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P l a n n i n g a n d S i m u l a t i o n w i t h Oros ® B r idge w i th SAP ® SEM ™

Table of ContentsComplex Demands, Comprehensive Solutions........................................................................................................................3

The Essential Tool for Activity-Based Management Planning in SAP SEM..............................................................................3

The role of SEM-BPS........................................................................................................................................................9

A Gallery of Solutions...............................................................................................................................................................5

Oros Bridge with SAP SEM — A Closer Look..........................................................................................................................7

The role of SEM-BPS.......................................................................................................................................................9

Mapping data with Oros Bridge with SAP SEM................................................................................................................9

Uploading and Downloading Characteristics and Key Figures...............................................................................................11

Key Benefits............................................................................................................................................................................11

Back to the Future..................................................................................................................................................................13

1 COPYRIGHT © ABC TECHNOLOGIES INC. & SAP AGCompany Confidential, September 25, 2000

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W H I T E P A P E R

© 2000 ABC Technologies, Inc. All rights reserved. The information in this document and the software described herein may not be reproduced, translated, or reduced to any machine readable form, in whole or in part, without prior express written permission of ABC Technologies, Inc. Complying with all applicable copyright laws is the responsibility of the user.ABC Technologies reserves the right to make any modification to this document or the information contained herein at any time without notice.

© Copyright 2000 SAP AG. All rights reserved.No part of this brochure may be reproduced or transmitted in any form or for any purpose without the express permission of SAP AG. The information contained herein may be changed without prior notice.Some software products marketed by SAP AG and its distributors contain proprietary software components of other software vendors.Microsoft®, WINDOWS®, NT® , EXCEL® and SQL-Server® are registered trade-marks of Microsoft Corporation.IBM®, DB2®, OS/2®, DB2/6000®, Parallel Sysplex®, MVS/ESA®, RS/6000®, AIX®, S/390®, AS/400®, OS/390®, and OS/400® are registered trademarks of IBM Corporation.OSF/Motif® is a registered trademark of Open Software Foundation.ORACLE® is a registered trademark of ORACLE Corporation, California, USA.INFORMIX®-OnLine for SAP is a registered trademark of Informix Software Incorporated.UNIX® and X/Open® are registered trademarks of SCO Santa Cruz Operation.ADABAS® is a registered trademark of Software AGSAP®, R/2®, R/3®, RIVA®, ABAP®, SAPoffice®, SAPmail®, SAPaccess®, SAP-EDI®, SAP ArchiveLink®, SAP EarlyWatch®, SAP Business Workflow®, SAP Retail®, ALE/WEB®, SAPTRONIC® are registered trademarks of SAP AG.


Planning Methods

Sales & Profitability Planning

P&L, B/S, CF

Planning

Value based planningHeadcount

Planning...

Target Costing

Activity Based Mgmt.

Life Cycle Costing

Investment

Planning

Planning Methods

Sales & Profitability Planning

P&L, B/S, CF

Planning

Value based planningHeadcount

Planning...

Target Costing

Activity Based Mgmt.

Life Cycle Costing

Investment

Planning

Today’s corporations face a number of unique competitive challenges. They must deal with increased pressure from competitors, rapid changes in technology, and increasingly shrinking product development cycle. As a result of these pressures, companies are being forced to re-engineer, which means significant changes in facilities, staffing, production activities or methods, and business models. As they do so, they are discovering the increasingly important role that strategic simulations play in their organizations. For many companies, the cost-effective creation and distribution of comprehensive simulations and scenario analyses without investing excessive time and effort. Whether they use simulations, budgeting, strategies to model new products, improve manufacturing productivity, manage facilities, or improve processes or procedures, the ability to efficiently create and manage this information can have a direct impact on a company’s bottom line.

COMPLEX DEMAND S, COMPREHENSIVE SOLUTIONS

In November 1999, an agreement between SAP AG and ABC Technologies Inc. was reached to provide activity-based management capabilities in SAP® Strategic Enterprise

Management™ (SEM™). Oros® Bridge with SAP R/3® was extended to interface Oros with SAP SEM. Chris Pieper, CEO of ABC Technologies Inc., believes that, “As an integrated solution, Oros will collaborate with other SEM analytic applications for simulation and performance measurement. With the expanded support and endorsement of SAP, we are accelerating our efforts to provide our joint customers with the most flexible and easy-to-use modeling environment possible.” Leveraging the flexible ABC/M modeling and simulation capabilities of ABC Technologies Inc. Oros solution, SAP SEM enables users to apply ABC/M for strategic planning, activity-based budgeting and performance monitoring in an integrated SAP SEM environment. SAP SEM provides managers and executives with the appropriate environment to simulate, analyze, monitor, optimize and communicate the strategic aspects of the enterprise and to execute strategy faster in order to increase value for investors, customers, and employees.

THE ESSENTIAL TOOL FOR ACTIVITY-BASED MANAGEMENT PLANNING IN SAP SEM

With the integration of Activity-Based Management (ABM), SEM-BPS provides a specific decision support tool for operational and strategic resource optimization and cost

management issues. Your ABC model now has access to real-time data on all strategically important aspects of

your organization because Oros Bridge with SAP SEM is directly embedded in the SAP SEM component SEM-BPS (Business Planning and

Simulation). The SEM-BPS component provides functionality to

support integrated strategic and operational business planning. These


"Can your company continue to meet the market’s expectations and present a credible strategy to deliver the

required future performance?"

functions include: creation of dynamic and linear business models; simulation of various scenarios, evaluation of these scenarios taking account of the business risks; carrying out the resource allocation as part of business planning; and rolling forecasting.Use Oros Bridge with SAP SEM to map objects in Oros Modeler™ with objects in SEM, then with a click of a button launch Oros to view and modify the information needed to accurately budget and cost processes, products, and services. You can use that information to simulate and plan future developments and to manage risks associated with key transactions. You can analyze profitability at whatever level of detail and in whatever area you require — right down to individual products, services, or customers. Being embedded in SEM-BPS provides the most reliable, efficient, and effective way to share activity based management information with SEM and its array of tools and methods, such as PowerSim™ and Microsoft®

Excel®.Note: Oros in this document refers to Oros Modeler, which before version 5.0 was referred to as Oros ABCPlus™.


Information without activity-based information is rarely, however sophisticated, the whole story. The real-world story often has activity-based information associated with it. Having this kind of data in one place to perform “what ifs” makes the combination a powerful tool for analysis and strategies.

A GALLERY OF SOLUTIONS

Here are just of few usages of using Oros Bridge with SAP SEM. This is by no means an exhaustive list.

C o m p u t e a c t i v i t y o r p r o d u c t c o s t s One of the main reasons for building an activity-based model is to compute activity or product costs. In the model you have defined your resource, activity and cost object hierarchies, and built assignments. Assuming you have resource costs in SEM, you can take planned resource costs (cost centers/groups and cost elements/groups) to populate the resource information of the Oros ABC/M model and then perform the calculations and analysis. For further analysis, you can upload activities and cost object complete with hierarchies and results to SEM-BPS. Use resource or process driver rates and planned costs for use in formulas. Use 3rd party tools (Excel and PowerPlay) to analyze resultant data.

C o m p u t e r e s o u r c e c o s t s b a s e d o n p r o j e c t e d o u t p u t q u a n t i t y Let’s say that you want to use an Oros model to compute resource costs based on projected output quantity. Product output quantities are provided by a 3rd party tool such as PowerSim and is available in SEM. Cost objects are also available in SEM. Download cost objects with their output quantities to the Oros model. If resources exist in SEM download this hierarchy as well, otherwise build it in Oros along with the activity hierarchy. Determine the assignment of cost between resources and activities, activities and cost objects using the bills of costs feature. Calculate the model to backflush the output quantities to calculate quantity rate and resource costs. The output of the ABC model (hierarchies and cost information) is then fed back to the SEM database to calculate a complete valuation. Use Oros and/or 3rd party tools (Excel and PowerSim) to analyze resultant data.

S i m u l a t e d i ff e r e n t s c e n a r i o s f o r s t r a t e g i c c o m p a r i s o n sUse Oros ABC/M model for determining the product costs for a product line in Mexico. Use it to analyze the cost of producing the same product in a plant in Brazil versus China.

I n t e g r a t i o n w i t h o t h e r S E M t o o l sProvides key data that can be used within PowerSim dynamic simulations. For example, the process driver rate in an employee retention cost simulation covering a three-year time horizon.

O t h e r t y p e s o f u s e Make vs. buy of a product/product line Cost-to-serve impacts for customer/customer groups additions/losses Analysis of divestitures, mergers, and acquisitions


Cost impacts for process reengineering of the macro value chains Product-Customer-Sales channel optimization Identification of redundant costs


OROS BRIDGE WITH SAP SEM — A CLOSER LOOK

More technically speaking, SAP SEM is a set of integrated and analytical application components operating on multidimensional SAP Business Information Warehouse (BW) data structures. SAP BW is a data repository that contains key information from all areas of the enterprise and forms the basis for planning and reporting. In the SAP BW data repository the multidimensional InfoCubes or structures are comprised of all required characteristics and key figures — some may be needed for ABC/M; others for other types of planning and analysis. Characteristics are master data that structure the data and are usually arranged in some hierarchical way. Examples are:

Resources (cost centers) Activities (business processes) Cost objects (products, customers and so on) DriversKey figures are numeric items that may have a unit or currency. Examples are:

Costs (posted costs) Driver quantities Output quantities Unit costsSome characteristics are dependent on other characteristics; that is, the characteristic value is meaningless in the absence of values from other characteristics. These are referred to as compound characteristics. Use Oros Bridge with SAP SEM to upload and download compound characteristics. Oros Bridge with SAP SEM also allows you to compare scenarios by modeling hierarchies (e.g., by business, brand, channel, or country) for profit analysis.


SAP BW (datarepository)

SAP SEM -BPS

Oros M odeler

Select characteristics and keyfigures from BW info cube

Modify, refine,strategize, and budgetwith data from SEMwithin Oros Modeler

Design info cubes(characteristicsand key figures)

Activity basedm anagem ent

planningm ethod

Map characteristics andkey figures to Oros

objects

Download toOros

Upload toSEM

Oros Bridge w ithSAP SEM

T h e r o l e o f S E M - B P SThrough the integration of SAP BW, SAP SEM has access to a large pool of information that is modeled on multidimensional OLAP structures and operates on identical data. Within SEM-BPS, you begin to narrow down the data from SAP BW for specific planning and reporting objectives. In the planning area, you determine which BW InfoCube is to supply the data (characteristics and key figures) that you want to plan on. With a planning level, you then restrict the amount of data supplied from the BW InfoCube to whatever is relevant to your planning task. You do this by selecting the desired key figures and characteristics. The planning level is the central entity for planning and contains planning packages. In a planning package, you can make further restrictions or refine the settings made in the planning level. A planning package contains the actual set of characteristics and key figures to be viewed and interpreted by Oros Bridge with SAP SEM resides. For example, in a planning level, resources (cost centers), activities (business processes), cost objects (products and customers), and costs (posted costs) are defined, but the period and plan version information is not specified. These qualifiers are defined in the planning package. Planning methods are the actual applications or tools you use to work with the data defined in a planning package. The SEM-BPS planning method titled Activity Based Management launches Oros Bridge with SAP SEM. When working with Oros Bridge with SAP SEM, it is assumed that all items in the planning level are also available in the planning package.

M a p p i n g d a t a w i t h O r o s B r i d g e w i t h S A P S E MOros Bridge with SAP SEM is used to map the objects in Oros with the characteristics and key figures defined in a selected planning package. When you import or download data to an Oros model the characteristics and key figures pulled from a SEM-BPS planning package are interpreted by Oros Bridge, and then downloaded into the Oros model or uploaded from the Oros model into SEM. This bi-directional ability allows you to incorporate strategic changes to activity based costing data into your plans quickly and efficiently.SEM-BPS is an active document container that hosts other application types called active documents. Oros Bridge with SAP SEM is an active document server as are other SEM tools such as Excel. In SEM these active documents are referred to as planning methods and are the actual applications or tools you use to work with the data defined in a planning package.


Unlike OLE embedded objects (which are simply displayed within the page of another document), active documents provide the full interface and complete native functionality of the server application that creates them. As a result, you can either enter your activity based costing data or other data manually or edit it using various automatic functions such as dynamic business strategy models and analysis and simulation processors.


UPLOAD ING AND DOWNLOADING CHARACTERISTICS AND KEY F IGURES

This table lists the types of Oros objects that SEM characteristics or key figures can be mapped to. It also shows what you can upload and download from SEM.

Oros Object Description Download to Oros

Upload to SEM

Characteristics Resource, Activity, and Cost Object Source

Represents accounts that have entered cost elements associated with them and accounts that are the source in assignments.

Resource, Activity, and Cost Object Destination

Represents destination accounts in assignments between resources, activities, and uni-dimensional cost objects.

Cost Object Dimension Represents multi-dimensional cost objects that are the destination accounts in assignments.

Entered Cost Element Represents the name of the cost element definition.

Driver Name Represents the name of the driver definition.

Measure Represents the measure of the external unit definition and the measure when defining output quantities.

External Unit Name Represents the name of the external unit definition

Key Figures Resource, Activity, Cost Object Cost

Represents the costs directly entered on cost elements or the account costs that are the results of assignments/internal bills of costs across different modules, and external bills of costs.

Entered costs

only

Resource, Activity, Cost Object Cost Internal

Represents the assigned costs calculated from assignments and internal bills of costs whose source accounts are in the same module as the destination accounts (inner module).

Driver Quantity Represents the driver quantities of an assignment.

Total Driver Quantity Represents the the sum of the source account's driver quantities.

Unit Cost Represents the per-unit contribution of the cost element toward it’s parent unit cost. The system determines the unit cost by dividing the cost by the output quantity.

External Unit Cost Represents the unit cost of an external unit’s definition.

Bills of Costs Fixed Quantities

Represents a bills of cost that has the Total option selected. This identifies the cost for the bills of cost as the total cost.

Bills of Costs Variable Quantities

Represents a bills of cost that has the Total option unselected. The bills of cost are then calculated by multiplying the bill quantity, the cost, and the output quantity to get the total cost for the bill.

Output Quantity Represents the calculated output quantity of an account. If you use bills of costs to calculate quantity-based consumption, then the output quantity is calculated by the system.

User Entered Output Quantity

Represents the user-entered output quantity of an account.

Sales Quantity Represents the sales quantity in the Sales table.

Revenue Represents the sale amount in the Sales table.


KEY BENEFITS

The integration of Oros Bridge with SAP SEM with SEM-BPS means:

Strong analytical capabilities of ABM are available for use with strategic planning and vision, providing more accurate information to support strategic business decisions.

Powerful functionality of Oros allows user-friendly and quick modeling of an organization's internal cost flows with a process view.

Special buffer memory component of SEM allows simulation of the Oros model without necessarily updating the data until all "what-if" analysis has been completed.

Supports a macro view of the value chain and the associated costs, e.g. supply chain. Provides a means for global coordination of planning tasks, including when in the

planning process activity-based analysis is performed. This is provided via the ability to create sequential steps to take place within the planning process.

Flexible PC-based application integrated into SEM BPS. Facilitates centralized & decentralized planning methods for activity modeling and analysis.

Bi-directional data integration with SEM-BPS core. Models and data are stored in SAP SEM.

A v a i l a b i l i t y

23

1

Focus:Activity-Based Managem entValue Driver TreeBenchm arks/Marketplace

Oros Bridge5.0 with

SAP SEM

BW 2.0B

June 2000

Fall 2000SEM 2.0B

July 2000

Focus:Expanded property listIm proved user interface


Explore

Reports

SAP BW (datarepository)

SAP SEM -BPS

Oros M odeler

P lanning

Oros Bridge w ithSAP SEM

Activity basedm anagem ent

planning m ethod

BACK TO THE FUTURE

Today, businesses need to urgently explore new areas for growth. With this, planning and forecast capabilities have become crucial. SAP SEM supports the trend away from measures that focus on the past such as those provided by quarterly and annual accounts. The trend is towards performance management that allows future-focused enterprise management and active management of stakeholder expectations. The SEM-BPS component, along with Oros Bridge with SAP SEM and Oros, are designed to enable you to carry out comprehensive simulations and scenario analyses without investing excessive time and effort.


Understand what happened Manage the future

Oros Bridge with SEM

SEM-BPS

Understand what happened Manage the future

Oros Bridge with SEM

SEM-BPS

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