SAP TPM or Excel, which is your money on?

9 October 2012

Matt Harper

Matt Harper

Delivery Director

Did you know...?

  • Up to 30% of revenue is spent on trade marketing and trade promotions. This is a huge cost when you consider large companies exceed turnovers of £10billion. It's actually the 2nd biggest item on the P&L after cost of goods sold.
  • In addition, ~30% of the sales force time is spent managing these activities, which is a laborious task, and is often not 100% accurate.
  • Most Consumer Business Sales Executives are under pressure from retailers to increase sales. It's what drives the success or failure of an organisation so it needs to be right, and it should be measurable organisations can benchmark and continually improve what is spent, on what, and when.

Bearing in mind the above, I think it's clear that the subject area of SAP TPM is a hot topic. So how do most organisations carry out these activities? The answer is that most use the good old spreadsheet, and why not? It's cheap. Everyone knows it. Everyone has it. It's portable. It can be amended as little or as often as needed. And it gives you all the information you need in a few documents stored on your laptop. Happy days, right? 

I could stop there, but I have a challenge to the above state of utopia!

  • What if the Holy Grail that you make your all-important TPM decisions on is lost? By not being held on a central enterprise-wide system, the risk of sensitive information getting into the wrong hands increases. So does the need for rework should this unfortunate situation occur
  • If it sits on your laptop, who else has visibility of it unless you send it to them?
  • Who supports it if you get a problem? Who understands the algorithms, visual-basic code and can verify if it is correct or not?
  • What are the implications of a typo in one or more cells?
  • What happens to the IP if you leave the company?
  • Wouldn't time be better spent adding value, rather than continually doing the same repetitive task week after week?
  • How does the spreadsheet integrate with other data to determine whether a campaign is good, bad or indifferent, and what actions are triggered in each scenario? What is the earliest a campaign can be withdrawn should it be having a negative effect?

But what if...?

  • There was a central repository, governed by authorisations so that only the right people see the information they need to do their job, and there is one single version of the truth
  • One system enables more parties (from sales, trade marketing, finance, marketing and demand planning etc) to update/review concurrently, reducing the time taken to reach a decision
  • Automated links can be integrated to the one system, rather than many disparate versions of spreadsheets, reducing the amount of non-value-adding repetitive tasks, and increasing the integrity of the data (reducing the risk of human error)
  • Linking to SAP ERP & Planning systems enabled benchmarking to take place so that spend can be measured; there is a need to be more efficient with spend (get more bang for your buck), and be optimised (understanding the impact of spend quicker)...
  • ...enabling agility such that poor spend is minimised (and when recognised, corrective action is taken swiftly) and effective spend is maximised. Or spend is reduced for the same outcome
  • Processes can be followed in a more consistent manner, complying with rules set by management, with breakpoints that prevent overspend in any particular time period
  • A support service can be deployed to ensure the solution is fit for purpose, maintained, supported and centrally developed / improved

The good news is that you can do this with an SAP TPM solution, but you need to be committed to some capital expenditure to get it up and running. That said, the ROI is considered to be 4% year-on-year.

So let's work the numbers through

If you take a £10 billion turnover company that spends 30% on trade marketing / promotions, that equates to £3 billion. Assume that their ROI is currently 20%, equating to £600 million. Increase this year on year by 4%, and the benefit is £24 million a year. Perhaps the above case is looking at the best case scenario, but the numbers are very big, so no wonder this is a hot topic.

A final thought

Does it really have to be one way or the other? Guess what...I would argue not!

Rarely does one size fit all, and we sometimes need up to 50 shades of a colour somewhere between black & white, but enough about my private life! So what if one could have the Excel front-end (which meets all the good points mentioned in the first paragraph above), but it was interfaced to the single version of the truth which is SAP TPM.

Going forward, with us humans being the inquisitive types, one imagines we will want more granular data (big data), and we will want it quicker, and all integrated. I could mention SAP HANA for TPM but that would be a shameless plug!

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