Unit 7 Analytics and Strategic Planning

1. Unit 7Analytics and Strategic Planning Dr. Supakorn Kungpisdan Unit 7: Analytics and Stratigic Planning

2. 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 Unit 7: Analytics and Stratigic Planning

3. 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 Unit 7: Analytics and Stratigic Planning

4. 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 Unit 7: Analytics and Stratigic Planning

5. Reporting and Analysis mySAP ERP (OLTP) OLAP Database application Unit 7: Analytics and Stratigic Planning

6. OLTP VS OLAP Unit 7: Analytics and Stratigic Planning

7. 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 Unit 7: Analytics and Stratigic Planning

8. 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 Unit 7: Analytics and Stratigic Planning

9. SAP BW Architecture Data from SAP and external systems are treated as sources Unit 7: Analytics and Stratigic Planning

10. 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. Unit 7: Analytics and Stratigic Planning

11. 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 Unit 7: Analytics and Stratigic Planning

12. Decision Support Model and simulation Unit 7: Analytics and Stratigic Planning

13. 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. Unit 7: Analytics and Stratigic Planning

14. 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 Unit 7: Analytics and Stratigic Planning

15. 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 Unit 7: Analytics and Stratigic Planning

16. Predictive Methods Unit 7: Analytics and Stratigic Planning

17. 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: Scoring Unit 7: Analytics and Stratigic Planning

18. 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 Unit 7: Analytics and Stratigic Planning

19. Explorative Methods • SAP BW offers various models for explorative data mining • Clustering • ABC Classification • Association Analysis • Weighted Score Tables Unit 7: Analytics and Stratigic Planning

20. Data Mining: Explorative Methods Unit 7: Analytics and Stratigic Planning

21. 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 Unit 7: Analytics and Stratigic Planning

22. 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 Unit 7: Analytics and Stratigic Planning

23. 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 Unit 7: Analytics and Stratigic Planning

24. 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 Unit 7: Analytics and Stratigic Planning

25. 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 Unit 7: Analytics and Stratigic Planning

26. Business Planning and Simulation Unit 7: Analytics and Stratigic Planning

27. Business Planning and Simulation • Business Planning covers different levels: • Strategic planning • Operational planning • Execution planning Unit 7: Analytics and Stratigic Planning

28. 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) Unit 7: Analytics and Stratigic Planning

29. 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 Unit 7: Analytics and Stratigic Planning

30. 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 Unit 7: Analytics and Stratigic Planning

31. SAP BW Business Planning and Simulation ALV = ABAP List Viewer, a tool for creating / viewing reports in SAP R/3 using ABAP Programming Unit 7: Analytics and Stratigic Planning

32. 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) Unit 7: Analytics and Stratigic Planning

33. 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. Unit 7: Analytics and Stratigic Planning

34. SAP SEM (Strategic Enterprise Management) Unit 7: Analytics and Stratigic Planning

35. 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 Unit 7: Analytics and Stratigic Planning

36. 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 Unit 7: Analytics and Stratigic Planning

37. Business Planning and Simulation • 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 Unit 7: Analytics and Stratigic Planning

38. 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 Unit 7: Analytics and Stratigic Planning

39. 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 Unit 7: Analytics and Stratigic Planning

40. 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 Unit 7: Analytics and Stratigic Planning

41. Corporate Performance Monitor Unit 7: Analytics and Stratigic Planning

42. 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 Unit 7: Analytics and Stratigic Planning

43. 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 Unit 7: Analytics and Stratigic Planning

44. Balanced Scorecard Unit 7: Analytics and Stratigic Planning

45. 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 Unit 7: Analytics and Stratigic Planning

46. Management Cockpit Unit 7: Analytics and Stratigic Planning

47. 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). Unit 7: Analytics and Stratigic Planning

48. SAPTEC Fundamentals of the SAP Web Application Server Unit 7: Analytics and Stratigic Planning

49. 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 Stratigic Planning