From Snail Slow to Lightning Fast: Profitability Analysis from SAP

January 24, 2012 by SAP News

In brand-driven industries like consumer products, where margins are slim and the business environment is unpredictable, it is crucial to monitor costs and revenues closely. Such profitability analysis is critically important across a variety of business functions in consumer products as it provides sales, marketing, product management, finance and other departments with information to support internal accounting, month, quarter and year-end close activities and other ongoing decision-making.

The sheer volume of data, and the inherent complexity of the data required to run profitability analysis creates significant business challenges. While the consumers of the analysis itself may not understand or even be aware of the underlying data complexity that creates these challenges, they are subject to implications and impediments.

For example, consider a salesperson attempting to understand the profitability impact of a potential change to a promotional offer. If the salesperson has to wait 10-15 minutes for the report to return that summarizes the results of that change, the sales person will be far less rigorous in his or her analysis of available options and, as a result, may very well miss the opportunity to identify the best overall option.

If a brand manager wants to understand how a price increase for a key manufacturing input will effect brand P&L but, due to the complexity of the underlying data, has to wait 24 hours for the report to run, that creates a process impediment for exploring alternatives to offset the price change and sustain existing profitability.

Challenges like these are unfortunately the norm rather than the exception when it comes to profitability reporting.  Due to the inherent complexity of the analysis, more often than not profitability reports must be scheduled to run only on a periodic basis or, if needed ad hoc, requested directly from business analysts often working in the IT organization.  As a result, reports are almost always highly structured making them difficult, costly and time consuming to modify.

All of this serves to separate the consumer of the analysis from the analysis itself. It also translates to decision lag time and missed opportunities to accelerate and extend market leadership or to respond quickly and profitably to changes in the business environment such as variable materials costs, price and margin pressure from retailers, internal budget considerations, fluctuating fuel and other energy costs, and more.

With its new cost and profitability analysis generation, SAP CO-PA Accelerator based on the in-memory technology of SAP HANA, SAP helps address these issues by addressing underlying changes to how the volume and complexity of data is managed:

Accelerate decision support for business users by enabling reports that previously ran in minutes or hours to run in seconds

Give business users direct access to the analysis whenever and wherever they need it, eliminating the need for report scheduling and run times

Provide business users with the capability and flexibility to modify reporting options on the fly, promoting rigorous real-time analysis to identify optimal responses to market dynamics and eliminating strict IT oversight

With these capabilities, it’s easy to revisit the same business challenges mentioned above.  For example, with the new SAP CO-PA Accelerator software, a salesperson will be able to evaluate different options for a potential change to a promotional offer simultaneously and immediately to identify the best overall option to optimize revenue and profit. And, now a brand manager can immediately calculate alternative manufacturing settings to offset the impact of an ingredient price increase on the brand P&L to prevent profitability losses.

These benefits are not only applicable to sales and marketing but to all departments that have a need to monitor and manage costs, pricing, and other elements of profitability. Your organization can have the same reports you run today available in seconds rather than in days and hours. The reports will be made available with no down time, no process changes and, best of all, no new training for your business users. And, you’ll have the ability to offer your business users tools to give them the option to modify reports and reporting results to support both ad hoc and more granular analysis than what’s available to them today.

A couple of great examples of companies enjoying these benefits come from two early adopters of the solution.  One early adopter, a world leader in animal nutrition, achieved amazing results using the SAP CO-PA Accelerator. With the rapid-deployment solution they came up to a “Triple-3” accomplishment: 3 days of proof-of-concept, 3 weeks of implementation and 3 times faster month-end closing! The company could reduce the time to analyze 10 million rows of fresh CO-PA data from 10 hours to only 2.4 seconds and so the reporting just got about 15.000 times faster, Within one week they reduced working capital by half a million euros and were able to improve profitability and market responsiveness.

The second early adopter, a leading home & personal care company, went live with SAP CO-PA Accelerator after only eight weeks. They used exactly the same reports as they were run in the previous environment, but now enjoy significant improvements in reporting performance. For example, an average brand report with a former run time of eleven minutes could now be run in less than one minute and a detailed customer report that took four to five hours to run now returns in 90 seconds. Best of all, some reports that previously timed out are now running and returning in seconds.

These are just a few early examples, and more and more companies are enjoying similar results every day.  To learn more about how your organization can benefit from significant improvements in profitability analysis with SAP CO-PA Accelerator, please visit us online.

Uwe Decker is head of Consumer Products EMEA at SAP.

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