Your options for implementing SAP® Integrated Business Planning for demand.

[ian_brister1]

It has become apparent to me during recent client conversations that the options available for implementing SAP Integrated Business Planning (IBP) for demand are unclear for many of our customers.  One of the underlying reasons for uncertainty in my opinion is however clear: SAP Advanced Planning and Optimisation (APO).  If you have already implemented APO, then your journey has probably been long and your system full of customisation, putting uncertainty as to what the timelines or benefits of actually implementing IBP for demand are.

In this blog I intend to highlight a number of different options on your journey to adopting IBP for demand.

Background

For those new to IBP for demand, let me start with a brief introduction. Released as part of IBP v5.0, the IBP for demand application is SAP’s next generation supply chain forecasting application. Since SAP IBP was developed natively on the SAP HANA platform, its performance outpaces that of systems that have merely been modified to use in-memory technology.  IBP for demand can be defined as;

IBP for demand =

‘Traditional’ Demand Planning + Demand Sensing + Predictive Analytics

Fig 1: IBP for demand process flow

In terms of options for implementing SAP IBP for demand, I will cover three main scenarios;

Traditional Demand Planning Only	this scenario would be likened to a direct replacement of APO Demand Planning (DP) - a mid to long term forecast being generated in either monthly or weekly buckets. And remember, no demand sensing!
Demand Sensing Only	in this scenario, demand sensing still needs a forecast input, so the assumption here would be that APO DP (or 3rd party) would still exist to provide this input
A Full Implementation	self-explanatory!

Traditional Demand Planning Only

So what kind of customer base would opt for Traditional Demand Planning only within SAP IBP?

Legacy Users

Although not the finished article, with the impending release of IBP 1608 the IBP for demand module in my opinion is a robust solution allowing those legacy customers to migrate directly on to a cloud based solution with all of its inherent benefits;

Elasticity:        Quickly scale up or down to meet computing demand

Affordability:  Only pay for what you use to minimise hardware and IT costs

Availability:    24/7 cloud system access from anywhere, on any device

Simplicity:       Free IT from managing servers and updating software

Recommending a greenfield SAP APO DP implementation today could be classed as recommending a legacy system! 

Although SAP have committed to support their Business Suite applications until 2025, I believe no real investment or development of the APO DP solution will be made. And why would it when SAP have the objective to become the world's No. 1 cloud business?

Incomplete Roll Out      

This situation is not uncommon, and also allows for your company to perform a Proof of Concept as well.  For the market(s) that you have not yet managed to roll out your current APO DP solution for, why not put them straight on to SAP IBP for demand?  Using SAP HANA Cloud Platform, integration service would then allow you to send the SAP IBP for demand forecast back to APO, assuming you need to release this to Supply Planning.  Over time, the solution you have embedded within SAP IBP for demand can then be rolled out to existing APO DP markets.

Fig 2: Using SAP IBP for demand in conjunction with SAP APO DP

Mergers & Acquisitions             

This scenario would be very similar to the Incomplete Roll Out scenario above. Why force a newly acquired company to implement a potentially outdated APO DP solution when they could as easily implement IBP for demand, in effect becoming an IBP for demand proof of concept for you?  See Fig 2 above.

Demand Sensing Only

I can see a lot of the larger blue-chip SAP APO customers opting for this approach in their journey towards the cloud, and to quote SAP;

“We believe the world is going to the cloud. But we believe customers want to go to the cloud at their own pace in their own way, and we need to give them the flexibility to do that.”

Wieland Schreiner, SVP of Cloud Suite, Products & Innovation SAP

This approach allows for existing SAP APO users to retain all of their mid-long term planning functionality (and customisation!) whilst implementing a SAP cloud based solution to look at the short term planning horizon. Note that demand sensing relies upon an input of a consensus forecast meaning the need for a ‘traditional’ forecasting tool remains.

Remember also that at this point in time, SAP IBP is a cloud hosted solution with no room for custom developments or enhancements. The only way to mitigate this is through customisation of the planning areas and key figure settings to achieve desired business results.

As the business users get used to SAP IBP for demand, and as hopefully SAP continues to deliver enhancements around functionality such as Realignment (Lifecycle Management functionality appears to be released with 1608), the large blue-chip SAP customer can then plan to migrate their SAP APO DP solution over to the cloud at a pace that suits their own budgets and timelines.

Fig 3: Using SAP IBP for demand, but only for demand sensing

A Full Implementation

Probably the boldest of the three scenarios. So what kind of customer base would opt for a Full Implementation of SAP IBP for demand?

Legacy Users

Exactly the same thoughts as per the earlier legacy section when Traditional Demand Planning Only.

Early Adopters

Embarking on another implementation of demand planning can seem onerous to some, but the benefits of what SAP HANA and SAPUI5 bring in terms of a better user experience (e.g. by providing users with near real-time information – gone are the days of an overnight batch run when the effects of a forecast change can be re-calculated in minutes) whilst reducing the overall operating cost in IT (both the human and machine elements) cannot be over-looked.

Fig 4: A full IBP for demand solution

To repeat again that although not the finished article, by the time a blue-chip would deliver it’s first IBP for demand solution to a test market in say 9-12 months from now (i.e. obtaining C-suite approval, budget in place etc.), the functionality of IBP for demand will, in my opinion, be on a par, if not better than SCM 7.0.

Conclusion

There cannot be a generic and one-size fits all conclusion to the path that you should take for IBP for demand.  Every client has its own set of circumstances, although it is fair to say that they are not as uncommon as you think.

Those organisations that recognise the choices that are now available and plot a route which maintains the integrity of their core planning processes whilst leaving room to benefit from new capabilities as they mature will find the journey most rewarding.

Ian Brister