Arjen van der Sluijs

Five reasons to consider IBP over APO

Sales and Operations planning is a business process that combines input from multiple sources and stakeholders in order to deliver a projected supply chain plan. This plan is transformed through several meetings into a consensus plan, which is backed by all parties within a company. Thereby it forms the basis for monthly procurement, production and investment plans.

But that is only theory. In our daily operations we notice that it’s quite difficult to bring people together and let them form a shared vision of something as complex as an operational plan. This is why a software that supports this process exists. It uses a new type of database (HANA) that runs in the cloud, so there is no need to run a large IT implementation project, let alone employ a support team to answer daily questions and provide support to key users. And it also improves speed and agility of the process. In combination with a better user interface, implementing this software should dissolve all your problems in the blink of an eye. That’s marketing. Here we notice that cloud-based services have a high potential when it comes to TCO reduction. But we aren’t quite there yet.

When we cut a few corners and - for the sake of argument - let the marketing speech be, there are some noteworthy aspects to SAP Integrated Business Planning (IBP) that can potentially benefit your company. Based on actual implementation experiences we’ve noticed five improvements:

1) The Web interface

SAP IBP has all the eye-candy you would expect from a modern planning tool. The web interface allows users to access most of the data in a very visually attractive way. Each of the functions that are typically executed by planners are represented by large icons. This works comparable to ‘apps’ on your phone; click xxx to execute function yyy. In the background these apps are supported by Fiori techniques, allowing to disclose additional functions to the user in a very flexible way (simply by introducing a new app).

2) The Microsoft Excel interface

The hardcore planner, however, doesn’t care about flashy designed UIs. Excel is still reckoned to be the most widely used planning tool worldwide. SAP has recognized this and has developed an Excel plug-in that allows direct operations on the data (regulated, of course, by authorizations).

When seeing this, my first impression was that typically using Excel isn’t perceived as a professional way of working. However, whatever objections I had against using Excel are completely off the table after I noticed its power. The way SAP has implemented the neat integration between the HANA database and Excel is very strong. And the best part is that planners love it because it more corresponds to their daily way of working.

3) Plannable combinations

I’m not sure how it’s called in other planning software packages, but this is the concept that refers to the smallest plannable unit. A plannable unit is characterized by several criteria (product number, location, customer, etc) and per criteria it’s possible to maintain multiple characteristics (color, size, weight, forecastability, volatility, etc).

Where in SAP’s Advanced Planner and Optimizer (APO) a plannable combination (CVC or characteristic value combination) could only be created if there was a value for all criteria, IBP is less rigid. It allows the creation of a plannable combination if some criteria are known. Ideal for companies with short product life cycles, quick product introductions as a result of configurable products or any other company that rapidly introduces (and removes) product-location combinations.

4) Public cloud

In my introduction, I ridiculed the cloud concept a little bit. You can account that to my natural skepticism to new solutions that are adopted so rapidly, promising to radically change the world and make all your problems disappear like snow in the sun.

In previous projects also old-school installations of SAP ECC had been executed; so installation times ranged from 3 weeks (VPN, userids) to 3 months (ordering hardware and licenses). This case was nothing like that: we got ourselves a clean installation of SAP IBP within 3 working days. And that’s a big relief if you have a project team waiting to get started. They can use the system immediately during blueprinting / prototyping without waiting for weeks before the servers finally arrive and everything is installed.

5) Tight integration of user groups in S&OP timelines

A sales and operations planning process is typically executed within a month and it follows some tollgates that are to be met before the next step in the process is executed. IBP offers the possibility to integrate these user groups with the tollgates (or phases if you wish). There’s some pretty tight integration there, not only can users’ authorizations get limited to certain phases, it is also possible to visualize the progress that people made. In that way it is always clear to everyone accessing the system in what phase of the planning process they’re working and to what extent that phase is completed.

Our project implemented the SAP IBP Sales & Operations Planning module. Although Integrated Business Planning (IBP) contains more modules (Demand, Response & Supply, Inventory, Control Tower and Demand Driven MRP), this one is more mature than the others. However, the user experience is comparable in all of them, since it’s based on similar technical architecture.

Interested in which planning solution is the best choice for your company? This depends on the maturity of your business process and on the importance of supply chain planning in your organization. McCoy is experienced in assessing a company’s needs; our experienced consultants translate that into the business cases, implementation projects and the tool selection. Please reach out to us for more information.


SAP IBP Explained: Planning like an Expert