Unit 7 Analytics and Strategic Planning

Unit 7: Analytics and Stratigic Planning 1

Unit 7Analytics and

Strategic Planning

Dr. Supakorn Kungpisdan


Unit Overview

Provide an overview of various possibilities for reporting and analyzing data as well as the strategic planning functions available in the SAP Business Suite


Business Example

Many departments in IDES require daily information of varying complexity from simple real-time list display reports to complex managerial statistical analysis reports.

Analytical results are used to plan future business targets, which again need to be communicated back to middle management and employees


Reporting VS Analysis

Online Transaction Processing (OLTP) refers to the type of processing typically performed in an SAP ERP system This reporting often refers to information requirements for day-

to-day work Online Analytical Processing (OLAP) provides

analysis that aggregate data for simple operational analytics

Analytic system must provide information about the important factors that an enterprise’s management needs for its business decision By selecting, assigning, and aggregating the information

available in the operational area


Reporting and Analysis

mySAP ERP(OLTP)

Database application

OLAP


OLTP VS OLAP


Differences btw OLTP and OLAP

Level of detail OLTP stores data at a very-high level of detail, whereas data in data

warehouse is compressed History

OLAP stores comprehensive historical data, where OLTP archives the data

Changeability Data in OLTP changes often where data in OLAP does not change

Integration OLAP has higher integration than OLTP

Normalization High normalization in OLTP, but low in OLAP

Performance OLAP environment is optimized for read access, where concerns more

in OLTP due to its functions e.g. change, insert, and delete


SAP Business Information Warehouse

SAP BW makes flexible reporting and analysis tools available

Enable strategic analysis an supports decision-making within a company

Authorized employees can access and evaluate historic and current data in different levels of detail

3 layers of SAP BW architecture Extraction Staging/storage Presentation/analysis


SAP BW Architecture

Data from SAP and external systems are treated as sources


SAP BW Architecture

Staging engine manages staging process for all data received from several source systems.

Storage Service manages and provides access to data targets in SAP BW and the aggregates that are stored in relational and multidimensional database management systems.

Analysis and access services layer provides access to the information stored in SAP BW.

Presentation services layer offers different options for presenting information to end users.


Decision Support

Management need to develop strategies to help them reach target

Need to be able to communicate strategy quickly to employees in order to understand how strategies affect day-to-day operations and help implement the strategies successfully

Need to establish a continuous feedback loop that allows the organization and the management team to learn constantly from strategy implementation and adjust tactics quickly

A decision support system is needed


Decision Support

Model and simulation


Decision Support (cont’d)

One type of decision support system, called Strategic Enterprise Management System, connects corporate strategy with operations and the actual value being created by executing management plans, rendering obsolete in many cases the time and resource-intensive process of annual budgeting

SAP SEM (Strategic Enterprise Management) and SAP BW (Business Warehouse) together provide a complete solution for all types of reporting and decision-support.


Data Mining

An analysis of large amounts of data in a database using tools which look for trends or anomalies without knowledge of the meaning of the data with the goal of automatic determination of significant patterns and hidden associations


Data Mining (cont’d)

Data Mining helps analyze and understand customer behavior by: Offering an analytical approach that looks for hidden data

patterns and relationships in large database Providing insights by analyzing past data Predicting future trends and behaviors Enabling organizations to make the critical jump from

retrospective (back to past) analysis to prospective (expecting) decision making

State-of-the-art data mining systems act as decision support systems (DSS) supporting human decision by providing information and analytical results

Two different methods for data mining: predictive and explorative


Predictive Methods


Predictive Methods: Scoring

The purpose of scoring is to valuate data records

3 function types to perform valuation: Weighted score tables

Create a model composing a number of fields and valuate each field, then create a weighted total

Linear regression and Nonlinear regression

Need to train using historical data


Predictive Methods: Decision Trees

A classification approach that uses the values of input variables to predict the value of a categorical variable

Decision trees allow user to: Generate readily-understandable rules with which to predict

customer behavior Evaluate the different values of possible outcomes and the

probability of reaching them Produce a graphical representation of how different factors

affect an outcome Create a segmentation scheme based on the decision tree

results


Explorative Methods

SAP BW offers various models for explorative data mining Clustering ABC Classification Association Analysis Weighted Score Tables


Data Mining: Explorative Methods


Clustering

Clustering creates groups of records that are: Similar to each other within a particular group Very different across different groups

Clustering helps user explore vast amounts of data and organize it in a systematic way.

You can identify both customers that are exhibiting similar characteristics within a cluster and characteristics that are different across clusters.

Based on this information, you can develop personalized marketing campaigns for each cluster


ABC Classification

Used to classify objects (e.g. customers, employees, and products) based on a particular measure (e.g. revenue or profit)

Offer a data mining method to establish and analyze a ratio between quantity and value within a given set of data

ABC analysis enables you to group customers typically into three groups whose members lie in a defined interval regarding their value, e.g. revenue or profit


Association Analysis

Association Analysis uncovers the hidden patterns, correlations, or casual structures among a set of items or objects

Commonly referred to as “association discovery” The patterns may be expressed in the form of

association rules such as: 72% of customers who buy milk also buy bread and eggs 80% of the time that a specific brand of toaster is sold,

customers also buy a set of chicken gloves and matching cover sets

A typical application is Market Basket Analysis, a modeling technique based on the theory that if you buy a certain group of items, you are more likely (or less likely) to buy another group of items


Weighted Score Tables

Each alternative is given a score for each criteria The score is then weighted by the importance of

each criterion All alternative’s scores are added together to

produce the total score. The alternative with the highest total score

should be the best alternative


Business Planning and Simulation

Due to the complexity of planning process, large number of staff from the most diverse parts of the enterprise are involved in the planning operations

A planning process includes: Defining planning forms, standards, approval procedures,

planning areas, and objects Setting up consolidation procedures and including planning

interdependencies Matching planning periods of the individual planning areas

and staff



Business Planning covers different levels: Strategic planning Operational planning Execution planning


Strategic planning

Define future direction of an enterprise e.g. product/service offering, ROI, company growth

A simulative process in which different scenarios are modeled and subsequently evaluated in order to calculate the expected value to be created

Strategy evaluation leads to target setting for the operational units which means breaking down high-level strategic goals

to targets on execution level (e.g. expected net revenue, sales growth rate)


Operational Planning

Allocating resource (labor, capital, assets) necessary to fulfill the targets and reconciling the resources across operational units.

E.g. sales volume has to be reconciled with production volume


Execution Planning

The result of the operational planning process may be used for detailed planning and scheduling in execution planning

SAP BW-BPS delivers tools for generic planning, supporting a planning process that allows for the construction of a planning model

This functionality brings planning, budgeting, and forecasting together with monitoring, reporting, and analysis, and bundles it all into one software installation


SAP BW Business Planning and Simulation ALV = ABAP List Viewer, a tool for creating / viewing rep

orts in SAP R/3 using ABAP Programming


Functions of SAP BW-BPS

Top-down planning and bottom-up contribution with a rich set of planning functions

A planning framework that lets you create and maintain planning models

A user interface for manual planning and analysis

Tools for process control (that is, status checking and monitoring)


SAP SEM (Strategic Enterprise Management) SAP SEM is an application component that completely

supports strategic enterprise management processes in an organization on all relevant levels

It comprises 5 functional software components that allow tight integration of SEM processes or component architecture

Based on SAP BW All SAP SEM component functions can operate on one

or several SAP BW InfoCubes InfoCubes are multidimensional data storage containers

for reporting and analysis of data.


SAP SEM (Strategic Enterprise Management)


Strategy Management

Provide tools, e.g. a support for Balanced Scorecard, that help organizations better translate strategy into action by defining and communicating strategies in areas e.g. product innovation, customer relations, and operational efficiency


Performance Management

Provide a Management Cockpit interface, the ideal framework for reporting performance results

The structure of the interface is predefined, yet flexible, and enables companies to deliver graphical, numerical, and verbal information to various levels within the organization

Users also benefit from fast access to information in a web-based environment

Strategy Management and Performance Measurement are also grouped under the term Corporate Performance Monitor



Allow company to update budgets more frequently, meet changing business conditions, and combine traditional, bottom-up budgeting with top-down strategic planning

Encourage a more collaborative budgeting and planning process that involves a greater number of departmental and divisional managers, while

Help companies integrate strategic, operational, and financial plans to ensure that all business activities are in line with the business strategy


Business Consolidation (SEM-BCS)

Provide complete functionality for the legally required consolidation by company and segment (e.g. by US GAAP (General Accepted Accounting Principles), IAS (International Accounting Standards), and local GAAPs)

Help carry out management consolidations based on user-defined organizational units and user-defined hierarchies

Allow consolidation simulations, e.g. to determine the effects of mergers and acquisitions, different translation methods, or changed consolidation rules

Also used by SEM-BPS and Corporate Performance Monitor for consolidation of plan data and for reporting


Stakeholder Relationship Management

Long-term success depends on ability to establish relationship with stakeholders (e.g. investors, analysts, customers, employees, partners, suppliers, social groups, and state institutions)

Good, stable relationships with stakeholders represent “intangible assets”. They affects capital market’s evaluation of the enterprise

Stakeholder Relationship Management provides support for communicating enterprise strategy, current plan data, and strategic initiatives to different stakeholder groups Two way communications: need to know stakeholder

expectations and incorporate them into the strategic management processes


Stakeholder Relationship Management

Some stakeholders may have a great deal of information. Exchanging information with these groups may be time-consuming and costly

The system manages a stakeholder database to support communication functions. Enable enterprise, with justifiable expense, to issue and

administer registered stock, and thus keep and eye on the stakeholder structure

So, the enterprise can more actively manage the expectations of analysts and capital markets


Corporate Performance Monitor


Balanced Scorecard

Balanced Scorecard is an instrument to convert business strategies into understandable, communicable, and meaningful targets

Integrates financial and non-financial aspects of business transactions

The individual targets are assigned to a perspective: financial, customer, internal business processes, or

learning and growth


Balanced Scorecard (cont’d)

Financial The strategy for growth and profitability viewed from the

perspective of the stakeholder Customer

The strategy for creating value and differentiation from the perspective of the customer

Internal Business Processes The priorities for excellence in various business processes

that aim to increase customer and shareholder satisfaction Learning and Growth

Measures to create a climate that supports organizational change, innovation and growth


Balanced Scorecard


Management Cockpit

A tool with which uses high-quality graphics to process all data which is based on business decisions This data can be both internal and external to enterprise

E.g. illustrate relationship between your enterprise’s investment and the current state of the financial markets

This visual information units enable management to grasp even complex situations at a glance, and thus facilitate and accelerate management decision making


Management Cockpit


Management Cockpit (cont’d)

The Management Cockpit room has 4 walls: Black wall for financial figures and critical success factors Red wall for markets, customers, and competitor analysis Blue wall for monitoring internal processes White wall for monitoring strategic projects

Each wall shows specific key figures that should be attained

The measures can freely combine accounting, logistics, or human resources data

Logical view can be used to define a general business factor (e.g. product quality) that results from several key figures (e.g. scrap rate, sales returns, or guarantees).


SAPTEC

Fundamentals of the SAP Web Application Server


Outline

SAP Solutions Navigation The System Kernel Software Development in SAP Systems Communication and Integration Technologies Tools for SAP System Administration SAP NetWeaver and Enterprise Services

Architecture

Unit 7 Analytics and Strategic Planning

Documents

Transcript of Unit 7 Analytics and Strategic Planning