In recent years, a new tool has emerged in SAP's architectural pictures. In the EPM domain, we find Profitability and Performance Management (PAPM). What kind of tool is that and what exactly can you do with it?
Overview and application
PAPM is a solution from SAP built on the in-memory platform SAP HANA. PAPM enables financials and business teams to turn their information into actionable insights based on powerful mathematical models. The tool also provides strong capabilities for combining different types of data. This combination makes the tool capable of allocating costs and revenues to customers and products, for example. With the tool you can:
- Developing mathematical models
- 'On-The-Fly' calculating simulations and unlocking different data sources
- Run multiple possible scenarios over the data to enable a planning cycle for users
- Define required reports flexibly with a clear audit trail
- Improve business results with actionable insights into:
- Profitability and cost allocations
- Driver-based planning
- Shared-services costing
- Cash-flow modeling
- Etc.
The combination with "what - if" analyses provides insight into possible consequences of decisions and where these consequences are triggered. In addition, scenario analysis can help improve planning.
Key benefits SAP PAPM
- Provides precise decisions with impactful models
- Provides meaningful insights at the customer, product or channel level
- Achieves immediately actionable insights
- Aligns processes with profitability and performance
- Refers results back to other applications
- SAP
- Non-SAP
Deployment
It is possible to implement SAP PAPM in different ways, both in Cloud and On-Promise:
- Stand alone
- In SAP BW (including BW4/HANA)
- In SAP S/4HANA / SAP ERP
- SAP HANA Finance & Risk Data Platform
Which method is chosen depends on what PAPM is to be used for. Because the source data that PAPM needs may be spread across an entire landscape, it is important to think carefully about this choice. In general, it is important to install PAPM where the source data can be most easily accessed. If PAPM is to be deployed primarily for cost allocation based on S4/HANA, then it makes sense to install PAPM within S4/HANA.
Should PAPM support scheduling processes within SAP BPC, the obvious choice is to install PAPM on the same BW(4HANA) instance.
Stand alone is a possibility. However, the degree of integration with underlying systems is so great that if a support system is present, better use can be made of it.
Integration
The integration with underlying systems of PAPM is very good. It is easy to include a data object from BW, for example, into the model of PAPM. This data object is thus integrated into the dataflow of PAPM. It can easily be combined with other sources. It is also possible to let end users enter data directly into PAPM.
All this can be combined into new data within PAPM to finally also easily write it back to an underlying system.
Modelling
SAP PAPM is composed of functions. These functions come in various types that provide support to transfer "read/write data access" to SAP and Non-SAP source systems, for example:
- Tables (directly in PAPM or an info object from an underlying system)
- Joins / Views: objects to combine source data into new data
- Calculations and allocations to enrich data
- Data Output queries to analyze data
- Writers to return data to a source system
All of these functions are easy to create and set up. Basically, no knowledge of scripting is required, although basic knowledge of SQL is useful if the desired models contain more than average complexity.
Conclusion
SAP PAPM lets customers build powerful performance management applications by:
- Real-time access to source data without replication or additional persistence
- Full transparency of costs down to the individual line item level
- Flexible configuration and calculation capabilities that enable business users to provide minimal IT intervention
- Powerful iterative configuration for real-time testing, modification and simulation of modeling scenarios
With these capabilities and SAP's continued investment in the product's integration and write-back capabilities, PAPM will only become more effective as a tool to help companies analyze and control their costs and profit margins.
