SAP Profitability and Performance Management for Retail

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SAP Profitability and Performance Management for RetailProductive decisions made on transparent data

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• What products / channels / shops are the most profitable?

• Which customers bring us the most money? What products do they buy?

• Which discount can we offer to the customer, while remaining within acceptable profitability?

• How does a 7% reduction in indirect costs affect the profitability of business segments?

• Should I open a new store in the city?

• What is the return of investments? (ROI)

Questions that customers are looking answers for

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This presentation and SAP‘s strategy and possible future developments are subject to change and may be changed by SAP at any time for any reason without notice. This document is provided without a warranty of any kind, either express or implied, including but not limited to the implied warranties of merchantability, fitness for a particular purpose, or noninfringement.

Modeling of financial KPIs

SAP Profitability and Performance ManagementOne tool for multiple calculations

Indirect cost allocations

Seasonality of margin analysis

Other scenarios

Cost and margin analysis at the most detailed level: client, product, channel, segment

Logistics costs analysis

Profitability analysis in multichannel environment

Processes costs analysis

Strategy and pricing



Management reporting

How to get to the right basis for decision support?

Transactional systemsProfitability and Performance

ManagementReporting systems

Income

Direct costs

Indirect costs

Extended cost allocations and calculations

What - if simulation



SAP Profitability and Performance ManagementCombination of three components

Calculation

Models

Forecasts

Transparency

Compliance

DatabasesSAP HANA, Oracle, IBM, MSQL Server,

Teradata, Hadoop, and so on

ApplicationsSAP S/4HANA, ERP, SAP BW, SAP

CRM, SAP BPC, and so on

Other sources

Data integration

Simulation and Reporting

Make right decisions in the moment

Date 0.00.00 – Client X – P r o d u c t ABC – %



SAP Profitability and Performance ManagementA perfect combination of all 3 components

Allocation

Assessment and global recharges

Top-down distribution

Activity-based costing

Enrichment

Derivation

CalculationValuation

Lookup

Currency and unit

conversion

Present value

Capital growth

Effective capital

Driver- and model-based calculations

Predictive analytics

library

R Language

FTP

Matched maturity

Net present value

Replicating portfolio

Risk management

Market risk

Counter-party default

risk

Shrinkage

Planning support

Sales planning

Cost planning

Integration with SAP

BPC

Calculationengine

Scenarios Forecasting Drill-down Auditability

Databases

SAP HANA, Oracle, IBM, MSQL Server, Teradata, Hadoop, and so on

SAP applications

SAP S/4HANA, ERP, SAP BW, SAP BPC, finance risk data platform,

and so on

Functions

Web services, microservices,R language, and so on

Other apps and data

MS Excel, CSV, andother files

Business data

aggregator

Simulationapplication

Solution capabilities


Lego like drag and drop model creation made by analyst


Business user oriented function. No coding

What do we allocate Based on which data

Driver / Function

Can allocate sums and quantities


Interactive visualization


Visualization. Full transparency


Interface for economist. What – if simulation. Stress testing

Analyze effect on profitability

Change parameters


Management reporting can be integrated with SAP Analytics Cloud


Business benefits

Achieve greater business agility through relevant and meaningful profit analysis, down to individual item level (customer, product, store level, transaction etc.)

Simplify estimation using the best allocation models for a specific scenario (standard cost, ABC, marginal cost) with flexible & reusable models

Reduce complexity using a single solution that cover the end-to-end process with a set of capabilities specific for business users roles

Fine tune customer offering, setting or resetting customer strategies based on buying behavior and resource consumption

Predict impact of cost fluctuations, reevaluate value chain and business model, gaining strategic insights for succeeding in an uncertain and volatile business climate

Easy Integration with POS system, Finance and Operation systems will allow cost allocation to more granular level


Retail Gift Card / Store Credit Profitability

Customer ProfileEstablished SAP customer looking for a performance solution to handle large volume of data• Interested in finding a solution to meet changing statutory revenue calculation requirements• Looking to execute and store multiple what-if calculation simulation scenarios• Desire to have SAP integrated solution platform with Google Cloud• Demand for eight years of outlook on revenue recognition projection• Manage USA and Canada’s Gift Card and Store Credit breakage revenue recognition

SolutionCustomer purchased SAP Performance Management to address the evolving regulatory demands of the firm’s “Gift Card Breakage” program. The focus is on modeling and accounting for the company’s gift card revenue recognition process. SAP Performance Management will be leveraged to:• Parse millions of gift card transactions enabling more accurate revenue recognition patterns of unused gift card revenue• Enable The Home Depot to satisfy regulatory reporting demands• Provide a better overall understanding of their financial position and empower enhanced reporting and decision making

Expected Benefits• Leverage SAP HANA’s native processing power for faster calculation performance• Capable of providing simulation of revenue possibilities based on breakage and redemption rates• Realization of quickly projecting out multi years’ of revenue estimates based on actual experience• Unlimited scalability and high auditable results from valuation based on Gift Card activation amounts and dates• Ability to use same tool to solve other calculation performance issues (i.e. allocation)

Case Study


How can this SAP solution enable you to change the game?

What does this SAP solution help customers do? Key facts

SAP Profitability and Performance ManagementSolution Summary Analytics

Strategic cost, revenue allocation and profitability solution

Access a centralized environment for cost and profitability management suitable for many types of organizations and industries.

SAP solutions connect processes for a variety of industry value chains by integrating horizontal lines of business with industry-specific solutions on premise, in the cloud, and through mobile devices.

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Companies can manage and analyze enterprise profitability and efficiency with the SAP Profitability and Performance Management application. The application enables companies to execute allocation and funds-transfer pricing and costing models using a high-speed finance and risk calculation engine that comprises business data aggregation and simulation and scenario management capabilities.

Fast high-data-volume processing

A strategic and business-focused profitability platform that is suitable across many industries Complementary financial management deployments using SAP HANA and the SAP S/4HANA

Finance solution Enhanced business scenarios for distributing costs and revenues and for funds-transfer pricing Strong integration with SAP BPC, enabling use of allocation rules of actuals for planning data Fast data processing, allowing business users to see profit results within seconds or minutes rather

than hours

Customers across numerous industries including banking, insurance, retail, consumer products, manufacturing, travel and transportation, and more

Run any size data model, without data replication, for superfast profit insights using the SAP HANA® platform.

Highly flexible and relevant costing models

Empower business users to rapidly create models to match their business needs through a variety of allocation methods.

Simulation and optimization tools

Use flexible analysis tools that allow users to perform ad hoc simulations and “what-if” analyses.

Transparent cost analysis

Support all levels of granularity for transparent profit insights into financial instruments, consumer products, transportation, and more.

Integrated and optimized insights

Gain enhanced profit insights by integrating and optimizing the SAP Business Planning and Consolidation (SAP BPC) application with SAP S/4HANA®.

ImproveProfit insights

ManageTime and cost of implementation

Data redundancy and costly reconciliation issues

Reduce

Customers

Learn more

Why SAP?

What are the benefits?

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Contact information:

Braam LoubserSenior Solutions Sales Specialist Platform & Technology, Africa Sales

T +27 11 235-6484

M +27 82 5961018

E [email protected]

Thank you.

SAP Profitability and Performance Management for Retail

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