How can SAP® data be made actionable?
Executive Briefing for CFOs, CIOs and Strategy Managers
In many organisations, SAP® Software play a central role in the collection, processing and analysis of financial, investment and project information. Solutions such as SAP S/4 HANA ® , SAP PPM, SAP PS, CO, FI, BW and SAP Analytics support planning, forecasting, simulation and reporting in a structured manner.
Transactions, budgets, liquidity trends, project structures, resources and dependencies are systematically documented. This provides a consistent and integrated database.
In the context of portfolio decisions involving several projects to be considered simultaneously, this database can be converted into a formal decision-making model.
1. Functional classification of SAP software solutions
SAP software solutions typically handle tasks in the following areas :
- Transaction recording
- Budgeting
- Cost and profit accounting
- Forecasting and liquidity planning
- Project and resource structuring
- Reporting and analysis
Depending on the modules used and individual configuration, planning and simulation functions may be implemented in various forms.
These systems provide a structured basis for strategic and operational decisions.
2. Extension with formal decision models
Additional mathematical models can be defined for portfolio decisions involving multiple projects. Among other things, the following elements are taken into account:
- Income and expenditure
Modelling is based on existing data and supplements the existing information structure with a formally describable decision logic.
3. The combinatorial decision space
When several projects are considered simultaneously, a combinatorial decision space arises.
For example, with :
10 projects → 1,024 possible combinations
20 projects → over 1 million combinations
50 projects → 2^50 ≈ 1.125 quadrillion possible combinations
The number results from the mathematical structure of possible project combinations under defined constraints.
4. Structuring relevant data
The following data points, amongst others, can be used for transfer into a decision-making model :
- Capital expenditure (CapEx)
- Operating expenditure (OpEx)
- Payment profiles
- Multi-period cash flows
- Financial valuation metrics (e.g. IRR, NPV)
- Resource allocations
- Logical project dependencies
Consolidating this information creates a consistent portfolio dataset that can be described mathematically.
5. Definition of objective measures
A decision-making model is based on a defined objective measure. Possible objectives may include :
- Maximisation of financial indicators
- Stabilisation of liquidity
- Limitation of risk
- Fulfilment of strategic criteria
- Multidimensional combinations of objectives
The definition of objectives determines the structure and logic of the model.
6. Mapping of constraints
Typical constraints may include :
- Annual budgets
- Multi-year caps
- Resource ceilings
- Strategic minimum requirements
- Regulatory requirements
Formal mapping of these conditions clearly defines the permissible decision space.
7. Architectural considerations
Functionally, different levels can be distinguished :
- Operational data collection and planning
- Formal decision modelling
These levels can be integrated or modular in design, depending on the system architecture and organisational structure.
The description is functional and does not constitute a performance or system comparison.
8. Transparency and Documentation
A formally defined decision-making model enables :
- Traceability of constraints
- Documentation of alternative scenarios
- Comparison of permissible portfolios
- Quantification of different performance metrics
This can support transparency and governance requirements.
Executive Summary
SAP software solutions provide structured, consistent and integrated planning and financial data.
For portfolio decisions involving multiple projects, this data base can be supplemented by formal decision-making models that mathematically represent target values and constraints.
The combination of operational data structure and formal modelling enables a systematic analysis of possible project combinations under defined constraints.
Legal notice :
SAP is a registered trademark of SAP SE or an affiliated company. These references are made solely for descriptive purposes within the context of a technical and architectural classification.
The functional distinctions shown serve to provide a general description of different system roles (e.g. System of Record, Planning Layer, System of Decision). They do not constitute a comparison of performance, functionality or quality in the sense of comparative advertising.
The actual scope of functionality of SAP software solutions depends on the modules used, individual configurations, customer-specific extensions and third-party solutions, and may vary in individual cases.
No claim is made regarding the incompleteness or inferiority of existing ERP or planning systems. The mathematical optimisation approaches described represent a complementary methodological consideration.
