Unit 7
Analytics and
Strategic Planning
Dr. Supakorn Kungpisdan
Unit 7: Analytics and Stratigic Planning
1
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
2
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
3
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-today 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
4
Reporting and Analysis
mySAP ERP
(OLTP)
OLAP
Database
application
Unit 7: Analytics and Stratigic Planning
5
OLTP VS OLAP
Unit 7: Analytics and Stratigic Planning
6
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
7
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
8
SAP BW Architecture
Data from SAP and
external systems are
treated as sources
Unit 7: Analytics and Stratigic Planning
9
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
10
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
11
Decision Support
Model and
simulation
Unit 7: Analytics and Stratigic Planning
12
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
13
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
14
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
15
Predictive Methods
Unit 7: Analytics and Stratigic Planning
16
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
Unit 7: Analytics and Stratigic Planning
17
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
18
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
19
Data Mining: Explorative Methods
Unit 7: Analytics and Stratigic Planning
20
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
21
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
22
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
23
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
24
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
25
Business Planning and Simulation
Unit 7: Analytics and Stratigic Planning
26
Business Planning and Simulation
 Business Planning covers different levels:
Strategic planning
Operational planning
Execution planning
Unit 7: Analytics and Stratigic Planning
27
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
28
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
29
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
30
SAP BW Business Planning and
= ABAP List Viewer, a tool for creating / viewing
Simulation ALV
reports in SAP R/3 using ABAP Programming
Unit 7: Analytics and Stratigic Planning
31
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
32
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
33
SAP SEM (Strategic Enterprise
Management)
Unit 7: Analytics and Stratigic Planning
34
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
35
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
36
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
37
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
38
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
39
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
40
Corporate Performance Monitor
Unit 7: Analytics and Stratigic Planning
41
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
42
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
43
Balanced Scorecard
Unit 7: Analytics and Stratigic Planning
44
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
45
Management Cockpit
Unit 7: Analytics and Stratigic Planning
46
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
47
SAPTEC
Fundamentals of the SAP Web
Application Server
Unit 7: Analytics and Stratigic Planning
48
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
49