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Presents
An Introductory Guide
Contents
INTRODUCTION 3
WHAT IS IBP ANYWAY?..............4
DEMAND SIDE IBP5
SUPPLY SIDE IBP 7
IBP vs. APO....8
WHY DO YOU NEED IBP?.......... 9
WHERE TO BEGIN.10
CONSIDERATIONS11
PARTING WORDS.....12
Introduction
y now you know its coming: IBP: the Integrated .
l
Business Planning Platform offered by SAP. Youre
probably already seeing plenty of PowerPoints,
diagrams and acronyms. Terms like HANA and cloud
are starting to appear so often theyve lost all
meaning.
But beyond the hype is an application with
real tasks, actual configuration, testing, interfaces and
training.
What is IBP
anyway?
An overview.
Our crafty marketing team, (Mike Raftery) developed an elevator pitch that we think
covers IBP nicely. SAPs S&OP solution on IBP is a cross functional application built to
show the financial and operational impact of different demand and supply
scenarios at any level of analysis in the supply chain.
OK great, but now you get off the elevator and you dont want awkward silence. So
what does it really do? The game changer here is the ability to seamlessly integrate
demand planning, supply planning, and financial data in a single planning area.
That translates to truly integrated planning across the entire organization.
The single integrated planning area data structure provides the ability to plan your
supply chain in real time from customer, to component, and every hop in between.
Each application (seen below) applies its own functionality to this framework to
provide a fully integrated planning suite to the entire
supply chain organization:
The game
changer here is
the ability to
seamlessly
integrate
demand
planning, supply
planning, and
financial data in
a single planning
area.
How does
IBP work?
Now that you have an idea of what IBP is and what it does,
lets break it down further into how it works. Well look first
at the demand side and then at the supply.
Inbound Data
IBP uses the Hana Cloud Integrator (or
HCI) to import all of the data required
to drive the demand generation
process. This tool maps data sources
from any required system (SAP
systems, non-SAP systems, flat files,
etc.)
Historical Data
Manipulation
Once the historical data has been
delivered to the IBP system, that data
needs to be analyzed to determine if
there are any outliers that needs to be
adjusted in order to ensure that the
statistical forecast is not unduly
influenced by this data. IBP makes
this a bit easier through the use of
defaulting logic in the key
figures. Example: you have a KF for
Sales History and a KF for Sales
History Overrides that feed into the
Statistical History KF. A calculation is
then written to have the Statistical
History KF default to the Sales
History KF only when the Sales History
Overrides KF is blank.
Generation of the
Statistical Forecast
Once the historical data has been
integrated and cleansed, the statistical
forecast can be generated
in IBP. There are currently only a few
choices for forecast algorithms (1st,
2nd, and 3rd order exponential
smoothing, and weighted average), but
for most companies, these are enough
to model the majority of their
portfolios. One thing that IBP offers
that APO does not is the ability to
create a table of the alpha, beta, and
gamma factor values and have the
system iterate through these value
sets and determine the best forecast
profile with the right factors, based on
forecast accuracy.
How does
IBP work?
How does
IBP work?
So.
How Do
We Begin?
START small
Start with one business unit, one segment. Build, learn, adjust and build again.
This approach allows for small wins and multiple waves of features to keep your
user base happy. Unlike long lead time projects with big bang go lives in which
the features arent known until its too late, an agile approach can build on
the features that work and abandon those that dont. A perfect fit for a cloud
based solution. With this approach, you can realize return on your investment
early and often in the project.
Move quickly and move often. The infrastructure-lite approach to the IBP
solution, and the ability to quickly run and evaluate the solutions give
incentive to incremental improvement. The light footprint of the application
allows for added and changed features with a quick turnaround. Customers
are happy and IT is creative, who can lose?
10
Things to consider
Releases Will Come Fast and Furiously
This is an application constantly under construction. Bug fixes of course, but more
importantly, new features pop up with each new release. A few times weve
thought, It would have been nice if. And then that feature was in the next
release. New capabilities are available with each release as well. None of the IBP
applications are fully established as SAPs rollout schedule demonstrates. That
means new toys with each new version; its like Christmas for nerds.
Sure, there are fixes with each new release, but you find bugs as well. If you have
the patience, its actually not that bad. You realize youre on the cutting edge of
something and this is the price you pay for pushing the envelope.
Everyone is ready to help: there is a rejuvenated community out there. With the
aforementioned issues and new releases coming regularly, everyone is looking for
the same answers and there are plenty of people trying to provide them. Since IBP
is relatively new, the quality of answers varies widely, as does the level of
support. However, as a community, there seems to be quite a bit of patience and
at the same time plenty of energy focused on getting this right. Theres a fraternal
feel to it (less the hazing) and that makes it an exciting time to be a part of the
extended SAP supply chain planning community.
For us, this is a first: working with an application in the cloud. After using it for a bit of
time, were convinced its the future of IT, but there needs to be answers to quite a
few questions before it can be used without a second thought. Basically, you end
up trading control for a lower TCO and speed. This is a fair trade. However, a few
questions need to be ironed out ahead of time. For example, how much say do
you have over a release calendar? What happens to the date after you stop using
the application? What is your recourse if the data is lost? How do you manage
customization, if at all? The list goes on. However, questions like this need to be
considered and answered before moving to the cloud can be the default
position. We have no doubt all these issues and concerns will be addressed, and
the cloud is the future, but were not there yet.
Yeah its pretty cool. The data model, the performance, the reporting, the fact that
IBP uses Excel as a front end. Im all in. This is going to change the game for SAP,
and their customers. Not quite today, or even maybe the near future. But it is
coming and organizations that plan with IBP sooner rather than later will see those
benefits quickly and become that much better than the competition. Theres a
delicate balance around when to move to IBP and in what order to migrate. Done
properly, it will truly accelerate a supply chain organization by removing the barriers
created by years and years of IT limitations. The hardware and applications
inherent in SAPs HANA solution architecture provide a business application in IBP
that users will barely notice. And isnt that the whole point to begin with?
11
SCM Connections
Contributing Authors: Mike Raftery, Sean Mawhorter, Wade Smith. Book design by Chris Raftery. Copyright 2015 SCM Connections.