A HANA-Based Analytical Application

SAP Working Capital Analytics, DSO Scope A HANA-Based Analytical Application

SAP Business Suite – Application Innovation June 2013

© 2012 SAP AG. All rights reserved. 2

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With SAP Working Capital Analytics, DSO Scope, you can analyze your days sales outstanding in an intuitive and interactive way • Anytime and anywhere on your iPad or • On your desktop computer • In real-time – powered by SAP HANA The following presentation provides information on the business background, why SAP HANA is used to run the application as well as a high level glance into architecture and HANA models.

Abstract

Additional Information – SAP HANA Live

SAP Working Capital Analytics – Introduction

SAP Working Capital Analytics – Why Using HANA?

SAP Working Capital Analytics – HANA Model Overview


SAP Business Suite – Application Innovation








SAP Working Capital Analytics, DSO Scope Definition of Working Capital

= Current Assets – Current Liabilities A measure of both a company's efficiency and its short-term financial health.

Inventory

Accounts Receivable

Cash

Other Liquid Assets

Accounts Payable

Wor

king

Cap

ital

Cur

rent

Ass

ets

Other Short Term

Liabilities

Cur

rent

Lia

bilit

ies

Working Capital

Represents the value of all assets that are reasonably expected to be converted into cash within one year in the normal course of business.

Current Assets

Current Liabilities A company's debts or obligations that are due within one year.


SAP Working Capital Analytics, DSO Scope Performance Indicator Relations and Influencing Factors

Cash Conversion Cycle (CCC)

Days Sales Outstanding

(DSO)

Days Inventory Held

(DIH)

Days Payables Outstanding

(DPO)

Inventory

Cost of Goods Sold (COGS)

Net Sales

Accounts Receivable (AR)

Accounts Payable (AP)

Operating Cycle (OC)

Influencing Factors Performance Indicators

+

-


SAP Working Capital Analytics, DSO Scope DSO-Relevant Performance Indicators and Influencing Factors

Cash Conversion Cycle (CCC)

Days Sales Outstanding

(DSO)

Days Inventory Held

(DIH)

Days Payables Outstanding

(DPO)

Inventory

Cost of Goods Sold (COGS)

Net Sales

Accounts Receivable (AR)

Accounts Payable (AP)

Operating Cycle (OC)

Influencing Factors Performance Indicators

+

-

SAP Working Capital Analytics 1.0 features content to analyze aspects relevant for Days Sales Outstanding (DSO).

The following slides provide further details with regards to DSO Analysis.


SAP Working Capital Analytics, DSO Scope Overview

Business Context / Use Case

• In today's volatile financial markets a company’s efficiency and financial health is more important than ever.

• Influencing and managing accounts receivable is of high significance in this context, especially in a global environment with major regional differences, e.g. with regards to payment terms.

• SAP Working Capital Analytics provides a new, intuitive and easy to use way to analyze Days Sales Outstanding (DSO) and related KPIs.

• SAP Working Capital Analytics allows to interactively build up flexible drill-down analysis paths to analyze complex data on a granular level.


Current solutions calculate KPIs based on classical balance sheet analysis methods (indirect method), leading to the following limitations

Key date dependent views on data only

Loss of detail, information and precision, due to calculations on aggregated data Restrictive drill down capabilities only

SAP Working Capital Analytics provides a new approach to analyse data: Powered by SAP HANA on real-time ERP data Intuitive and easy use; allows to interactively build up and

save flexible analysis paths KPI calculations based on original documents, such as

accounts receivable documents (direct method), providing authentic results and a ‘realistic’ view on cash flow Calculation based on data details provides new possibilities

to explore and drilldown (e.g. detailed analyses by customer, down to financial line items). So far, analyzing data on this level (if possible at all) was very complex, time-consuming and had to be done manually.

Current Solutions

Product Features




Customer Value

Improvements in DSO related KPIs directly impact the efficiency to collect outstanding receivables the increase of liquidity more flexible investments, using own money instead of loans improved credit ratings

Technical Prerequisites

SAP Working Capital Analytics iPad version or Desktop version (supported for Google Chrome)

SAP HANA Live for SAP Business Suite 1.0








SAP Working Capital Analytics, DSO Scope Calculation Method for DSO

SAP Working Capital Analytics powered by SAP HANA allows to calculate relevant measures based on financial line items (referred to as direct method).

The following slides provide details about typical DSO calculation methods in comparison to the direct DSO calculation based on financial line items.

The calculations are based on a simulation example outlined on the next slide.

Calculation: Introduction


Date Revenue DSO Clearing Date Receivables

01.06.2011 999,41 € 15 16.06.2011 11.878,96 € 02.06.2011 992,26 € 15 17.06.2011 12.417,71 € 03.06.2011 977,11 € 15 18.06.2011 12.886,84 € 04.06.2011 954,28 € 15 19.06.2011 13.276,78 € 05.06.2011 924,23 € 15 20.06.2011 13.579,59 € 06.06.2011 887,58 € 15 21.06.2011 13.789,09 € 07.06.2011 845,07 € 15 22.06.2011 13.901,03 € 08.06.2011 797,56 € 15 23.06.2011 13.913,11 € 09.06.2011 746,03 € 15 24.06.2011 13.825,10 € 10.06.2011 691,53 € 15 25.06.2011 13.638,78 € 11.06.2011 635,16 € 15 26.06.2011 13.357,95 € 12.06.2011 578,07 € 15 27.06.2011 12.988,34 € 13.06.2011 521,43 € 15 28.06.2011 12.537,47 € 14.06.2011 466,39 € 15 29.06.2011 12.014,53 € 15.06.2011 414,07 € 15 30.06.2011 11.430,17 € 16.06.2011 365,54 € 15 01.07.2011 10.796,31 € 17.06.2011 321,79 € 15 02.07.2011 10.125,84 € 18.06.2011 283,71 € 15 03.07.2011 9.432,44 € 19.06.2011 252,07 € 15 04.07.2011 8.730,23 € 20.06.2011 227,52 € 15 05.07.2011 8.033,51 € 21.06.2011 210,55 € 15 06.07.2011 7.356,49 € 22.06.2011 201,53 € 15 07.07.2011 6.712,95 € 23.06.2011 200,62 € 15 08.07.2011 6.116,00 € 24.06.2011 207,84 € 15 09.07.2011 5.577,81 € 25.06.2011 223,06 € 15 10.07.2011 5.109,35 € 26.06.2011 245,95 € 15 11.07.2011 4.720,14 € 27.06.2011 276,06 € 15 12.07.2011 4.418,14 € 28.06.2011 312,77 € 15 13.07.2011 4.209,48 € 29.06.2011 355,33 € 15 14.07.2011 4.098,43 € 30.06.2011 402,88 € 15 15.07.2011 4.087,23 €

SAP Working Capital Analytics, DSO Scope Calculation Method for DSO

• Each day a certain amount of revenue is generated.

• Revenue always results in a corresponding accounts receivable position.

• Customers always pay after 15 days.

Obviously, the DSO is 15 days!

Simulation Example

The table shows revenue and receivables for June 2011.

The graphic above illustrates how revenue and receivables are distributed over time, assuming that positions are cleared after 15 days. .


SAP Working Capital Analytics, DSO Scope Indirect Calculation Method for DSO (classical)

DSOt = x 30* Receivablest

Revenue of last 30 days* * Could also be any other number of days

In a first step, the ‚classical‘ DSO calculation (indirect method) is explained in more detail.

DSOt = x 30 4.087,23 €

Receivables as of June 30, 2011: 4.087,23 €

Revenue June 1 – June 30, 2011: 15.517,40 €

15.517,40 €

DSOt = 7,9 days

DSO Calculation Example Indirect Method ‚classical‘

DSO Formula Indirect Method ‚classical‘

days

Result

Although the DSO must be 15 days, we see that the ‚classical‘ approach to calculate DSO results in considerable variations of DSO values (e.g. DSO June 03: 19,3 days/ DSO June 30: 7,9 days), depending on when the calucation is performed. This effect even increases in case of seasonal fluctuations.

DSO variations resulting from calculation method


SAP Working Capital Analytics, DSO Scope Indirect Calculation Method for DSO (rolling avg. receivables) The following example shows how DSO is calculated using rolling averages.

DSOt = x 30 5.764,15 €

Avg. Receivables June 19 – June 30, 2011: 5.764,15 €

Revenue June 1 – June 30, 2011: 15.517,40 €

15.517,40 € DSOt = 11,1 days

DSO Calculation Example Indir. Method ‚Rolling avg. Receiv.‘

DSO Formula Indirect Method ‚Rolling avg. Receivables‘

DSOt = x 30* Rol. Av. Receivables 12 days**

Revenue of last 30 days* * Could also be any other number of days ** Could also be a rolling average over other perdiod

days

Result

Using rolling averages to calculate DSO decreases variations to some degree. However, DSO values are only approximations that are subject to certain assumptions.

DSO variations slightly decreased


SAP Working Capital Analytics, DSO Scope Direct Calculation Method for DSO

This slide outlines how DSO is calculated based on original documents (direct method).

DSOt =

Doc.1: posted June 1, cleared June 16, 2011: 999,41 €

Doc. 2: posted June 2, cleared June 17, 2011: 992,26 €

1.991,67 DSOt = 15,0 days

DSO Calculation Example Direct Method

DSO Formula Direct Method

days

DSOt = Σ (CD – PD) * AR

Σ AR AR = Accounts Receivable Amount CD = Clearing Date PD = Posting Date

((06/16/11 – 06/01/11) * 999,41) + ((06/17/11 – 06/02/11) * 992,26)

Result

A DSO calculation based on document details allows you to derive DSO values that reflect real movements and developments without making any assumptions.

True DSO, no variation








SAP Working Capital Analytics, DSO Scope HANA Model Architecture


SAP Working Capital Analytics, DSO Scope HANA Model Architecture

ERP Database Tables

VDM HANA Views

SAP Working Capital Analytics Private Views Layer

SAP Working Capital Analytics and VDM Query Views Layer








SAP HANA Live for SAP Business Suite What is it?

SAP HANA Live provides

Views for easy analysis of Business Suite data with SAP HANA Open for a wide variety of reporting frontends Extensible Maintained by SAP

Operational Reporting based on real-time Business Suite data

Foundation for a new class of Analytics Applications


SAP HANA Live for SAP Business Suite Architecture View


SAP HANA Live for SAP Business Suite Your Customer’s Data – Set Them Free

Open

Access via standard interfaces, especially SQL

Access with any client

Uniform

One approach for all Business Suite applications (ERP, CRM, SCM, GRC …)

Analyze cross application boundaries

Intuitive

Data models are made simple

Customizing dependencies are hidden

Real-time

Cycle time from recording to reporting is zero

Built on replication or embedded

Fast

Reporting performance powered by SAP HANA

Rapid implementation times

Extensible

Easily include customer modifications

Adjust to industry or customer language

Easily enrich with non-SAP data


SAP HANA Live for SAP Business Suite Benefits

HANA-based Analytics provides the following advantages compared to regular reporting solutions:

Open: any access to the reporting framework is based on standard mechanisms. SQL skills are sufficient to retrieve the SAP data and build models on-top with open standard tools.

Extensible: you can easily extend SAP’s model to include non-SAP data, to rename SAP terminology into your industry- or company-specific terminology and to include custom fields or modifications. The rich analytics and statistical features of SAP HANA allow to go far beyond traditional reporting.

Uniform: one approach is chosen for all Suite applications enabling a common reporting across application boundaries.

Intuitive: the virtual data model will hide the complexity and customizing dependencies of our Suite data model to make data available without deep understanding of SAP models.

Fast: HANA-based Analytics features SAP HANA as the underlying computing engine, so analytics on high data volumes and high levels of data will be possible.

Real-time: since all reporting happens on primary data (or a real-time replicate of it), there is no need to wait for data warehousing loading jobs to finish. No cycle time from recording to reporting anymore.

The virtual data model is planned as a foundation for any future analytic SAP development and especially for customers and partners to efficiently build reporting scenarios and applications on top.


Existing Stack

SAP HANA Live Deployment Options

Customers can add new analytics capabilities immediately without disruption to their existing landscape. Any investment today will be valid for SAP Business Suite powered by SAP HANA.

SAP Business Suite

(ERP, CRM, SCM,…)

SAP Frontend

Sidecar Approach

AnyDB

SAP Business Suite

(ERP, CRM, SCM,…)

SAP Frontend

Replication

BOBJ

HTML 5

Any frontend

Integrated Stack

BOBJ

HTML 5

Any frontend

SAP HANA SAP HANA

SAP HANA Live SAP HANA Live


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A HANA-Based Analytical Application