advanced budgeting with sap sem and business analytics

8/13/2019 Advanced Budgeting With SAP SEM and Business Analytics

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Advanced Budgeting

withSAP SEM and Business Analytics

External communication

Strategyupdate

Mid-term planning

B/S, I/S, Cash Flow3-5 year

strategic planning

Evaluate

scenarios

Cascade targets

to lower Bus.Units

Detailled operational

planningMeasure

performance

Business process

optimization

Strategy and Business ManagementStrategy and Business Management

Performance ManagementPerformance Management

Strategy

analysis and

assessment

Adjust operations

Risk estimation

Define objectives,

Set targets,

Launch initiatives

Forecast

Strategic PlanningStrategic Planning

M.Wefers, SAP AG

Contact: [email protected]

1



1. Deficiencies in conventional planning and budgeting

Planning and budgeting along traditional lines is a fact of life in nearly all companies, although many of

them simply regard it as a necessary evil. It produces results that are only of use for a comparatively short

period of time relative to the high cost and use of personnel in obtaining them. The deficiencies of

conventional planning and budgeting can be summarized as follows1:

a) Use of resources

- The high level of detail necessitates a considerable commitment of cost accounting and

manager capacity in the planning. Insufficient top-down guidance leads to unclear goal setting

and numerous planning defects. The effort put into coordination and consolidation of subplans

is also considerable.

b) A lack of integration of strategic and operational planning

- What is often a clear process of strategy analysis and goal setting is not translated into strategy

implementation. The values expressed in the strategic objectives do not find their way into theannual operational planning, nor are the goals across the organization broken down and

converted into concrete activities.

c) One-dimensional planning

- One-sided alignment of planning to financial values and consequently the failure to identify

non-financial value drivers in the operational planning.

d) Planning acceptance

- The logic and intelligibility of the planning content is disputed, frequently delaying its

finalization. Even during the subsequent implementation or regarding adherence to specified

goals there are problems in accepting the planning.

e) Other problem areas

- A series of open questions also arises regarding the integration of additional instruments in the

planning: Activity-Based Costing, risk controlling, integration of the Balanced Scorecard in

operational planning, plan consolidation and easy access to alternative planning scenarios, as

well as ‘what if’ analyses.

Cf. Gleich/Knopp (2001), pp. 429-436

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2. „Advanced Budgeting“: a practical way to increase efficiency in planning,

budgeting and strategy implementation

2.1 New approaches to the preparation of planning and budgeting

In the light of the deficiencies described above, a number of different companies, international working

parties, consultancy firms and universities are looking at ways of redesigning planning and budgeting. In

addition to the radical new approaches, such as the CAM-I Initiative ‘Beyond Budgeting’2, considerably

more practical ways to redesign planning have been demonstrated that are being discussed under the

heading ‘Advanced Budgeting’.

The most important Advanced Budgeting approaches can be outlined as follows:

a) Integration of strategic and operational planning

- Strategic planning and the top-down specifications derived from it for operational budgetingand the subsequent bottom up feedback in the mixed top-down/bottom-up planning system.

- Balanced scorecard for translating the strategy into relevant projects and operational objectives.

b) Supplementing of financial goals with non-financial value drivers

- Clear understanding of strategic success factors by identifying and planning non-financial

value drivers.

c) Inclusion of all relevant departments of the company

- Internal company agreement of objectives, targets and initiatives, for example through

cascading scorecards.

d) Global budgets

- Specification of global budgets supplemented by a few detailed budgets instead of detailed

budgets for all areas.

e) Benchmark oriented targets

- Transition from internally based cost goals to external motivation for improvement.

f) Rolling forecast

- Regular reporting on the ability to meet objectives from managers through dynamic rolling

forecasts.

g) Activity-based planning - Replacement of input based cost element planning by an output based activity planning at

process level (Activity Based Planning: Activity planning for processes, resource requirements,

process cost planning, cost element planning, specification of an area budget).

The Advanced Budgeting approach frequently uses additional instruments to supplement the usual

applications for planning and budgeting: strategic planning (based on VBM metrics such as DCF or

EVA™), balanced scorecard, rolling forecast, cctivity-based budgeting, risk management, performance

cockpits (formula-based exception reporting) and value driver analyses.

Advanced Budgeting is mainly characterized by its pragmatism. The ‘budget’ is not done away withaltogether, and the approaches and instruments given above do not all need to be introduced at the same

2 Cf. Hope/Fraser (2003), pp. 108-115

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time. This avoids the risks associated with Beyond Budgeting. Instead, companies analyze the

deficiencies in their planning and budgeting processes and then use any of the above approaches and

instruments that are relevant to make improvements. Companies such as Borealis in Denmark3, Rhodia in

France4 and ABB in Switzerland

5 have led the way in Advanced Budgeting, and so are in a clear position

to demonstrate the accompanying potential for improvement it brings.

SAP AG 2003, Title of Presentation, Speaker Name 3

Rhodia: The new 3-phase Management Process

BE NE F I T F R OM

T HE

E X P E RI E N C E T O MAKE E V E N

G

RE AT E R

P R O GRE S S

QUARTERLY

REVIEW

Objectives

achieved?

Action Plan

• Objectives

• Action

• Manager

MISSION

VISION

SPIRIT

CORRECTIVE ACTION

PLANS

• Forecasts for 5 rolling quarters

• Include progress of Action Plans• Integrate impact of Corrective Action Plans

STRATEGIC PLAN PHASE

5 YEAR

STRATEGIC

PLAN

• Major

strategic

options and

assumptions

• Key ValueDrivers

• Strategic

Actions

• Objectives

ACTION PLAN PHASE

Action Plan

• Objectives

• Action

• Manager Action Plan

• Objectives

• Action• Manager

FORECAST PHASE

1

2

3

Source: Rhodia, 16.Controller Forum, 2002

Figure 1: Enterprise Management at Rhodia, France

3 Cf. Boesen (2002) 4 Cf. Pincon (2002), pp. 51-59 5 Cf. Yap (2001), pp. 245-254

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2.2 The flow of process-based enterprise management

2.2.1 Strategic planning cycle

The strategy is formulated within the strategic planning cycle and a reliable picture of the enterprise and

business areas is outlined 6. The elaboration of cause and effect relationships of strategic objectives,

quantitive scenario planning within value management, middle-term financial statement, P&L and cash

flow planning all belong in this category, together with the evaluation of initiatives and projects. It is

essential that models, calculations and documents should be available to everybody.

2.2.2 Strategy and business management cycle

The strategy that has been elaborated must be detailed in writing and converted into objectives, metrics

and measurable targets. It then needs to be communicated to the whole organization or at least passed on

to the different areas in the form of objectives. If initiatives fall outside the company’s normal business,they have to be defined as special projects.

External communication

Strategy

update

Mid-term planning

B/S, I/S, Cash Flow3-5 year

strategic planning

Evaluate

scenarios

Cascade targets

to lower Bus.Units

Detailled operational

planningMeasure

performance

Business process

optimization

Strategy and Business ManagementStrategy and Business Management

Performance ManagementPerformance Management

Strategy

analysis and

assessment

Adjust operations

Risk estimation

Define objectives,

Set targets,

Launch initiatives

Forecast

Strategic PlanningStrategic Planning

Figure 2: The flow of process-based enterprise management

6 Cf. Meier/Sinzig/Mertens (2002)

5



2.2.3 Operational management cycle

The business areas for their part translate strategic tasks into operational planning (for example, sales

plan, personnel and cost plan). Ambitious targets often require a detailed discussion of where there is

potential for improvement and its conversion into operational business processes. The analysis ofvariances between plan and actual is made on a regular basis within performance management.

Performance cockpits can be useful in focusing more closely on any significant variances. The rolling

forecast is particularly important in predicting whether the targets specified are achievable based on the

feedback given.

This timely and realistic estimate can then be incorporated into the strategy and business management

cycle. In addition to the quantitive feedback, written assessments from managers giving their

interpretation of the results are of increasing importance. This completes the cycle.

3. IT supported implementation of Advanced Budgeting with SAP SEM and

Business Analytics

3.1 SAP SEM and Business Analytics

An issue in many companies is whether to carry out their enterprise management, including planning and

budgeting, in existing transaction systems or with an easy to use spreadsheet application. Both approaches

have serious disadvantages. The former are best for processing transactions, so their data structures

cannot be adapted flexibly. However, flexibility is essential for planning applications. On the other hand,

planning using spreadsheet applications does have this flexibility, so enabling end users to make

individual changes very quickly. That, however, is precisely the problem that necessitates substantial

maintenance effort. Even collecting widely scattered Excel files requires a considerable amount of effort

on the part of the relevant business analysts.

The SAP SEM and Business Analytics applications (SAP SEM/BA) take an approach that avoids both

disadvantages. The data structures can be modeled in a flexible way and defined in the SAP Business

Information Warehouse (SAP BW). All of the plan, actual, and forecast data required for strategic and

operational enterprise management are collected together in the SAP BW. The SAP SEM/BA applications

work on this basis. The user logic can be administered either centrally or locally especially for planning

and budgeting applications, and made available to the users worldwide using modern client-server

architecture. End users can choose between Web, Microsoft Excel or SAP GUI interfaces according to

their method of working.

SAP SEM/BA have been incorporated in the following components:

SEM Business Planning and Simulation

SEM Strategy Management

SEM Performance Measurement

SEM Business Consolidation

SEM Stakeholder Relationship Management

Financial Analytics

CRM Analytics

PLM Analytics

SCM Analytics

Workforce Analytics

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StakeholderRelationship

Management

PerformanceMeasurement

BusinessConsolidation

Business Planning Simulation

StrategyManagement

Business Information WarehouseBusiness Information Warehouse

Enterprise PortalEnterprise Portal

CRMCRM SCMSCM PLMPLM SRMSRM non-SAP

Apps

non-SAP

Apps

S E M

S E M

Workforce Analytics

B u s i n e s s A n a l y t i c s

B u s i n e s s A

n a l y t i c s

Financial Analytics CRM Analytics PLM Analytics SCM Analytics

Figure 3: Components of SAP SEM und Business Analytics

SAP SEM/BA are a part of the mySAP ERP product built on the SAP NetWeaver platform that is also

included. SAP NetWeaver covers (among other things) the components SAP Business Information

Warehouse, a platform for constructing analytical planning applications, and the mySAP Enterprise

Portal.

3.2 Strategic planning cycle

3.2.1 Strategic planning

The purpose of strategic planning is to elaborate plan values over several years for the most important

indicators across the enterprise and to break them down for the strategic business units (SBUs). The

planning horizon is usually 3 to 5 years and contains indicators such as sales growth, investments,

EBITDA margin or ROCE.

SAP SEM/BA enables the setup of a planning application of which the following functions are

examples. Plan data gets collected at enterprise-wide level for generic value drivers, including for

instance sales growth, investments in fixed assets, changes in working capital, EBITDA margin, tax rates

and cost of capital rates. Using the background logic as a basis, the application creates a balance sheet,income statement and cash flow statement. Further key figures, such as return and VBM indicators, can in

turn be derived from these figures. As a rule, different scenarios are planned in the form of different

versions. The required speed of planning is achieved notably by the reduction in planning effort resulting

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from the use of generic value drivers. The corporate controller can analyze the results within the strategic

planning, as can the SAP BW OLAP reporting integrated in it.

Figure 4: SAP SEM/BA Strategic Planning

At SBU level business-specific value drivers replace the generic value drivers. For instance, EBITDA

planning can be replaced by the differentiated planning of sales, sales costs for each main product group,

and overhead. Here, too, different versions can be used for planning for working out other distinct

scenarios. As part of the mixed top-down/bottom-up planning system concept, the planning results from

the various levels can be compared and fine-tuned with each other so that a final, binding plan version

can be agreed.

All of the employees involved in the planning (corporate controller, business analysts) can jointly work

on the results, and at the same time profit from the results of other teams. The time-consuming

consolidation of sub-plans, which are often found in various locations, is eliminated altogether. If

required, even the maintenance of the calculation logic can be controlled centrally, so that every change is

of immediate benefit to the SBUs.

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3.2.2 Financial statement planning

SAP SEM/BA supports medium-term planning activities that typically involve the creation of a balance

sheet, profit and loss and cash flow statement, and also specific key figures. Such planning is usually

carried out at the level of either business units or legal units (group, subsidiaries), and in most companiescovers a period of between one to three years.

Figure 5: SAP SEM/BA Financial Statement Planning

The creation of plan figures is divided into a series of logical steps. The user can first start with sales

planning, and based on this extract the costs of sales. Once the overhead, investments and depreciation

have been planned the EBIT can be determined. In doing so it is up to the user to decide which groups of balance sheets, income statements and cash flow items are to be drawn up and the level of detail used to

plan them.

Moreover, the application enables the speedy creation of plan figures using three basic methods:

a) Transfer of plan values by integrating other sub-plans

b) Manual creation of plan values

c) Derivation of plan values by background logic functions

The opportunity exists to integrate financial statement planning with the strategic planning and

operational planning. This way, for example, it is possible to include (and if necessary adapt) the results

of the sales or profit planning without changing the original operational sub planning. This also makes it

possible for different teams to work on the planning at the same time. This is supplemented by the option

of deriving values using business logic. To give an example, cost of sales can be calculated by sales planning based on product groups and their planned or historical percentage production costs (COGS).

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Another example involves the derivation of accounts receivables using a day sales outstanding (DSO)

procedure.

By combining these three procedures the user can plan interactively and yet retain an overview. Changes

to one plan item cause the recalculation of the other items concerned. The key figures derived from

planning can be displayed on all input layouts, so making the effects of changes immediately transparent.

Financial statement planning is the connecting link between strategic and operational planning, andrecords with the results the expectations placed on the business units.

3.2.3 Elaboration of the enterprise strategy

The elaboration of the detailed strategy for the enterprise with objectives, cause and effect relationships,

key figures and strategic projects is usually carried out in intensive discussions by decision-makers and

with very little IT involvement. Microsoft Office applications are probably the most used in this

connection. SAP SEM/BA offers the following support above and beyond this: for enterprises in the

chemicals industry 7 strategy templates have been formulated that can be used as a starting point for the

formulation of an individual strategy. On the other hand, with a Web-based service SAP SEM/BA

integrates the strategy consulting company ‘The Balanced Scorecard Collaborative’7. Customers are

offered a web-based project support here for developing strategies. The outcome can be transferred toSAP SEM/BA electronically, and uploaded as a basic Balanced Scorecard.

3.3 Strategy and business management cycle (Part 1)

3.3.1 Balanced Scorecard

Once a binding plan has been agreed, it remains to be shown how the individual objectives are going to

be achieved. The SAP SEM Balanced Scorecard

8

comprehensively supports the visualization andoperational implementation of a company or business unit strategy. The objectives are initially outlined

from various angles. In addition to the financial perspective that tends to concentrate on earnings, the

intended objectives are defined from the perspective of customers or internal processes. In many instances

this needs to be supplemented by the requirements imposed on the infrastructure and employees. To

clarify the effect one action has on another, the objectives are linked in a cause and effect chain. The

overall view is designated the “Strategy Map”.

7 Cf. ‘Design Center’ from the The Balanced Scorecard Collaborative. Hyperlink: www.bscol.com 8 Cf. Wefers (2000)

10



Figure 6: SAP SEM/BA Balanced Scorecard – Strategy Map

For the operational implementation, each objective is assigned an owner, and for establishing quantities

measurable units and quantitive amounts are assigned to the objective. Each measure is given a detailed

definition via the SEM Measure Builder that can be displayed for every user. The data for the measures

can either be selected from SAP BW or simply created manually. To ensure the objectives are achieved,

each one can be linked to initiatives or projects that can then be administered simply within the SAP

SEM/BA Balanced Scorecard. Projects can also be administered by using applications such as the SAP

R/3 Project System (PS). This means that the responsible manager is not only later able to analyze the

achievement of objectives using plan/actual/forecast analyses but can also include the progress being

made in projects that are supported.

SAP SEM/BA allows objectives to be cascaded within the enterprise through qualitative and quantitive

descriptions of target values, and their transmission down to the business unit level. In this regard

enterprises can distinguish strategic advice from an obligation to implement the standard values,

depending on the culture of the firm.

3.3.2 Risk Management

A further essential aspect of strategy implementation is the inclusion of risk factors. SAP SEM/BA Risk

Management9 supports the quantitive estimate of risks relating to the achievement of strategic objectives

by internal company risk managers as a supplement to the Balanced Scorecard.

9 Cf. Wefers (2002)

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3.4 Operational management cycle

Once the objectives, measures and initiatives are available at group and business unit level, they have to

be realized in the form of operational planning.

3.4.1 Volume / sales planning

SAP SEM / BA allows not only purely manual planning at any product level, but also in the mixed top-

down/bottom-up planning system. In doing so, the strategic tasks within top-down planning are refined

step by step. The following example serves to illustrate this: the sales director is set targets for worldwide

sales growth for a particular main product group. He divides these up into regional areas, and forwards

the sales plan to his regional sales managers. These in turn refine the plan values with respect to product

groups and sales offices. Finally, the sales employees receive these planning targets and commence

bottom-up planning. For each product and customer, periodic sales volumes and sales deductions are

planned. By aggregating the plan values, the sales managers and sales director can analyze the differences

between bottom-up planning when compared to top-down planning.

Figure 7: SAP SEM/BA Sales Planning

SAP SEM / BA supports sales planning across a broad range of activities, operations and tasks. For

example, all planning screens can be freely defined and so allow the incorporation of actual values and

comparison versions as planning aids. Target values can be distributed on a hierarchy, and growth rates

used for planning. Other functions can be modeled using formulas as necessary. Moreover, every planner

only receives such planning screens in his worklist as have been assigned to his role.

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3.4.2 Cost center planning

SAP SEM / BA enables the implementation of applications for cost center planning, that in turn enable

both detailed planning and planning at aggregate level. Instead of planning each cost center and cost

element individually, managers can record their values at group level. Planning primary costs can be done

in a simple and straightforward way. Once the prices have been refreshed in the system, the quantities can be planned and evaluated with costs by the system. At the same time the results can be checked against

the budget that has already been entered.

Figure 8: SAP SEM/BA Cost Center Planning

Users who are only rarely involved in planning tasks can obtain quick and easy access to their planning

screens by e-mail. All interfaces can be set up for individual needs, and for instance display comparison

values from earlier planning sessions. After primary cost planning, they can be transferred to other cost

centers or distributed. Statistical key figures are generally used as distribution keys. Secondary cost

planning is also supported or can be carried out in SAP R/3 cost accounting following retraction of the

data.

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3.4.3 Investment planning

SAP offers a comprehensive solution for the management of investments in the SAP R/3 component

Investment Management (IM ). With SAP SEM/BA it is possible to implement easily accessible and

simple to operate investment planning as a supplement that does not presuppose the use of SAP R/3 IM.Various aspects, such as alternative scenario calculations and the effects investments have on structure

and performance related key figures can be included in the planning. Data structures, planning logic and

planning screens can be adapted to suit individual requirements. Static and dynamic methods are available

for longer term investment calculations.

If advantage is taken of the close integration of SAP R/3 IM and SAP SEM/BA investment planning, then

SAP R/3 structure data can be transported from a variety of different system environments to SEM, and

used there for restructuring tasks if and when necessary. Once investment planning has been completed in

SAP SEM/BA, the investment plans can be transferred to SAP R/3 IM and displayed in the form of

investment projects.

3.4.4 Coordination of planning activities

The participation of a large number of different people in the planning process means a considerable

amount of time and effort has to be put into coordination. SAP SEM/BA takes this into account through

the “planning coordination” functions. This supporting application allows the construction of a sequence

of planning tasks, the assignment of responsible managers, and contains status management including e-

mail access. A planning cycle could therefore run as follows. A regional manager defines the various

planning activities and then begins the planning process from the status monitor. All planners involved

receive a request to commence planning by e-mail, including details of how to access the planning

application. Everyone involved can set the status in the monitor to “For Checking” once planning is

finished, and enter explanatory comments. Their manager is then informed automatically and can send the

plan values back to the planner if necessary once the check is complete, adding a comment giving the

reasons why additional processing is required. Once the manager has accepted all of the sub-plans, he canclose the planning sequence in the monitor, so blocking any further changes to the planning data. It is

worth mentioning that during all of these activities no files with the plan values need to be sent to the

manager. The manager can call up and check the individual cases of detailed planning direct using the

monitor.

3.4.5 In-depth analyses

In many cases detailed planning on its own is not sufficient to achieve the most ambitious objectives.

Business processes must be analyzed yet further with the object of uncovering potential for improvement.

Financial Analytics with the application Activity-Based Costing / Management (ABC/M) offers the

chance of analyzing process costs (for example, for accounts receivable accounting) more closely. CRM

Analytics can be used to analyze customer behavior, form customer groupings, and plan and optimizemarketing and promotion campaigns. Workforce Analytics offers functions for the multidimensional

analysis of changes in headcount and salaries. The cost of personnel can be planned, and employee targets

and potential bonus payments linked to departmental targets based on a Management by Objectives

(MbO) system.

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3.4.6 Business performance analyses

The progress of the business is assessed at regular intervals on the basis of performance indicators. SAP

BW offers comprehensive reporting for this purpose that supports, for example, multidimensional

profitability analyses. SEM Management Cockpit provides middle or senior management with a purelygraphical analysis tool. Automatically calculated status indicators display those key figures that require

particular attention. The Management Cockpit allows rapid analysis of financial key figures and their

non-financial value drivers and is designed with extremely straightforward navigation, so that the one-off

outlay on training is kept to a minimum.

Figure 9: SAP SEM/BA Management Cockpit

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Complex key figures can be analyzed in more detail using the value driver trees that can be integrated.

Impromptu ad hoc simulations are made possible simply by overtyping any of the value driver values and

recalculating the value driver tree.

Abbildung 10: SAP SEM/BA Value Driver Tree

A particular benefit is the integration of the benchmark data that today exists in many industrial sectors.

SAP SEM/BA enables the simple administration and manual entry of benchmarks using the SEM

Measure Builder. The integration of professional benchmark providers10

is possible via an electronic

repository switch. Once the benchmark data is available in the system, all of the analytical applications

described above can use it. This means companies can allow impetus for improvement from outside the

company to flow into the analysis.

10 There are a variety of companies who offer benchmark data, for example PPA GmbH.

Hyperlink: http://www.benchbase.com

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3.4.7 Forecast

An analysis of the current periods is insufficient to draw a realistic picture of the immediate future.

Instead, more and more companies are requiring their departments to submit cost and growth forecasts for

the next few months – often into the following fiscal year. SAP SEM/BA enable both forecasts with strictreference to fiscal years and rolling forecasts to be implemented. For both of these approaches the system

provides broad support for the creation of new forecast data, so, for example, the actual and budget values

can be copied to the forecast version and an overall value to be achieved distributed to the periods to be

planned. In the case of an annual forecast, the periods open for planning decrease over time, whereas for

the rolling forecast the number of forecast periods remains the same – for example, third quarters.

Figure 11: SAP SEM/BA Rolling Forecast

SAP SEM/BA supports the close linking of the applications to each other so that different groups, such as

sales managers and controllers, can benefit from the results in their analytical applications. The datacategories plan, actual, benchmark and forecast can be processed and analyzed in all of the applications

detailed above in parallel, because they are available to all applications at the same time via the SAP BW.

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3.5 Strategy and business management cycle (Part 2)

With the performance analyses and forecasts available, the manager is in a position to make a detailed

assessment of the strategic objectives. The SAP SEM Balanced Scorecard provides a comprehensive

means to do this analysis. A status can be defined for all key figures using defined formulas that can be

symbolized in the form of colored icons. Graphics, time series and trend indicators help users to gain a

quick overview of the changes. Background information can be called up direct using the reports that are

integrated in SAP BW. The status of initiatives can also be used for information on, for example, whether

milestones have been adhered to. The status of the more global objectives can then be derived from the

status of key figures and projects.

Experience gained during the implementation of projects shows that users are very interested in top-down

analyses between different business units. This is supported by dynamic drilldown analyses. A user can

begin the analysis at any level in the hierarchy and continue it in a business unit either on the same level

or a lower level, providing the necessary authorizations have been assigned. In addition, the application

provides a strategy comparison between enterprise units in tabular form that do not require user

interaction.

Figure 12: SAP SEM/BA Balanced Scorecard – Dynamic Drilldown

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The SAP SEM Balanced Scorecard enables users to create comprehensive written assessments regarding

the development of strategies, objectives, measures and projects in the system. Others who are involved

in implementing the strategy can add their comments about these assessments. The result is to provide an

overall view of the situation, containing both qualitative analyses by the responsible managers as well as

quantitive values, making a significant contribution to the interpretation of the results of the strategy

implementation.

Figure 13: SAP SEM/BA Balanced Scorecard – Assessments and Comments

Starting with the Balanced Scorecard views, such as the strategy map (cf. figure 6), middle and senior

management can gain a quick overview of the progress made in implementing the strategy, and subject

any potential difficulties to detailed and targeted analysis. The Balanced Scorecard can also be

downloaded locally to the PC, making offline analysis possible. Beside the pure analysis, the BSC offlineapplication can also be used for presentations when visiting business units for performance reviews.

Senior menagement offen demands a high quality print version of the Balanced Scorecard. This

requirement is solved by the “BSC Briefing Book”. Endusers can individually structure their own

collection of BSC information which can be printed with high quality lateron. This gives managers two

different ways of checking the status of the strategy implementation outside of the office.

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4. Summary

SAP SEM and Business Analytics contain all of the applications necessary for the successful

implementation of Advanced Budgeting. Top-down targets from medium and long-term planning can be

matched with the feedback from the operational bottom-up planning. Data from any number of different

sources can be used via the SAP BW, making it noticeably easier to include non-financial value drivers in

the planning. The Balanced Scorecard creates the framework to make strategies intelligible for all

involved through relevant projects and operational objectives, and to cascade specified targets across the

organization. The SAP applications allow a free choice of the aggregation level on which planning and

budgeting is to take place. The multilevel client-server architecture means the application logic can be

maintained centrally while still providing end users with a high level of individual freedom as far as the

procedure is concerned, so rendering the need to send local files unnecessary. The gain in processing

speed that this achieves has been proved time and again in various customer projects. Other instruments,

such as rolling forecasts, benchmark-based objectives, ABC/M can help to make the planning and

budgeting process more dynamic, with the ultimate purpose of making it successful.

5. Bibliography

Gleich, R. / Kopp, J. (2001): Ansätze zur Neugestaltung der Planung und Budgetierung. In: Controlling,

issue 8/9, August/September 2001, pp. 429-436

Hope, J / Fraser, R.(2003): Who needs Budgets. In: Harvard Business Review, February 2003, pp.108-

115

Boesen, T. (2002): New Tools for a New Corporate Culture: The Budget-less Revolution. In: Balanced

Scorecard Report, HBR 15, January 2002

Pincon, J. (2002): Managing without Budgets: the Rhodia’s experience. In: Performance Controlling,

2002, pp.51-59.

Yap, J. (2001): Further Development of ABB’s Planning and Control System. In: Strategien erfolgreich

umsetzen, 2001, pp.245-254.

Meier, M / Sinzig, W / Mertens, P. (2002): SAP Strategic Enterprise Management / Business Analytics.

Berlin, Heidelberg, 2002.

Wefers, M. (2000): Strategic Enterprise Management with the Balanced Scorecard. Hyperlink:

http://service.sap.com/sem -> Media Library -> Presentations -> SEM-CPM -> Balanced Scorecard.

Wefers, M. (2002): Risikomanagement mit SAP SEM als integrativer Teil der Unternehmenssteuerung.

Hyperlink: http://service.sap.com/sem -> Media Library -> Presentations -> SEM-CPM -> Risk

Management.

advanced budgeting with sap sem and business analytics

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