SAP business planning & consolidation overview31st July, 2015
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Agenda
► Key financial terms► Financial statements► SAP BPC objects► Business planning process in BPC► Financial consolidation in BPC
SAP Business Planning and Consolidation Overview
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Key financial terms
SAP Business Planning and Consolidation Overview
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General ledger
► Complete record of all business transactions of a company, and is used to aggregate information into the financial statements of the company.
► Comprised of all the individual accounts (represented by GL codes) needed to record the assets, liabilities, equity, revenue, expense, gain, and loss transactions of a business
SAP Business Planning and Consolidation Overview
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Legal entity
► An organizational unit for which financial statements must be created.
► Example of Legal entities’ structure
ABC Tech INDIA
ABC UKABC
Canada NSS IndiaABC USAABC
Singapore
ABC Japan
ABC UAEABC GIS
IndiaABC
Germany
ABC Services
Ltd, India
ABC AG Switzerlan
d
ABC Ins.
Tech UK
ABC BV, NL
HK Branch
ABC Australia
ABC Healthcare
Technologies Inc.
ABC Media
Tech. JV 60% Own
Proyecta
ABC Manila Branch
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Types of accounts
► AssetsItems of value owned by a company (ex: Cash, Inventory, etc.)
► LiabilitiesObligations of the company to transfer something of value (an asset ) to another party; Acts as a source of fund for the company (ex: Loans, Bonds, etc)
► EquityOwner's value in an asset or group of assets. Value of the assets contributed by the owners
Equity = Assets - Liabilities(Also known as Net Worth, Capital & Shareholders Equity)
SAP Business Planning and Consolidation Overview
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Types of accounts
► RevenueMoney the company earns from its sales of products or services, and interest and dividends earned from marketable securities
► ExpensesMoney the company spends to produce the goods or services that it sells (e.g. office supplies, utilities, advertising)
Profit (or Loss) = Revenue – Expenses(Also known as Net Income and Bottom Line)
SAP Business Planning and Consolidation Overview
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Debit (Dr) / Credit (Cr) entries
► Debits and Credits are entries made in account ledgers to record changes in value resulting from business transactions.
► A debit is an accounting entry that either increases an asset or expense account, or decreases a liability or equity account. It is positioned to the left in an accounting entry.
► A credit is an accounting entry that either increases a liability or equity account, or decreases an asset or expense account.
Example : The owner brings cash from his personal account into the business Cash (an asset) is increased thus debit Cash Owner capital (an equity) is increased thus credit Owners' Capital
SAP Business Planning and Consolidation Overview
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Trial balance
► Report run at the end of an accounting period, listing the ending balance in each account
► Primarily used to ensure that the total of all debits equals the total of all credits
► Acts as the first step in the preparation of financial statements. It is a working paper that accountants use as a basis while preparing financial statements.
SAP Business Planning and Consolidation Overview
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Financial statements
SAP Business Planning and Consolidation Overview
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Balance sheet
► A statement of the assets, liabilities, and capital of a business or other organization at a particular point in time
► Also known as statement of financial position
► Gives the snapshot of a company’s financial condition
► A standard company balance sheet has three parts: assets, liabilities, and equity
SAP Business Planning and Consolidation Overview
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Income (P&L) statement
► A financial statement that summarizes the revenues, costs and expenses incurred during a specific period of time - usually a fiscal quarter or year.
► Also known as statement of financial performance or statement of operations;
► Shows managers and investors whether the company made or lost money during the period being reported.
► A standard company income statement is divided into two parts : income & expenses
SAP Business Planning and Consolidation Overview
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Cash flow statement
► A statement that provides aggregate data regarding all cash inflows a company receives from both its ongoing operations and external investment sources, as well as all cash outflows that pay for business activities and investments during a given period
► Also known as statement of cash flows and is concerned with the flow of cash in and out of the business
► Shows how changes in balance sheet accounts and income affect cash and cash equivalents, and breaks the analysis down to operating, investing and financing activities
SAP Business Planning and Consolidation Overview
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Schedule VI reports
► Designed by Ministry of Corporate Affairs; Applicable for all Balance Sheet made after 31st March, 2011
► Amalgamation of Balance Sheet, P&L Statement, Cash Flow Statement and various notes to accounts required to support the numbers in these financial statements
► Usually published at the end of financial year by every listed company while declaring their year end results
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SAP BPC objects
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Environment
► Starting point to build models in SAP BPC
► Group of models; Set of dimensions that may be shared amongst its models
► Functional area designed to include the models associated with a business process (Planning/Consolidation)
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Model
► A functional unit used for a particular purpose
► Example : A model for sales applications and another model for head-count planning.
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Dimensions
► Dimensions represent the master, text, and hierarchy data for each of the business entities (e.g., accounts, company codes, and categories).
► Are required for mapping the complete data from backend (usually ECC) in BPC cubes
Dimension properties ► Provide additional meaning to the dimension► Example: an account dimension can include an account type property to indicate the type of
account (whether it is an income account or an expense account). ► Can be used as selection/filter criteria while reporting
Dimension members► Each dimension member record represents master, text, and hierarchy data associated with
the key of a dimension.
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Rules
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Business planning process in BPC
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Planning across different lines of business
CorporateStrategy
Finance Financial Planning
Financial Budgeting
Enterprise Strategy Management
Profitability and Costing Analysis
Sales & Marketing Sales Order Management
Trade Promotion Management
Campaign Management
Trade Fund Management
Operations Supply Network Planning
Production Planning and Detailed Scheduling
MRP/Resource Planning
Global ATP/CTP
APO/NW BW
Human Capital Compensation Planning
Strategic Workforce Planning
Key Performance Indicators
Resources Capital Expenditure
Planning
Maintenance Budgeting
Investment Planning
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Business planning process
Consolidation Tool s overview for Infosys
► Opening Activities
► Load previous year actuals data
► Upload current rates
► Perform Business Planning
► Revenue Planning
► Quantity planning
► Rate Planning
► Direct cost planning – Linked to the quantity to be produced
► Indirect/Operational cost(OPEX) – not linked directly to the production
► Capital expenditure planning (Capex)
► Human resource expenses planning
► Headcount planning – opening balance, recruitment, attrition
► Payroll cost planning
► Currency Conversion
► Generate Financial Statements
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Planning process & BPC objects
► Opening Activities
► Load previous year actuals data
► Upload current rates
► Perform Business Planning
► Revenue Planning
► Quantity planning
► Rate Planning
► Direct cost planning – Linked to the quantity to be produced
► Indirect/Operational cost(OPEX) – not linked directly to the production
► Capital expenditure planning (Capex)
► Human resource expenses planning
► Headcount planning – opening balance, recruitment, attrition
► Payroll cost planning
► Currency Conversion
► Generate Financial Statements
Flat File Load / data extract from BW
In Rates Model; Flat File Load / Input template
►
Currency Conversion Business Rule
EPM reports
• User input through Input templates
• Perform calculations using logic scripts / member formulas / BADIs
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Business planning activities’ affect on financial statements
ABC CompanyStatement of Profit & Loss
Revenues ……………$5,000Cost of Sales ……………3,000
Gross Margin …………2,000
Operating ………………………400Payroll ……………………………300SG&A ……………………………250Depreciation ……………………50
Operating Profit ……1,000
Interest Expense ……………50Net Income ……………$950 B
Sales Planning
Module
Expense Planning
Module
Capital Planning
Module
Operational Headcount
Application
LiquidityPlanning
application
S&OPPlanning
Module
IT/ Project Planning
Module
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Financial consolidation
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Consolidations
Controlling
Internal Audit
Local Close cycle
1
Intercompany
Reconciliation
2
External Financial reporting
6
Financial Management
review
5 Group Financial Consolidation
4
3
Data submission to GROUP
Financial consolidation & reporting in a business
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Financial consolidation process
► Opening Activities
► Carry Forward Balance
► Currency rates
► Update Ownership
► Data collection
► Load SAP Data
► Load non SAP Data
► Input Notes to Account Data
► Report Individual Schedule VI Financial statements
► Group Level Activities
► Run Currency conversion
► Run Controls
► Run Consolidation
► Submit Journal Entries
► Review, Finalize consolidation
► Publish Final books of account
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Consolidation process & BPC objects
► Opening Activities
► Carry Forward Balance
► Currency rates
► Update Ownership
► Data collection
► Load SAP Data
► Load non SAP Data
► Input Notes to Account Data
► Report Individual Schedule VI Financial statements
► Group Level Activities
► Run Currency conversion
► Run Controls
► Run Consolidation
► Submit Journal Entries
► Review, Finalize consolidation
► Publish Final books of account
Carry Forward Business Rule
In Rates Model; Flat File Load / Input template
In Ownership Cube; Flat File Load & Ownership Manager
Flat File Load / data extract from BW
Flat File Load / Input Template
Input Template
EPM 10 reports
Currency Conversion business rule
Validations/Controls in Controls Monitor
Elimination Business rule; Through DMP or Consol Monitor
Journal Entries
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Thanks
SAP Business Planning and Consolidation Overview