Like many companies undergoing a digital transformation, Protiviti’s experts recently assisted a national financial services company struggling with error-prone Financial Planning and Analysis (FP&A) processes. These processes were mostly rooted in Excel, focused on allocations and reporting, and had received limited investment in innovative technology compared with profit-generating functions. Protiviti partnered with this FP&A team for a successful, rapid deployment of SAP Analytics Cloud Planning (SAC Planning).
In just over two months, the implementation brought conceptual models for revenue, loss and key balance sheet measures to life while reducing resource investment in budgeting and forecasting. Cloud-based processes with structured data connections allowed for time invested in the annual budget to be cut in half. Prior processes and business needs constrained the budget to a single annual version; with SAC Planning, a much smaller team delivered more than ten scenarios to help inform management decisions and deliver new insights to leaders across the organization.
Five ways SAP Analytics Cloud enables corporate value creation
While there are many long-term benefits to improving FP&A processes, here are five key benefits of the SAC Cloud, which have a fast time-to-value following an SAC Planning implementation.
Data: Recent large-scale improvements in the client’s data quality allowed the Cloud Connector to routinely incorporate new data from numerous SAP and external sources.
Process: Structuring all processes to be incorporated with the client’s general ledger (GL) data allowed for blending financial and operational data to a scale that had not been previously possible.
Analytics: Functional and operations leadership were able to discuss KPIs relevant to their business and understand the forecast for their business; improved forecasting allowed for new cyclical capabilities to be stood-up.
Scenario Planning: The ability to easily aggregate, drill into, and create assumptions for multiple business units, delivery channels, and/or products allows the user to make prescriptive adjustments, understand the resulting changes, and measure variances.
Reporting: SAC Planning allows for custom built dashboards and web-based reporting. Additionally, the client was able to realize substantial value-add through the Excel-add-in that allowed for questions to be answered live in management discussions.
For more details on how to accelerate an SAC Planning Implementation successfully, reference this blog post.
Implementation success factors include project management, client partnership, access to quality data
Protiviti enabled SAC Planning and implemented the xP&A accelerator solution for gross profit planning, allocations, workforce planning and reporting. Additionally, we brought tested project management, process insight and data integration capabilities to deliver a modern solution tailored to the client’s stated and unique needs. In partnership with the client, custom fields were derived by blending numerous measures into custom revenue models focused on creating actionable insight. Of course, great partnership and a strong software package cannot deliver the necessary integrated planning processes without quality data. Finance collaborated with stakeholders across functional groups, including human resources, to ensure that the models incorporated the same system data that end-users were familiar with from existing reporting. Standing up a new financial planning model using consistent information created trust with the business and enabled faster quality assurance testing.
Client example: Creating new forecasting, analysis, reporting, performance measurement and modeling using a driver-based planning process
The client provided conceptual Excel models that blended existing data to create custom-KPIs; however, models needed to be duplicated 100+ times to support the client’s product lines. SAC allows for similar calculations and the scale to quickly combine historic data and perform numerous calculations over a multi-year timeframe. Revenue projections were the most complex part of the models and the primary information feeding downstream models. A simplified version of this complex logic is below; dynamic drivers and assumptions include unit count, store count and loan balances.
New Customer Revenue Calculation:
- Interest rate calculation () blends financial data (a) & ops data (b)
- Store count and unit count sourced from operations data and/or assumptions
- New customer rate () is a ratio of two different operating metrics
- Average loan amount () combines two measures from operations data
- Losses = revenue * charge-off rate (not shown above)
Downstream financial-models focus on variable staffing, advertising, other operating expenses, and depreciation. The combination of outputs from these models provide efficiency metrics and insights that were not previously available. An example of this would be overall store utilization. The traditional metrics (expense as a % of revenue) does not provide the necessary level of detail to understand, adapt, and refocus efforts on the appropriate business activities, as it takes less time to service a loan than write new business.
The software learning curve allowed for finance teams to quickly become “daily power users” as the logic is easily understandable for a strong Excel user. The finance general ledger model includes general and administrative (G&A) expense employee payroll using the Workforce Accelerator. Integration into a detailed finance model allows for allocation to over 1,000 cost centers and incorporation with G&A expenses, standard reporting, P&L comparisons and trend dashboards.
Client realized increased financial planning performance by unlocking new capabilities, improving analytics to stakeholders, and delivering new service and experience to operations
The client, like many FP&A professionals, thought the reality of replacing inefficient, labor intensive and error-prove Excel-based planning was out of reach. By partnering with Protiviti, this digital transformation was fast and cost effective. Combining data from their ERP system, operations databases and internal knowledge with Protiviti’s expertise, transformed their corporate capabilities beyond financial planning, performance measurement and operations analytics.
FP&A communicated data and metric-driven budgets to all leaders, which created both an ongoing dialogue and buy-in that allowed for incorporating observations into modeling and forecasting throughout the project. Additionally, rather than seeing a ‘full-stop’ on all other projects during planning or budget season, newly available time was reallocated for investment in other initiatives across the organization that allowed the FP&A team to be a true partner in delivering business transformation.
For more information
To learn more about SAP Analytics Cloud and developing analytics and planning strategies, we suggest:
- What is Your Planning and Analytics Strategy?
- Planning for the Unplanned: Predictive Forecasting with SAC Planning
- National Vision Enhances SAP Business Planning and Consolidation with SAC