One of the most compelling benefits of SAP S/4HANA is embedded analytics. Over time, you can use it to transform your business into a more efficient organization. Data is power, but only if people can access, understand and apply it. SAP S/4HANA’s embedded analytics makes that happen by helping you analyze data in real time within your business applications.
We’ll start by looking at what embedded analytics is, using examples that apply to many businesses. Then we’ll discuss some of the advantages of exception-based management in SAP S/4HANA.
On one level, embedded analytics is adding features normally associated with business intelligence software, such as dashboard reporting, data visualization and analytics tools, to existing applications. But this technology is also much more than just a real-time alternative to traditional information management systems like data warehouses; it’s an opportunity to seamlessly augment enterprise resource planning processes with relevant analytical insights.
From an SAP perspective, embedded analytics encompasses all of the features, tools and pre-defined content delivered right out of the box with SAP S/4HANA. This lets organizations leverage integration between business processes and the analytics its people are viewing.
Take sales order fulfillment. Let’s say sales orders aren’t being delivered, invoiced and sent out to customers. The problem? For any number of reasons, it could be incomplete orders, or blocked orders, deliveries or invoices. In a traditional ERP environment, you’d have to execute multiple transactions to determine and then resolve the issues, starting with finding the list of incomplete orders and assigning data to them, and then looking at the blocked orders, or the blocked deliveries or the blocked invoices, and in each case resolving the appropriate problems.
For a particular sales order, it’s more efficient to know what’s blocked because it’s incomplete, or because of blocks on the order itself or in delivery or invoicing. Embedded analytics can give you tools to handle all of these things in one place. For sales order fulfillment, SAP S/4HANA offers several Fiori applications that you can leverage to get to details you need.
For example, embedded analytics might show 214 sales order fulfillment issues that you can resolve if you choose. Or if you want to deal with fulfillment issues for priority customers, you can use a similar Fiori tile that gives you more information—for instance, that of those 214 issues, which are related to which customers, and which customers have the most issues.. You get a real-time view of what those problems are. Want to drill down? Clicking on the Analyze Issues tile gets you a dashboard from SAP grouping sales order challenges into categories.
Embedded analytics can also help with exception-based management. This means examining financial and operational results—and only alerting management if the results differ substantially from what was budgeted or expected. The goal is to focus your attention on behaviours or items that fall outside whatever benchmark you’ve set in the system.
However, companies don’t take full advantage of exception-based management because ERPs haven’t always made it easy. The traditional approach: download your data into Excel and pivot it until you realize there’s issue. Maybe your problem is that you have overdue receivables or fulfillment issues, but you only reach that conclusion after analysis.
Exception-based management is meant to put that issue in your face when you come into the office in the morning and log onto SAP. It says, “Hey, Accounts Receivable accountant, this is your problem; you need to deal with it.”
With SAP S/4HANA’s purchasing analytics tiles, for example, you might see that 64 percent of your spending isn’t going through the creation of a purchase order, so it’s non-managed. The tile shows that number in red—a warning to resolve the issue – because in your business perhaps any non-managed spend over 60% (your defined threshold) is a problem. Or maybe your business wants most of its spending to come from contracts, but embedded analytics shows that almost 97 percent of spend is off-contract. Seeing the red warning, you can dig deeper. Meanwhile, if a metric is green, you don’t need to worry about it, again your defined thresholds, your management of your business by exceptions that matter to you
Clicking on “off-contract spend,” you get a bar chart showing, by supplier, all areas where the company is off-contract. You can drill down to a particular supplier by requesting all purchase orders for it. After that, you can create a new purchase order for the venture related to the contract that has been set up.
How do you know how such KPIs are calculated, and what value they bring to your organization? In SAP S/4HANA’s Fiori Library, searching for “off-contract spend” shows all applications related to that term. From there, you click to see the app’s implementation documentation and details of the KPI calculation. If it doesn’t match your requirements, maybe because you used a different time horizon, it’s easy to change that variable.
Besides delivering embedded analytics to end users, SAP S/4HANA offers tools for IT users and developers. In Part 2, we’ll explore both of those capabilities and how everything fits together as a complete business intelligence solution.