I was reading the newspaper recently and came across a story about a Spanish submarine that was constructed 70 tons too heavy. Officials didn't discover the problem until the submarine was nearly complete. Now they fear if they launch the sub it would be too heavy to resurface! How did this happen? The problem can be traced to a miscalculation — someone apparently put a decimal point in the wrong place. Ouch! Something as simple as a keying error resulted in a $2.7 billion dollar paper weight. Fortunately, engineers think they can enhance the sub to make it seaworthy but this story illustrates how costly user errors can be. Segue to the world of finance where roughly 70% of companies rely solely on Excel for planning, budgeting and forecasting and the stories of user error and resulting time loss may not be as astounding as an overweight submarine but are just as prevalent.
This is one area where solutions like SAP's Business Planning and Consolidation (BPC) can help. The application automatically calculates totals, checks syntax, controls data accuracy. This is one way that costly mistakes, like the overweight sub, can be avoided. I am not saying you can ever totally eliminate user error, but you can greatly reduce the number of manual inputs into your plans and forecasts with the automation a tool like BPC provides. Even if you are still reliant on user input, in the budgeting process for example, BPC provides a framework for managing these processes so that errors, like a misplaced decimal, are quickly identified, by BPC's validation rules in this example where management can set thresholds above which either the user is warned or prevented from entering data that violates the rule, and corrected in real time. I can share countless stories of some poor finance person whose responsibility it was to manually consolidate excel spreadsheets during the budget process.
At one company it took over two weeks for one lone 'budget guy' to come up with a consolidated plan. What a relief it was for him when they implemented BPC. Now the budget is consolidated real-time with the proper checks and balances. The 'budget guy' is now free to work on more value added activities, not only that, across this company's planning, forecasting and reporting processes they were able to shave some 9,000 man hours from the processes annually. Efficiency gained through automation can be great, as I've just illustrated, but that is just the tip of the proverbial iceberg. BPC returns the most value when it is approached as a comprehensive performance management initiative spanning People, Process and Technology. At Column5 we believe the technology is the foundation upon which you deliver the true business value. Once you have a solution like SAP BPC in place you need to address the People and Process.
You have to create and provide:
The Right Model
- Model processes across the whole “enterprise”. Cover strategy, operations and finance
To the Right Audience
- Include all decision makers – who needs to contribute and consume this data?
At the Right Time
- Frequency – Rolling forecast, monthly updates, weekly flash reports
Watch our webcast BPC v10 Roadmap & Demonstration
During this joint Column5 and SAP Webcast, we will discuss the upgrade path/process to SAP Planning and Consolidation version 10.0. We will demonstrate new features, tips and tricks along with implementation considerations.