Please see the SAP SyWay Analytics Approach document, section 'Documentation' for more information about the context of this document.
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- Capturing financial information such as Sales Prices, Sales Volumes
- Capturing recurring product costs
- Calculation of financial measures such as Sales Forecast, Contribution Margin
- Calculation of financial indicators, such as NPV, MIRR and VCI
- Calculation of Project Score.
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The Project Business Case must be completed for all financially driven projects, except for Items linked to a Cluster Item.
Process Flow Diagram
The following flow diagram provides context for the Business Case within the scope of all the Item/Project planning functions:
| draw.io Diagram | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
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Step | Description | Comment | |
|---|---|---|---|
| 1. | Create Item | A new Item is created in S4HANA. The Item master data is synch'd to SAC. | |
| 2. | Maintain Project Cost | A time-phased Project Cost is required for all Portfolio Items. This is entered at Item level for new Items or copied from Detailed Planning for Items with a Project/WBS. Past periods are automatically over-written with actual costs. | |
| 3 | Financial Driver? | If the Project has a financial driver, then a Business Case is required||
| . | 4. | Complete Business Case* | The previously entered Project Cost is displayed in the Business Case (non-editable). Manual inputs to the Business Case are made as required. |
| 54. | Calculate Financial Indicators* | Financial Indicators such as NPV, MIRR and VCI are calculated from the business case inputs. | |
| 65. | Calculate Project Score** | If the Project has a financial driver, Project Score is calculated based on the financial indicators from the Business Case. Otherwise, Project Score is calculated based on a Risk assessment. | |
| 76. | Maintain Item | Portfolio Item master data is maintained throughout its lifecycle. | |
| 87. | Next Action? | Various planning actions are required throughout the life of the Portfolio Item | |
| 98. | FY Budget Request | FY Budget Request is maintained for Items requiring budget for the next Financial Year. This is an annual process for the relevant Items. | |
| 109. | Stage Gate Funding Request | A Stage Gate is triggered. Depending on the Item Type and Stage Gate, this may involve a funding request. | |
| 1110. | Variation Funding Request | A Variation Funding Request is made mid-phase when supplementary budget is required. | |
| 1211. | Detailed Planning | During the life of the Item/Project a time-phased, detailed plan can be maintained at WBS Element level. This can be copied at Item level to Project Cost. Past periods are automatically over-written with actual costs. |
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Story Definition
Overview Page
An Overview Page for 'Portfolio Item Planning & Reporting' will include a link to the 'Portfolio Item Planning' Story:
- This multi-page Story manages Cluster, Item and WBS level planning.
- The Business Case is also a page within this Story.
- The Story pages for 'Portfolio Item Planning' are defined across the following Functional Specifications:
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ERP-670 SAC Planning WBS Elements
Further related planning Stories are accessed via the same 'Portfolio Item Planning & Reporting' Overview Page:
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ERP-669 SAC Planning Portfolio Items
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ERP-669 SAC Planning Portfolio Items
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ERP-669 SAC Planning Portfolio Items
N/a - individual tiles will be available on the BTP launchpad to access each story and/or page as required.
Story Page 1 - Business Case
Page Objective
This page supports input
Story Page 3 - Business Case
Page Objective
This page supports input of the Business Case and calculation of Financial Indicators and Project Score. It is also possible to display a previously saved snapshot of the Business Case.
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- If the Business Case was completed in EUR, then all currency amounts will be converted to the Item currency (if not EUR)
- If a Currency or Cost/Price Multiplier was selected, then all values and prices will be converted back to a factor of 11
- Finance will provide the relevant Exchange Rate Type to be used for currency conversions.
All quantities will be saved in the selected Unit.
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Refer here for a mock-up of the Business Case: Business Case Template - Google Sheets
The Excel Add-In for SAC will be available for this page.
The following table describes the data sources and calculationsIf multiple data sources consumed by story:
Widget | Data Model | Field | Filter / Calculation |
|---|---|---|---|
Header | PPM_ITEM | Project Name: CGPL_TEXT-TEXT1 | |
| PPM_ITEM | Project ID /RPM/ITEM_D-EXTERNAL_ID | ||
| PPM_ITEM | Project Owner: /RPM/ITEM_D-ZXX14 | Derive Personnel Name from Position | |
| PPM_ITEM | /RPM/ITEM_D-CATEGORY | Retrieve description from RPM_PROJ_CAT | |
Time Horizon | Years to be displayed in the time horizon are repeated for each table/widget and determined as follows: If Year of Project Kick=-Off not blank First year = Year of Project Kick-Off else First year = year of Planned Start (/RPM/ITEM_D-PLANNED_START) Final Final year = End Year for NPV Calculationcurrent year + 20 The following years are highlighted in the time horizon:
| ||
0. Preliminary Information | PPM_ITEM | Year of Project Kick-Off | Mandatory, format YYYY Default to year of /RPM/ITEM_D-PLANNED_START |
| PPM_ITEM | First Year of Commercial Sales | Optional, format YYYY If entered, must be >= Year of Project Kick-Off | |
| PPM_ITEM | Time to Full Maturity (Years) | Optional, integer If entered, must be >= 0 | |
| PPM_ITEM | Discount Rate (WACC) | Mandatory, format % If blank, take default from /SYQ/T_SCORING_PARAMS-PARAM_VALUE where:
Must be >= 0 and <= 100 | |
| SCORING_PARAMETERS | Years for NPV Calculation: /SYQ/T_SCORING_PARAMS-PARAM_VALUE | Where:
| |
| PPM_ITEM | Currency | Mandatory Default to Group Currency (EUR) and allow to switch to Item currency (/RPM/ITEM_D-CURRENCY) | |
| Currency Multiplier | Mandatory Select from list of defined multipliers; 1, 1k, 1m If blank, default to 1k Derive Currency Factor and Currency Display: If Currency Multiplier = 1 Currency Factor = 1 Currency Display = Currency ElseIf Currency Multiplier = 1k Currency Factor = 1,000 Currency Display = "k" & Currency Else (Currency Multiplier = 1m) Currency Factor = 1,000,000 Currency Display = "m" & Currency | ||
| PPM_ITEM | Reinvestment Rate | Mandatory, format % If blank, default to Discount Rate (WACC) Must be >= 0 and <= 100 | |
| PPM_ITEM | End Year for NPV Calculation | Calculated: If First Year of Commercial Sales = 0 then End Year for NPV Calculation = Year of Project Kick-Off + Years for NPV Calculation Else End Year for NPV Calculation = First Year of Commercial Sales + Years for NPV Calculation | |
| PPM_ITEM | Probability of Commercial Success | Optional, format % If entered, must be >= 0 and <= 100 | |
| PPM_ITEM | Probability of Technical Success | Optional, format % If entered, must be >= 0 and <= 100 | |
| PPM_ITEM | Risk Adjustment | Mandatory, format % Must be >= 0 and <= 100 | |
| PPM_ITEM | Working Capital/Sales Ratio | Mandatory, format % Must be >= 0 and <= 100 If blank, take default from /SYQ/T_SCORING_PARAMS-PARAM_VALUE where:
| |
| PPM_ITEM | EBITDA at Maturity | Optional, format as per Currency | |
1. Project Cost (FEC) | Project Cost (FEC) - Opex Currency /RPM/FIN_PLAN-CURRENCY | Display-only; Currency Display | |
| PPM_ITEM | Project Cost (FEC) - Opex: /RPM/FIN_PLAN-AMOUNT | Display-only, format as per Currency Filter:
| |
Project Cost (FEC) - Capex Currency /RPM/FIN_PLAN-CURRENCY | Display-only; Currency Display | ||
| PPM_ITEM | Project Cost (FEC) - Capex: /RPM/FIN_PLAN-AMOUNT | Display-only, format as per Currency Filter:
| |
Total Project Costs Cost (FEC) Currency | Display-only; Currency Display | ||
| Total Project CostsCost (FEC) | Display-only, format as per Currency Calculated: Project Cost - OPEX + Project Cost - CAPEX | ||
2. Project P&L Impact | PPM_ITEM | Price/Cost Multiplier | Mandatory Select from list of defined multipliers; 1, 1k, 1m Derive Price/Cost Factor: If Currency Multiplier = 1 Price/Cost Factor = 1 Price Currency Display = Currency ElseIf Currency Multiplier = 1k Price/Cost Factor= 1,000 Price Currency Display ="k" & Currency Else (Currency Multiplier = 1m) Price/Cost Factor = 1,000,000 Price Currency Display ="m" & Currency |
| PPM_ITEM | Unit | Mandatory Select from list of defined UOM | |
| PPM_ITEM | Product Volumes Unit: /RPM/FIN_PLAN-UNIT | Display-only, same as selected Unit Filter:
| |
| PPM_ITEM | Product Volumes: /RPM/FIN_PLAN-QUANTITY | Optional, format as quantity in selected Unit Filter:
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| PPM_ITEM | Product Selling Price Unit: /RPM/FIN_PLAN-UNIT | Display-only, derived as Price Currency Display / Unit Filter:
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| PPM_ITEM | Product Selling Price: /RPM/FIN_PLAN-AMOUNT | Optional, format is Currency per selected Unit Filter:
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Sales Forecast Currency /RPM/FIN_PLAN-CURRENCY | Display-only; Currency Display | ||
| PPM_ITEM | Sales Forecast | Display-only Calculated per year: Product Volumes * Product Selling Price * Price/Cost Factor / Currency Factor | |
| PPM_ITEM | Product Variable Cost Unit: /RPM/FIN_PLAN-UNIT | Display-only, derived as Price Currency Display / Unit Filter:
| |
| PPM_ITEM | Product Variable Cost: /RPM/FIN_PLAN-AMOUNT | Optional, format as per Product Selling Price Filter:
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| Contribution Currency /RPM/FIN_PLAN-CURRENCY | Display-only; Currency Display | |
2. Project P&L Impact | PPM_ITEM | Contribution | Display-only, format as per Currency Calculated per year: Product Volumes * (Product Selling Price - Product Variable Cost) * Price/Cost Factor / Currency Factor |
| PPM_ITEM | Contribution in % of Sales | Display-only, format as % Calculated per year: Contribution / Sales Forecast * 100 | |
Total Fixed Costs Currency /RPM/FIN_PLAN-CURRENCY | Display-only; Currency Display | ||
| PPM_ITEM | Total Fixed Costs: /RPM/FIN_PLAN-AMOUNT | Optional, format as per Currency Filter:
| |
| 3. Cash Impacts | Working Capital Currency | Display-only; Currency Display | |
| PPM_ITEM | Working Capital | Display-only, format as per Currency Calculated per year: Working Capital/Sales Ratio * Sales Forecast | |
Change in Working Capital Currency | Display-only; Currency Display | ||
| PPM_ITEM | Change in Working Capital | Display-only, format as per Currency Calculated per year: Working Capital/Sales Ratio * (Sales Forecast this year - Sales Forecast last year) | |
Other Cash Impacts Currency /RPM/FIN_PLAN-CURRENCY | Display-only; Currency Display | ||
| PPM_ITEM | Other Cash Impacts: /RPM/FIN_PLAN-AMOUNT | Optional, format as per Currency Filter:
| |
| 4. Subsidies | Subsidy Currency /RPM/FIN_PLAN-CURRENCY | Display-only; Currency Display | |
| PPM_ITEM | Subsidy: /RPM/FIN_PLAN-AMOUNT | Optional, format as per Currency Filter:
| |
| 5. Interim Calculations | Year XXXX - Year YYYY | Display only Year XXXX = Year of Project Kick-Off Year YYYY = End Year for NPV Calculation | |
| PPM_ITEM | Discount Period | Display-only, format as numeric, 1 decimal Calculated per year: Retrieve First Discount Period from /SYQ/T_SCORING_PARAMS-PARAM_VALUE where:
If Year = Year of Project Kick-Off then Set Discount Period to First Discount Period Else Add 1 to previous year Discount Period | |
Cashflow Currency | Display-only; Currency Display | ||
| PPM_ITEM | Cashflow | Display-only, format as per Currency Calculated per year: Cashflow = Contribution - Total Project Costs - Change in Working Capital - Other Cash Impact | |
Discounted Cashflow Currency | Display-only; Currency Display | ||
| PPM_ITEM | Discounted Cashflow | Display-only, format as per Currency Calculated per year: Cashflow / (1 + Discount Rate) ^ Discount Period | |
Risk Adjusted Contribution Currency | Display-only; Currency Display | ||
| PPM_ITEM | Risk Adjusted Contribution | Display-only, format as per Currency Calculated per year: Risk Adjusted Contribution = Contribution * Risk Adjustment % | |
Risk Adjusted Cashflow Currency | Display-only; Currency Display | ||
| PPM_ITEM | Risk Adjusted Cashflow | Display-only, format as per Currency Calculated per year: Risk Adjusted Cashflow = Risk Adjusted Contribution - Total Project Costs - Change in Working Capital | |
Risk Adjusted Discounted Cashflow Currency | Display-only; Currency Display | ||
| PPM_ITEM | Risk Adjusted Discounted Cashflow | Display-only, format as per Currency Calculated per year: Risk Adjusted Cashflow / (1 + Discount Rate) ^ Discount Period | |
Cumulative Discounted Cashflow Currency | Display-only; Currency Display | ||
| PPM_ITEM | Cumulative Discounted Cash Flow | Display-only, format as per Currency Calculated per year: Discounted Cashflow for this year + Cumulative Discounted Cash Flow for previous year | |
| PPM_ITEM | Payback Period (Days) | Display-only, format as per Currency Calculated per year: If Cumulative Discounted Cash Flow = 0 then Payback Period (Days) = zero ElseIf Cumulative Discounted Cash Flow < 0 then Payback Period (Days) =365 ElseIf previous year Cumulative Discounted Cash Flow > 0 then Payback Period (Days) = zero Else Payback Period (Days) = (previous year Cumulative Discounted Cash Flow * -1) / (Cumulative Discounted Cash Flow - previous year Cumulative Discounted Cash Flow) * 365 | |
Present value -ve Cashflow Currency | Display-only; Currency Display | ||
Present value -ve Cashflow | Display-only, format as per Currency Calculated per year: If Cash Flow >= 0 then Present value -ve Cashflow = zero Else Present value -ve Cashflow = Cashflow / (1 + Discount Rate) ^ Discount Period | ||
Future value +ve Cashflow Currency | Display-only; Currency Display | ||
Future value +ve Cashflow | Display-only, format as per Currency Calculated per year: If Cash Flow <= 0 then Present value +ve Cashflow = zero Else Present value +ve Cashflow = Cashflow * (1 + Reinvestment Rate) ^ (# Cashflow Periods - Discount Period) | ||
| # Cashflow Periods | Derived: # Cashflow Periods = End Year for NPV Calculation - Year of Project Kick-Off + 1 | ||
| 6. Financial Indicators | PPM_ITEM | Year XXXX - Year YYYY | Where XXXX = Year of Project Kick-Off and YYYY = End Year for NPV Calculation |
| PPM_ITEM | NPV (Net Present Value) | Display-only, format as per Currency Calculated: NPV (Net Present Value) = Sum (Discounted Cashflow) for all years up to End Year for NPV Calculation | |
NPV Currency | Display-only; Currency Display | ||
| PPM_ITEM | Risk Adjusted NPV | Display-only, format as per Currency Calculated: Risk Adjusted NPV = Sum (Risk Adjusted Discount Cashflow) for all years up to End Year for NPV Calculation | |
Risk Adjusted NPV Currency | Display-only; Currency Display | ||
| PPM_ITEM | MIRR (Modified Internal Rate of Return) | Display-only, format as per Currency Calculated: FVCF = Sum (Present value +ve Cashflow) for all years up to End Year for NPV Calculation PVCF = Sum (Present value -ve Cashflow) for all years up to End Year for NPV Calculation * -1 MIRR = (FVCF / PVCF) ^ (1 / # Cashflow Periods) -1 | |
| PPM_ITEM | Discounted Payback Period | Display-only, format as per Currency Calculated: Discounted Payback Period = Sum (Playback Period) for all years / 365 | |
| PPM_ITEM | VCI (Value Creation Index) | Display-only, format as per Currency Calculated: VCI = NPV / Sum (Total Project Costs) for all years up to End Year for NPV Calculation | |
| PPM_ITEM | Project Score | Display-only, numeric Refer to ERP-669 SAC Planning Portfolio Items for the calculation | |
| 7. Comments and Justification | PPM_ITEM_Long_Text | CGPL_TEXT-LTXT | Optional, long text commentary to support Business Case Filter:
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- Exchange rates must be maintained to support conversion between local and group currencies. The Exchange Rate type will be provided by Finance.
- Master data must exist in DSP (extracted from S4HANA)
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Frequency of Analysis/Report Run
The Business Case is required for financially driven Portfolio Item and will be completed/updated prior to each Stage Gate although ad-hoc updates are possible.
Testing Considerations / Dependencies
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Prerequisites for testing:
- A PPM Item exists with an Investment Reason which determines it is a financially driven project.
- Project Cost has been maintained for the Item
- Global parameters have been maintained
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