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03 Feb The Beginners Guide to Implementing S&OP on IBP

(By Mike Raftery)

IBP is everywhere these days.  SAP’s new advanced planning platform, Integrated Business Planning platform, is here and it is ready for prime time.  By now, if you’re a person who tends to read blogs like this, you will have seen plenty of PowerPoints, diagrams and acronyms.  Terms like HANA and cloud now appear so often, they lose all meaning.  But beyond the hype is an actual application with real tasks, actual configuration, testing, interfaces and training.  So how do you prepare for a sales and operations planning project on the IBP platform?

It’s going to be different, but it doesn’t have to hurt.  So let’s get ahead of it and start the preparation now.

It’s not an App, it’s a Platform

Practice your elevator speech.  Here’s ours: “SAP’s S&OP is not so much an application, but a collaborative platform that will allow you to make better decisions faster by combining different supply chain data points with financial analysis, in side by side simulations.

That was ok, but you can do better.  The S&OP application is incremental functionality.  Why do you need it?  Because expectations have changed. People demand answers right now.  In a world where you can find any answer on your phone via Prof. Google (or maybe his Assistant, Siri) it is not acceptable to have to take a few days before answering “what if” questions.  That’s where the IBP platform shows its value.  To have simulative capabilities modeling everything from demand to supply and inventory optimization in a single platform from a single data set is revolutionary.  The ability to visualize the impact of changes on demand, inventory, production capacity and sales quickly and easily will get you those answers in the today’s timelines.

With S&OP IBP, not only can you simulate any scenario in seconds, you can also drill down and segment that data at any level to view and analyze data at any level required.  With this application, you can remove the aggregation restrictions of BI, and the performance limitations of APO.  That means the first time your users sit in an S&OP meeting and can answer a question immediately, with the facts to back it up, you can also share in that smug feeling of self-satisfaction that they’ll have as well.

When you think of S&OP as a platform for integration, decision making and simulations, you can see the power it has beyond a traditional application.  It will become the critical nerve center of decisions to support all supply chain activities and strategies from here on out.

Be Agile, or Lather, Rinse, Repeat

If your organization runs on the cloud, you get the benefit of a “shovel ready” application, and the accompanying expectations of speedy delivery.  An application like S&OP running on IBP in the cloud (on HANA, to complete buzz-word bingo) is great because it comes ready to configure, and fully supported.  This light footprint is a perfect fit for the agile project management methodology.  The iterative incremental approach to delivery allows you to focus on the deliverables and get quick wins right away.  Since your organization is free from the back-office tasks associated with most applications, you can focus everyone’s efforts directly on the application itself, and the processes it will support.

Agile methodology is great because it allows for incremental builds and features along the way.  For a new software package with functionality as advanced as SAP’s HANA platform, your organization will find new uses and new features as you get more experienced with the capabilities.  There is no way to get it all right away.  SAP is continuing to roll out new features that you will want to take advantage of.  And your users will ask for new data, better dashboards and deeper analysis as you all start to comprehend what a real time S&OP process can bring to your business.

So start small: one business unit, one segment.  Build, learn, adjust and build again. This approach allows for small wins and multiple waves of features to keep your user base happy.  Unlike long lead time projects with big bang go lives where the features aren’t known until it’s too late, an agile approach can build on the features that work, and abandon those that don’t.  It’s a perfect fit for a cloud based solution. With this approach, you can realize return on your investment early and often in the project.

Think Evolution, not Revolution

Even though IBP will eventually replace APO on the SAP roster in 2025, it is not a version upgrade, not even close.  This is nothing like your typical version upgrades in ECC and APO with the “lift and shift” type of project plan.  This is an evolution.  IBP, specifically S&OP and inventory optimization, complement APO and work great together as a team.

S&OP can take planned orders, inventory targets and demands from APO (or any other system), and take it to a whole other level.  APO is great as an executional planning tool, but simulation and what-if planning has never been a strong point.  S&OP can take the same inputs, layer on financial data and provide answers faster than APO ever could.  You can take any process, any input, and incorporate it into S&OP.  No longer is technology a limitation, it can represent any process imaginable within the IBP platform.

This is great, if you can take advantage of it.  So do not be scared to bring in users and business partners early and often.  Help them to envision the process as they want it to be, not as they have today.  Many “requirements” of today stem from system limitations of yesterday.  So constructively question requirements.  Get to the root of the process, not the clicks of the system.  By making your users partners, not customers, you can ensure a much more relevant and useful application.  This is especially so with the dramatic difference of the IBP platform.  Running in real time, in excel, in a collaborative manner is going to be a new world for your users.  Hold hands and go there together.

Running S&OP on the IBP platform with HANA technology will change your organization.  The question is, will it add confusion and frustration, or will it act as an accelerator for your supply chain?  If you treat the migration to IBP as an IT project, odds are that everyone will end up frustrated.  If you work hand in hand, supply chain and IT, to understand, design and build a process that takes advantage of the IBP application, the return on investment will be enormous.  It sounds easy, but change is hard.  Challenge your company to take a hard look at its processes and use IBP to change the game, starting with S&OP this year.  You’ll thank me in 2025.

Still reading?  You must be interested in this topic, so be sure to check out our video series: IBP in 30 minutes.

5 Things You Might Not Know About IBP on SAP HANA
Face Off: IBP S&OP v. APO Demand Planning, Part II