Integrated Planning And Simulation: Delivering New Insights At High Speed

Thilo Sekol

As businesses everywhere embark on their transformation journey, speed becomes critical for controlling. This put me in mind of an old story from Tom Peters’ book Liberation Management, circa 1993, quoting Toyoo Gyohten, now honorary advisor to the Institute for International Monetary Affairs:

“I was talking to one of Japan’s best foreign-exchange dealers, and asked him to name the factors he considered in buying and selling. He said: ‘Many factors, sometimes very short-term, some medium, and some long-term.’ I became very interested when he said he considered the long term, and asked him what he meant by that in time frame. He paused a few seconds and replied with genuine seriousness, ‘Probably 10 minutes.’ That is the way the market is moving these days!”

In this new normal, CFOs and their controlling teams are expected to support the business with insights that can only be delivered in real time by a new generation of tools. An example of a scenario now possible is the integration of financial and controlling data into one universal ledger to merge in real-time accounting and controlling without additional postings.

We would like to suggest here a few basic questions that any organization willing to deploy an integrated planning and simulation scenario should ask:

Business model – How do you want to steer your future business? Do you need to “reimagine and design” your business models?

Organization – How do you want to optimize your organization to survive? Is your structure still valid?

Processes – What would be the best (planning and controlling) processes to support your company? What are the ones that you can sunset, costing you time, resources, and energy?

Systems – Which systems bring your ideas to high speed and help to reduce total cost of ownership? What should your future infrastructure look like?

Once these fundamental questions are answered, organizations can confidently get started with their integrated planning and simulation project. From this point on, the key objective will be to reduce manual input processes during the planning (and simulation) cycle and find automated ways to fill in the necessary information.



integrated-planning-example

This figure shows an example of an integrated planning process (selected part). Units and days sales outstanding (DSO) in the yellow boxes need to be planned manually. The gray boxes run automatically (based on assumptions and formulas). Less input, lots of automation, high efficiency!

Combined with new technology such as in-memory, organizations can now set up a high-speed infrastructure to perform simulations after and during the budget cycle without a lot of effort. In-memory technology makes it possible to create complex (and high-end data volume) simulation models – including changes in currency, sales, and cost – and run them in real time.

With efficient reporting and solutions such as the digital boardroom, the controlling teams now have the potential to support business decision makers in any function, including sales and production, and help their company transform into a live business.

To learn more about the value of instant business insights and how to thrive in a fast-paced digital economy, read CFO.com’s thought leadership report, Financial Planning and Analysis 2016. More great resource for CFOs is available now at the SAP finance content hub.


Thilo Sekol

About Thilo Sekol

For 10 years, Thilo Sekol has worked for SAP as a senior consultant. To help customers succeed, he applies his experience in operative controlling procured over 14+ years as head of controlling, board member, and various other roles before joining the SAP CFO Advisory team. Thilo is focused on helping companies optimize their planning and controlling processes to reduce IT and business costs and increase overall efficiency. He has a degree in Business Administration (Mannheim/Germany) and an MBA (Michigan/USA).