
Condition, etc.

Unit
cost, quantity, VAT, payment
condition, etc

P&L

Headcount, FTE,
etc

Personnel
Budget

CAPEX
Budget
Nondirect cost
Budget


Different component of a budget process
At the same time, to
obtain a financial
planning, we will
realize:
The Budget
completeness with
the Balance Sheet
area
Provisional and
Actual Cash Flow
with the relevant
analysis
dimensions

Reference Framework

Sales
Plannig
Quantity, Pr
icing,
Payment
Condition, e
tc.

Purchase
cost
Budget

VAT, etc
.

Unit
cost, quantity, VAT, paym
ent condition, etc

P&L

Debts, Credits and
Net Financial
Position
Billings and
Encashment
Analytic Plan

Balance Sheet

Headcount, FT
E, etc
Personnel
Budget

Cash Flow

Tangible and
Intangible Assets
CAPEX
Budget

Budget dei
Noncosti cost
direct
indiretti
Budget

TFR, debiti, PFN

Billings and
Encashment
Analytic Plan


Fundamentals of BPC - Link between economic/financial planning planning
Link between economic/financial planning and operative and
operative planning
• Technical cubes for
simulations
Check
dashboard

Consolidation
Level

• Mid–Term
Consolidation
• Key figure
• Simulation at Group
level
Group target check

• Common target
item for Market
Unit

Consolview for
business

Inter–business view
MU Consolview

BU/MU level

Consol View for Entity
and for Market

Balance
Sheet

Cash Flow

KPI’s

Sales Margin

Main Dimensions

C

Profit and
Loss

Assets

Liabilities

Financial KPI’s

OPEX

Depreciation

Free Cash Flow

Non Financial
KPI’s

…

…

…

…

Business Unit Consolidation

C

Production
(e.g. Power
generation, … )

C

Production specific OPEX
(e.g. Production, maintenance, project
execution, material handling, …)

CAPEX
(e.g. Project, CAPEX, Fixed
Assets, IT Projects)

Harmonization between business Units / Market Units

Group Consolidation

Group level

C
Sales

B
MU 1

B
MU 2







IC&PL
Key figures
Personnel
Margin
Interco detail

B
MU …

• Harmonize Key Figures
• Same main figures for all Market Units
• Reconciliation

Sales specific OPEX

Financing cash flow
(e.g. Increasing Capital
stock, Dividends)

Working capital
Financial KPI

(e.g. EBITDA, EBIT, CAPEX, Cost to
serve, Cost to acquire)

Planning Items (Harmonized Cost Obj and CoA)

Market Unit specific dimensions


Custom

• Market View
• Business View
• Consolidated View

Main Cubes

A

Specific
detail per MU

Specific Cubes

Operating data
capture

Link between economic/financial planning and operative planning

Economic/Financial Budget

• Top–down targets, …
• Top–down forecast
• Automatic report generation from
operational planning data

Group level
• Technical cubes
for simulations

Group Consolidation
Profit and
Loss

Balance
Sheet

Cash Flow

KPI’s

Group target check

C

• Common target
item for Market
Unit

Consolview
for business

Assets

Liabilities

Financial
KPI’s

OPEX

Depreciation

Free Cash
Flow

Non Financial
KPI’s

…

…

…

…

Business Unit Consolidation

C

Production
Main Cubes

C
C
B

A

Specific
detail per MU

IC&PL
Key figures
Personnel
Margin
Interco detail

(e.g. Production, maintenance, project
execution, material handling, …)

Sales

Sales specific OPEX

CAPEX
(e.g. Project, CAPEX,
Fixed Assets, IT Projects)

Working capital

(e.g. Increasing Capital stock,
Dividends)

B
MU 2

Financial KPI
(e.g. EBITDA, EBIT, CAPEX, Cost
to serve, Cost to acquire)

B

Planning Items (Harmonized Cost Obj and CoA)
MU …

• Harmonize Key Figures
• Same main figures for all Market Units
• Reconciliation

Operative Budget
OperativeBudget

Market Unit specific dimensions

Custom

• Market View
• Business View
• Consolidated View

Production specific OPEX

(e.g. Power
generation, … )

Financing cash flow

MU 1

Specific
Cubes

Consol View for Entity
and for Market







Sales Margin

Inter-business view
MU Consolview

BU/MU level

Operating data
capture

Main Dimensions

Check
dashboard

Harmonization between business Units / Market Units

• Mid-Term
Consolidation
• Key figure
• Simulation at
Group level

Consolidation
Level

Economic/Financial Budget

• Bottom–up plans, sub–plans, …
• Bottom–up forecast
• Integration between MU and BU
plans, though keeping each MU and BU
peculiarities


Thanks
KMR Software Services

http://www.kmrsoft.com
Email : info@kmrsoft.com
Ph: +91 9966003349
Skype : KMRSS.SAP

SAP BPC Online Training from KMR

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