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External execution of business processes (outsourcing, subcontracting, tolling etc.) has been an import aspect of a companies’ business strategy for a number of years. The motivation now is changing from a pure cost perspective to a more capacity and capability oriented one.

According to a recent study (Trendstudie "Erfolgsmodell Outsourcing 2010" by Steria Mummert Consulting) some 40% of German companies (27% in 2009) are looking for additional capacity too when engaging in outsourcing activities.

Many companies, according to the study, were forced to quickly react to strongly fluctuating market demands. And a large number of these organizations aim to accommodate them through flexible, external capacities rather than invest and build nonflexible ones internally.

For SAP users this is a very interesting trend.

"Integrated Cost and Performance Management'" solutions based on ERP CO and EPM BPC and PCM need to provide not only cost but also process capacity and rate information. And they can . . . which is great.

What needs to change though is the way the foundational ERP CO data is used and applied to the business planning models in EPM. Once these models are set up properly, their real-time capabilities allow to explore the profit and cost structures for alternative options and determine the optimal mix of internal and external capacities - the optimal course of action - in no time at all.

Combined with ‘integrated cost and performance' reporting - scorecards for executives (via XCelsius), KPI dashboards for managers (via BPC or PCM, and Analytics for the controllers (via Explorer or other BW / ERP-based reporting), the associated targets as well as actual achievement (execution) can be reported in a role-based fashion.