SAP BPC for Group Finance - what is the business case?

1 June 2012

Tristan Colgate

Tristan Colgate

Former Managing Director

SAP BPC has many applications across different lines of business - Finance, Sales, HR, Operations, Procurement, and so on. It is, however, a particularly strong tool when it comes to financial budgeting and forecasting, integrated with the preparation and disclosure of management and statutory reporting.  These are all processes that lie within the Group Finance function.

A Group Finance function is, by its nature, a tough customer. Considered an overhead, and conscious of the need to practice the tight financial control it preaches, the Group Finance function is often conservative in nature when it comes to investing in new technology.  Any investment it makes, rightly so, must have a robust business case and a healthy return on investment.

Cost reduction

Business cases for financial budgeting, forecasting and reporting have classically been based on a cost savings model.  Costs are saved by streamlining, what can be, an onerous process, thereby saving finance and business headcount.  This is an important part of the equation but I have yet to see a business case that provides a compelling ROI based on this alone.  It also ignores the question of why the process exists in the first place.  True, external reporting is simply mandatory, but there are benefits other than cost reduction in processing it efficiently.  In the case of budgeting, forecasting and management reporting, it is necessary to go back to the reasons why these processes exist in order to understand the business benefit being delivered.

Risk

The Financial Times recently reported that a dozen Chinese companies had missed a deadline to file annual reports to US stock exchanges in April.  It goes on to say that "It suggests that a company is disorganised or, at worst, fighting with its auditors over the accuracy of its financial statements".  The result of this is inevitably a collapse in confidence and share price and, at worst, suspensions.  Any business case, therefore, needs to consider the risks of continuing with the 'as-is'.  The challenge inevitably is how to quantify them.

Lost opportunity

Sound financial plans are the precursor for many activities that can have a dramatic impact on the fortunes of a company and failure to have them may lead to an opportunity cost far outweighing the cost of solution implementation.  Herein lies another important component of the business case.

For example, companies pursuing an aggressive acquisition strategy who are reliant on external funding for the acquisition will need to prove that they can afford it.  In a sizeable company, providing a robust cash flow forecast that supports their request is a manual and data-intensive process requiring a sophisticated solution.  SAP BPC is especially suitable for this purpose and the return on the investment in such a solution could quite easily be realised by the first acquisition that it enables.

There are numerous other examples of where Group Finance's ability to provide sound financial information to internal and external stakeholders is the precursor to key business strategies.  Again, the challenge is how to quantify these benefits in the traditional ROI paradigm.

Conclusion

Traditional business case methods centred around return on investment are not sufficient when evaluating investment in an SAP BPC solution for the Group Finance function.  In evaluating the indirect benefits of such a solution, the importance of Group Finance in the wider business' ability to achieve its goals will be highlighted and a clear and robust business case will emerge.

Bluefin and SAP S/4HANA - welcome to the one horse race

We use cookies to provide you with the best browsing experience. By continuing to use this site you agree to our use of cookies.