Robert Kugel's Analyst Perspectives

SAP Rolls Out Business Planning and Consolidation on HANA at SAPinsider

Posted by Robert Kugel on Mar 19, 2012 10:42:24 AM

For me, the most significant announcement to come out of the recent SAPinsider conference was the company’s formal release of Business Planning and Consolidation (BPC) running on HANA, SAP’s in-memory computing appliance. For me, HANA is a potential “game changer” for planning, statutory consolidation and other analytics-supported financial processes because of the substantial reduction it enables in processing time from loading to reporting. In-memory systems provide a substantial edge in speed of processing large data sets or complex calculations, whereas the latency between thought and answer in complex scenario analyses on disk-based systems often prevents a collaborative dialogue around possible situations and their potential outcomes. Today, companies have to simplify the analysis, severely limit the amount of detail or find some combination of the two. More than likely, they wind up not having a potentially valuable collaborative dialogue in activities such as weekly or monthly review and revision of operating plans and their financial consequences, closing the books or assessing the impact of pricing changes on profitability. In the case of planning, I expect that in-memory systems will enable make it easier for companies to make changes to detailed plans (such as the budget or production plans), which is difficult today for many of them.

In keynotes at SAPinsider company executives reiterated that cloud computing and mobile technologies as well as processing and analysis of big data are underpinnings of its development efforts. From a customer’s and user’s perspective, these technologies are innovation vectors that can change how they operate, providing new capabilities with which to evolve key business processes to enhance their effectiveness and efficiency. For instance, sales executives can use tablet-based business analytics to discuss business trends collaboratively with customers, or do price optimization and profitability analysis on the fly in making offers and setting terms. The “consumerization” of business applications – not just mobile apps – is another product development theme that SAP is embracing. This is consistent with other vendors’ directions, and it reflects the need to meet the demands of younger users who have more sophisticated expectations than those who, say, started working with ERP systems in the 1990s.

A business topic that surfaced several times in SAP’s presentations was the value of utilizing of shared services. Centralizing administrative functions into shared services can reduce costs (especially if they are performed in lower-wage areas) and improve execution by allowing for more specialization and a larger center of competence. Accounting is one common area where companies centralize (our research finds a highly centralized accounting function in 70 percent of midsize and larger companies). As well, companies in which separate units handle invoice payment, accounts payable, travel management, workforce management and real estate management could benefit from bringing them together. However, shared services can be more trouble than they’re worth unless systems are established to ensure responsiveness to local needs. Software can be helpful here by standardizing processes (so suppliers or customers don’t become frustrated with different requirements), streamlining process execution (so that invoices can be paid in time to earn discounts) and speeding collections.

For me, some of the most relevant sessions at the conference covered the ongoing evolution from United States Generally Accepted Accounting Standards (US-GAAP) to International Financial Reporting Standards (IFRS). This is a critical change for finance departments of almost all midsize and larger U.S. corporations. The topic is timely because recent progress made in converging US-GAAP and IFRS means that corporations will have to incorporate fundamental changes to their accounting and statutory consolidation processes sooner than they were expecting.

SAPinsider offered both high-level discussion of technology trends that will affect business software and in-the-trenches advice on how to address current business issues. I think it’s fitting that the official announcement of BPC on HANA came at this venue because, as I’ve noted, while I expect innovative finance departments to quickly exploit the advantages of BPC on HANA, I’m afraid it will take a while for mainstream companies to get around to changing how they manage these core processes. Since this event is about providing SAP users with practical advice on how best to incorporate technology to transform business operations, in coming events I look forward to hearing concrete examples of how companies have progressed.


Robert Kugel CFA – SVP of Research

Topics: Big Data, Mobile, Planning, SAP, Social Media, Customer Experience, ERP, GRC, Office of Finance, Operational Performance Management (OPM), Budgeting, IFRS, XBRL, Analytics, Business Analytics, Business Collaboration, Business Mobility, Cloud Computing, In-memory, Business Performance Management (BPM), finance, Financial Performance Management (FPM), Sales Performance Management (SPM), Supply Chain Performance Management (SCPM), Workforce Performance Management (WPM), Financial Performance Management, GAAP, HANA

Robert Kugel

Written by Robert Kugel

Rob heads up the CFO and business research focusing on the intersection of information technology with the finance organization and business. The financial performance management (FPM) research agenda includes the application of IT to financial process optimization and collaborative systems; control systems and analytics; and advanced budgeting and planning. Prior to joining Ventana Research he was an equity research analyst at several firms including First Albany Corporation, Morgan Stanley, and Drexel Burnham, and a consultant with McKinsey and Company. Rob was an Institutional Investor All-American Team member and on the Wall Street Journal All-Star list. Rob has experience in aerospace and defense, banking, manufacturing and retail and consumer services. Rob earned his BA in Economics/Finance at Hampshire College, an MBA in Finance/Accounting at Columbia University, and is a CFA charter holder.