By focusing on factors that make the most impact on our business, driver-based planning gets rid of the noise and hones in on what is important – the impact of key business and value drivers on your business. While past performance, seasonality and patterns help bridge the future as a baseline, defining key business drivers and leveraging them to assess cause and effect with what-if analysis can provide businesses both tactical and strategic decision-making insights. Letting you run multiple simulations to help predict and more importantly, prepare for what may be coming around the corner is the value proposition of driver-based planning. Lets explore tools in SAP Analytics Cloud that offer solutions in developing driver-based planning models.
Finding drivers with Augmented Analytics in Smart Discovery
The prevailing challenge with driver-based planning is to identify the right driving indicators that impact business performance. With SAP Analytics Cloud, why not get an assist from a “data analyst in a box” in Smart Discovery? The solution automates data exploration using the relationships between dimensions and measures. Results are then dynamically built as story showing key insights, patterns, drivers, influencers, outliers and an interactive “what if” simulation. This is a machine learning driven solution void of any user inputs or filters. The auto-generated story is unbiased and objective in surfacing insights. In essence, bubbling up key driver insights and identifying drivers, key influencers or outliers. Insights we may not have anticipated but can now leverage.
Visually representing driver-based process with Value Driver Tree (VDT)
SAP Analytics Cloud offers a great graphical representation solution for driver-based planning with Value Driver Tree (VDT). Business users at times struggle to see the forest for the trees as they get so involved with their section of planning. Value Driver Trees help alleviate this by graphically showing the planning chain, the interdependencies and any hierarchical relationship at both the ground and at the 30,000 feet perspectives. As drivers are adjusted, the impact is immediately rendered downstream showing the effect on the planning process as a whole. The tool is intuitive, allowing users to make adjustments to drivers either as a dollar value or percentage on the fly.
Planning on calculated members with Inverse Formula
Planning structures typically have calculated members such as profit or revenue that cannot be adjusted directly. Developers would have to come up with complex and at times, egregious work arounds to plan on parent level drivers by indirectly impacting calculated formulas to get the job done. With the Inverse Formulas feature offered by SAP Analytics Cloud, a formula can be converted into an input ready cell without any modification to its underlying constituents. As a quick example, let’s take the calculation for profit: Profit = [Revenue] – [Cost]. By adding an inverse formula, [Revenue] – [Cost] | Inverse ([Cost] = [Revenue] – [ Profit], we can now enter values for profit directly onto the cell. Cost dynamically gets updated with Revenue remaining constant. This can also be further enhanced by creating and inverse for revenue as well and then using the cell locking feature to control which measure changes. In fact, the feature allows for multiple, nested, conditional and across version inverse formulas. Coming from an SAP BPC background, I can attest to the value that Inverse Formulas brings to the table.
Understanding true value-drivers and levers that determine business outcomes is at the core of driver-based planning. SAP Analytics Cloud provides compelling solutions to these age-old planning challenges. Leveraging machine learning with Smart Discovery, graphical visualization of the planning landscape with Value Driver Tree (VDT) and Inverse Formulas to plan on calculated members – all value adds to any planning solution. Check out the video showing Smart augmented analytics in action by clicking here.
What are your thoughts on SAC and its planning capabilities? Do you think it is getting close to challenge SAP BPC? Add to the discussion by sharing your thoughts in the comments section of this article or the post.