Not Your Same Old Advanced Planning System Implementation!

Panelists: Robert Birdsall and Ryan Rickard, SCMO2
Date: September 6
Sponsor: IBP Bootcamp and SCM 2018

Gone are the days of engaging a System Integrator and waiting nine to twelve months for the first in a series of rollouts. With today’s cloud platform, and specifically SAP Integrated Business Planning (SAP IBP), the platform is upgraded every 3 months. Customers must dedicate resources for successful sprint completions and compress implementation timelines as the Business demands ever-faster ROI to compete for incremental market share.

Read this live Q&A transcript to get answers on how to better approach an SAP Integrated Business Planning implementation so that business value begins paying dividends in as little as four months. Robert and Ryan shared tips and best practices to address project team composition, timeline expectations, hurdles, and approach methods that facilitate a successful and faster time to value for SAP IBP implementation.

SAPinsiderMatt: Hello, and welcome to today’s live Q&A on how to better approach an SAP Integrated Business Planning implementation. We’re looking forward to a lively discussion. Thanks to everyone who has submitted  questions in advance.

Please welcome today’s panelists: Robert Birdsall and Ryan Rickard of SCMO2.

Robert Birdsall is a Director of SCMO2 with over two decades of experience. Beginning his SAP career as a Materials Management consultant, Robert has extensive hands-on experience both in implementing supply chain logistics as well as project management and methodology. Robert was certified APICS CPIM in 1995 and is active with the Project Management Institute (PMI).

Ryan Rickard is a Director with SCMO2 and an industry thought leader in the Demand Planning and Statistical Modeling space with a solution focus on SAP Advanced Planning and Optimization (SAP APO) and SAP Integrated Business Planning. Prior to moving into consulting, Ryan was an industry demand planner and senior supply chain manager in the Consumer Products sector. Ryan has over 16 years’ experience in supply chain planning, financial supply chain, and sales and operations planning (S&OP) processes. Ryan’s recent work efforts have him at the forefront in implementing SAP Integrated Business Planning models driving value in transitioning customers to the cloud platform.

Comment From Mikayla: What implementation approaches have been successful for a cloud platform?

Robert Birdsall: Almost any project implementation approach can be successful. Traditional, Agile, and Hybrid approaches have all been used successfully to implement SAP Integrated Business Planning.

Comment From Jack: How much resource time should we dedicate for an SAP Integrated Business Planning implementation?

Robert Birdsall: There is a significant dedication of resources for data and field calculation validation. Do not underestimate this aspect of an SAP Integrated Business Planning implementation. You must also field your team for process design decisions and development from legacy or external systems.

Comment From Ed: How do I plan to effectively integrate SAP Integrated Business Planning into my system landscape?

Robert Birdsall: Your biggest challenges will be the configuration of your firewall and any proxy to securely communicate with cloud services. Dedicate your WAN/LAN resources on the front end (even as early as in the design stage) to begin working these activities.

Comment From Bev: Have you implemented SAP Integrated Business Planning at companies that don’t use the SAP Jam feature? Have you found that they use other common social platforms to communicate, and if so, what are you seeing out there?

Robert Birdsall: SAP Jam collaboration brings tremendous benefits to your SAP Integrated Business Planning implementation, but it is not required. Other tools are not integrated with the planning tool, so you lose a bit in terms of efficiency. We’ve seen clients use SAP Jam, use their existing social/collaboration tools, or use no collaboration or social platforms at all.

Comment From Britt: What module should I implement first?

Ryan Rickard: Many are beginning with SAP Integrated Business Planning for sales and operations planning, which is one of the more mature modules. However, it depends on what your immediate business needs are. You may also choose to start with SAP Integrated Business Planning for sales and operations along with another module, such as SAP Integrated Business Planning for inventory or SAP Integrated Business Planning for demand, to save on implementation costs for the overall project timeline. Clients beginning with SAP Integrated Business Planning for sales and operations see the benefits of end-to-end process modeling, collaboration, and analytics or dashboarding.

Comment From Hans: Going back to the question on the implementation effort, how much effort would you put on the ERP side and on the SAP Integrated Business Planning  side? Is it 50-50?

Robert Birdsall: If the context of your question pertains to the integration of SAP Integrated Business Planning to a legacy system or SAP Integrated Business Planning, then the bulk of the work is on the ERP side. We recommend doing your transformation work there and not in SAP Cloud Platform Integration for flat-file transfers. If you use web services (for example, SOAP and REST), then it’s a mix and closer to 50-50.

Comment From Lynda: What areas of capability do we need to address in our initial scope to drive early benefits?

Ryan Rickard: If you begin with SAP Integrated Business Planning for sales and operations, you can see benefits with process modeling, social collaboration and task management, dashboarding, and analytics. Within SAP Integrated Business Planning you can manage all planning activities and reporting in one platform.

Comment From Jorge: How long should various implementation scenarios take?

Ryan Rickard: Typically, the initial implementation takes between four and six months for a single SAP Integrated Business Planning module. Additional modules can then be implemented in about four months. If you begin with SAP Integrated Business Planning for sales and operations, the timeline for subsequent modules can be a little quicker because you’ve already invested in the configuration and mapping for a majority of the master and transactional data.

Comment From Meghan: For how much of an implementation do I need a consulting partner’s help, and what stages can I do myself?

Robert Birdsall: Your consulting partner brings a lot to the table when it comes to the implementation. This experience can save you tremendous amounts of time. The consulting partner can provide a fully staffed team that can address all aspects of the implementation, or you can choose a bare-bones implementation. If you go for the minimum bare-bones approach, your internal team can pick up elements such as security, legacy side development, template development, dashboards, and change management and training. Don’t forget, though, that you will already have significant data validation activities consuming multiple resources that can’t be picked up by your consultants.

Comment From Chris: How does security work in SAP Integrated Business Planning?

Ryan Rickard: Security in SAP Integrated Business Planning is similar in many ways to what you see in SAP ERP Central Component (SAP ECC) and SAP APO. It is role-based security, where different functions (called catalogs) are assigned to various roles. You have control by role for read or write access for the functions or catalogs assigned to each user. However, a slight difference with SAP Integrated Business Planning security is that there aren’t individual security objects that you have control over.

Comment From Sean: What will my system landscape look like with an SAP Integrated Business Planning project (DEV/QAS/PRD)?

Robert Birdsall: You’ll have two “boxes” with at least a three-level landscape. Your development and test planning areas will sit on the “development” box, and the production planning area will sit alone on your “production” box.

Comment From Angela: Can I stay on SAP APO and integrate to SAP Integrated Business Planning for certain modules or capabilities?

Ryan Rickard: You can most definitely stay on SAP APO and migrate to SAP Integrated Business Planning for certain modules, and we see a lot of customers doing that today. For example, you could begin with SAP Integrated Business Planning for demand and continue doing supply planning in SAP APO. In this example you would do demand planning in SAP Integrated Business Planning and interface the forecasts back to you SAP APO system for supply planning.

Comment From Sabknath: Does SAP provide SAP APO customers with an upgrade path to SAP Integrated Business Planning?

Robert Birdsall: SAP Integrated Business Planning is the new SAP APO, but it is a re-implementation. To take advantage of all the new features that SAP Integrated Business Planning has to offer, you’ll want to go through a full design cycle with a detailed assessment of how these features can benefit your organization.

Comment From Teri: What’s the relative cost or implementation approach if you implement one module now and follow up later with at least one other module?

Robert Birdsall: You’ll have a much higher implementation cost for your first module (half as much to double the cost of implementing additional modules) as you’ll be doing the bulk of your integration during the initial project. Later, the integration effort is much less complex and costly.

Comment From Tony: How does SAP Integrated Business Planning support S&OP? What features are included in SAP Integrated Business Planning?

Ryan Rickard: That is a great question, Tony. As a former business S&OP leader, SAP Integrated Business Planning supports the S&OP process very well. Process modeling is a feature that allows you to model each process (i.e., demand, supply, inventory, and S&OP), assign activities (called Tasks) to users, and track the progress throughout the planning cycle. The Tasks are assigned to the users, and they mark the Tasks complete as they accomplish. You can then see the progress and even trigger the next steps automatically. Collaboration via SAP Jam is also a great feature. It provides a social media type communication platform to share planning notes, updates on changes, and information about required actions. Analytics and dashboarding is also an excellent feature that supports S&OP and is housed directly in the SAP Integrated Business Planning web user interface (UI).

Comment From Guest: We are using SAP transactional/Hyperion for above-market reporting and consolidation and likely not to change this framework. How do you envision SAP Integrated Business Planning and SAP Business Planning and Consolidation (SAP BPC) fitting in this environment?

Robert Birdsall: SAP Integrated Business Planning allows importing and exporting of data from almost any system. You would continue to use these applications as you do today; it’s just a matter of remapping the source and destination data.

Comment From Pierre M. Noat: I have a client that is a midsized company (150 million euro turnover) ready for an SAP S/4HANA migration on its standard SAP ECC solution. Forecast management is the prerequisite for an efficient planning solution. The company is ready for it, but would need a forecast solution (quite basic in fact). Is SAP Integrated Business Planning a possible approach or definitely not? (Note that I would have gone for a solution with Demand Planning plus SAP Production Planning and Detailed Scheduling (PP/DS) in SAP APO, but I’m not sure how to do with SAP S/4HANA?) Do you believe that is feasible?

Ryan Rickard: If you are moving to SAP S/4HANA soon, SAP Integrated Business Planning for demand would be a great solution for forecasting. However, you don’t have to have SAP S/4HANA for SAP Integrated Business Planning for demand.

Comment From Pierre M. Noat: My client is questioning the solution for forecast management — it is an important process for this client — do you think a simple SAP Integrated Business Planning solution could be an option?

Ryan Rickard: SAP Integrated Business Planning for demand is an excellent solution for forecasting. It allows for multiple demand inputs (i.e., orders, shipments, and customer point of sale), as well as various forecast inputs (i.e., statistical, sales, marketing, and finance). Demand sensing is also available if you have a requirement to react quickly to changing market conditions for short-term forecasting. The statistical forecasting feature is very robust in SAP Integrated Business Planning with new models, including ARIMA and Auto-Exponential Smoothing. Lifecycle planning allows you to link products together for new product planning and statistical forecasting.

Comment From Christine: Can you explain the concept of the unified planning area in SAP Integrated Business Planning and what the advantage of using it is?

Ryan Rickard: The unified planning area allows you do incorporate all modules and capabilities in SAP Integrated Business Planning in one (demand, inventory, S&OP, and supply). The advantage is that you have one planning area for all, instead of integrating data across multiple planning areas.

Comment From Jens Berth: How do you recommend completing integration  between SAP Integrated Business Planning and back-end SAP ECC? You mentioned both flat files and web services. What about integration to other ERP systems?

Robert Birdsall: Third-party systems (ERP and bolt-on) must use the flat-file integration. For SAP ECC, it’s a matter of deciding which method will work best for your organization. We recommend flat-file integration for companies that really want to cut project costs (as all legacy development can and should be done internally), but there is a lower total cost of ownership to using web services. That said, your consulting partner will normally do web services integration (which costs real money) as integration of SAP ECC and SAP Integrated Business Planning is more tightly coupled via SAP Cloud Platform Integration.

Comment From Dave: For companies currently running SAP APO, do you advise a clean cutover, or do you recommend running both systems in parallel for a period of time.

Ryan Rickard: I would say it depends on how comfortable and prepared the organization is to move all your SAP APO planning processes to another tool. You can begin realizing benefits for sales and operations planning, data integration, and process optimization if you do move all functions of SAP APO to SAP Integrated Business Planning at once. However, for example, we see many customers that begin with SAP Integrated Business Planning for demand and stay in SAP APO for supply planning for a while.

Comment From Eric: Are there plans to unify the SAP S/4HANA digital core and SAP Integrated Business Planning cloud to enable one integrated data source on the same cloud platform?

Robert Birdsall: I’ve not seen any plans to do so on the SAP roadmap; but beyond the current five-year horizon, it might be possible.

Comment From Guest: I need to build a clear and repeatable linkage between my S&OP process and data to my financial forecast — obviously, internal alignment, one version of the truth, increased responsiveness between the two processes, etc. — but what have you seen accomplished in a midsized environment (that is, a $2 billion to $4 billion environment)?

Ryan Rickard: One of the nice new features of SAP Integrated Business Planning is the ability to financialize planning. Standard in SAP Integrated Business Planning is the ability to include costs and prices and create (for example) forecast revenue and projected inventory costs. You can integrate financial forecasts, if maintained externally, and compare them against your SAP Integrated Business Planning financial plans. You can easily aggregate or disaggregate your financial data in SAP Integrated Business Planning as well. You can have a financial forecast for each product, which then rolls up to a family or business financial forecast that can be compared with a high-level annual operating plan.

Comment From Dan: Why are remote teams being proposed for most SAP Integrated Business Planning engagements?

Robert Birdsall: Standard configuration (SAP Integrated Business Planning/SAP Cloud Platform Integration) is relatively straightforward and can quickly, cost-effectively, and (most importantly) securely be implemented by remote teams. Lower cost remote resources are ideal to complete these activities while the more complex customization, process design, knowledge transfer, and similar tasks are best done by local resources.

Comment From Brian: Should we be using sales order history, shipment history, or both together as the basis for statistical forecasting?

Ryan Rickard: In SAP Integrated Business Planning you can use either or both actually. Different businesses use different order elements for statistical forecasting (orders versus shipments), and now within SAP Integrated Business Planning, you can create statistical forecasts for both. This simply requires that you have two different statistical forecasting key figures, which can then be analyzed and compared with each other to  determine which you wish to feed into the consensus forecast. Therefore, you are no longer forced to select one or the other. My personal opinion, however, is that using order history is typically best to capture the original demand timing and quantities that the customer wanted to begin with.

Comment From Koleman: Why would one want to use SAP Integrated Business Planning over the standard functionality in SAP S/4HANA?

Robert Birdsall: SAP Integrated Business Planning functionality works over the longer term horizon and is a replacement for SAP APO functionality. SAP S/4HANA is focused on the short term, transactional horizon. Think months and years for SAP Integrated Business Planning and days or weeks (possibly a few months) for SAP S/4HANA.

Comment From Nab: How about scenario planning in SAP Integrated Business Planning? Is it possible to transfer only delta changes to a scenario (from live data)?

Ryan Rickard: Scenario planning in SAP Integrated Business Planning is an excellent tool for what-if planning. With scenario planning you can create and share different plans and share them within your organization for review and approval, and change before being incorporated into the actual baseline plan. Scenario planning uses, or stores, the deltas in the back end. At the point in time that the scenario is created, it saves the deltas for the current (at that time) baseline plan.

Comment From Jim: Is SAP S/4HANA a prerequisite to SAP Integrated Business Planning?

Ryan Rickard: No, you can implement SAP Integrated Business Planning without migrating to SAP S/4HANA and vice versa; you can implement SAP S/4HANA without SAP Integrated Business Planning.

Comment From Christine: Since SAP Integrated Business Planning is a cloud-based application, how do companies implement new releases of SAP Integrated Business Planning with minimum impact on IT and the business related to testing?

Robert Birdsall: Releases are conducted on a quarterly basis with an offset between your development and production system. Most companies execute set of standard test scenarios each quarter to ensure there are no changes to their standard processes and then complete a feature review to determine what new elements are made available to the end-user community. It’s not as resource heavy as one might imagine. One of my clients has a single resource dedicated to doing the activity each quarter, and it completes everything in just a few days.

Comment From Guest: Are there separate modules required in the SAP Integrated Business Planning framework to introduce my financial forecast?

Ryan Rickard: Separate modules are not required, but there are separate data elements and key figures that are needed. For example Currency, Currency To, and Exchange Rates are master data elements that need to be included to support the various currencies in your business. Key figures such as forecast revenue and projected inventory cost are included and do the calculation to store and display financial plans.

Comment From Nathan: What are the biggest mistakes you see made when integrating the data from SAP ECC to SAP Integrated Business Planning?

Robert Birdsall: This is a question that I could spend an hour answering, but I’ll just stick to a few major points. First, as mentioned before, they don’t clean up their data fully and completely. Second, they integrate data imagining that they can force SAP Integrated Business Planning to work the same way they did in SAP APO. It doesn’t, and you can’t. Third, they try to turn SAP Integrated Business Planning in to a data warehouse for all their reporting needs. It has been done, but it’s really not meant for that.

Comment From Guest: So just to clarify and confirm, if I have SAP Integrated Business Planning for my S&OP processes, there is no need to introduce SAP BPC? Clarification would make my internal “sell” much easier.

Robert Birdsall: There is no need for SAP BPC with SAP Integrated Business Planning for sales and operations planning.

Comment From Pierre M. Noat: Is SAP Integrated Business Planning suitable for a midsized company, or is it still reserved for large companies, given its current maturity stage?

Ryan Rickard: SAP Integrated Business Planning is definitely suitable for midsized companies. Although SAP Integrated Business Planning is mature, it is user friendly (every planner loves Excel) and provides many capabilities that you can use or not use based on your businesses planning maturity. If you have a need for process optimization and planning collaboration, SAP Integrated Business Planning is a great tool. The analytics and dashboarding within SAP Integrated Business Planning provide an efficient and timely (live) view of your planning.

Comment From Dave: Would you provide some explanation about the SAP Supply Chain Control Tower module. How is it used? What are the main benefits?

Robert Birdsall: SAP Supply Chain Control Tower provides a suite of measures and metrics that can be used in performing analytics on your imported data. The major benefit is that you get all these standard measures and some slick reporting features without having to spend a bundle to create them all yourself.

Comment From Edison: What areas of capability do we address in the initial scope to drive early benefits?

Ryan Rickard: There are many capabilities and opportunities with SAP Integrated Business Planning to drive early benefits depending on your area of business need:

For S&OP, you can:

• Create the optimal business plan to drive revenue growth and increase market share
• Effectively balance demand and supply and attain financial targets
• Increase speed and agility of planning and drive most profitable responses
• Improve forecast accuracy and on-time delivery through collaboration

For demand, you can:

• Develop more accurate midterm statistical forecasts
• React faster to short-term demand changes with pattern recognition-based algorithms
• Drive more accurate deployment of product based on short-term demand
• Manage product transitions via lifecycle planning

For inventory, you can:

• Improve customer service levels
• Maximize the efficiency of inventory and working capital
• Improve planner productivity and standardize planning processes
• Standardize the inventory target-setting process at each tier within the supply chain to feed operational plans
• Reduce production and distribution costs

For response and supply, you can:

• Benefit from support of tactical (rough cut) supply planning, as well as operational supply planning
• Use pegging and gating-factor analysis
• Use constrained optimization and priority rules-driven algorithms
• Use unconstrained demand propagation and heuristics options
• Generate and provide allocations to Available to Promise (ATP) and reschedule sales orders
• Production and distribution (deployment) use cases

Comment From Christine: How mature is the SAP Integrated Business Planning for response and supply module, especially with regard to the deployment functionality?

Robert Birdsall: In the SAPinsider SAP Integrated Business Planning Bootcamp, we share with participants that the SAP Integrated Business Planning for response and supply module is 70% to 80% there with regard to its functionality versus SAP APO. That said, however, you get the traditional “it depends” answer when it comes to whether the deployment functionality would meet your company’s needs. I’d recommend a proof of concept (PoC) or pilot be conducted if you are considering the SAP Integrated Business Planning for response and supply module.

Comment From Guest: Is SAP BPC required to maintain alignment? Would you go big bang with SAP Integrated Business Planning plus SAP BPC, or do you stagger these functionalities?

Robert Birdsall: SAP BPC is not required to maintain alignment. Personally, I like to do a comprehensive design and then stagger functionality with a more agile approach. Either approach works, though. Consider making your choice based on where you’ll gain the most benefits by bringing certain functionality live first.

Comment From Guest: Regarding 10K forms and stock-keeping units (SKUs), how do you keep the S&OP and financial forecast aligned and reconciled? What are the tactical implications on this process?

 Ryan Rickard: If you financial plan outside of SAP Integrated Business Planning, you can determine the interface frequency to SAP Integrated Business Planning and update as often as desired. The planning in SAP Integrated Business Planning is automatically financialized in real time for comparison. You may also choose to do your financial planning entirely in SAP Integrated Business Planning; however, many companies do financial planning in other applications and interface frequently to SAP Integrated Business Planning.

Comment From Abdulrazak: What is the landscape like for developing countries, most especially in Africa, about the adoption?

Robert Birdsall: I don’t know what the adoption rate is in Africa. That’d be a question SAP would need to answer directly.

SAPinsiderMatt: Thank you, Robert and Ryan, for all your insightful answers today. For more on SAP Integrated Business Planning implementations, join Ryan and Robert at the IBP Bootcamp in Prague, October 16-18 and at SAPinsider SCM 2018 in Orlando, November 28-30.

You can reach Robert by email at rbirdsall@scmo2.com and Ryan at rrickard@scmo2.com.