The changing dynamics of the business world calls for a financial service solution that does more than just reporting. In comes the SAP Profitability and Performance Management (SAP PAPM). This solution assimilates and analyses finances through various forms of financial modeling, but PaPM was not where it all started.
The financial service solutions under the SAP initiated with performance management of financial services commonly referred to as SAP FS- PER. Let us look at each of them as an individual entity.
SAP financial service- FS-PER
SAP FS-PER mainly was conceived with an idea to assist banks and insurance companies in risk assessment. Financial services rendered under this solution setup mainly dealt with assessing the insurance values and fund transfer strategies.
The risk assessment was the highlight of the initial SAP FS-PER solution that was possible with the option to integrate with SAP finance and risk data platform.
SAP PaPM
SAP Performance and Planning Management came into existence as the successor of the existing FS-PER solution. Touted as the next-gen solution PaPM provides useful information through huge volumes of data.
It also provides a feature of forecasting through ‘what-if’ situations and simulation. It operates on a three-wheel form: data aggregator, calculation engine, and analytics data for simulation.
Need for the shift
The need for a shift to a next-gen financial service solution arises from the narrow functionality of predecessor solutions. As stated earlier, it mainly focused on the financial service industry such as insurance and banks.
With the increasing impact of finances beyond the core banking and insurance industry, the situation demanded an upgraded solution. So, the entry of PaPM was inevitable. The PaPM solution is designed to provide services beyond the banking and insurance realm
The stark areas where PaPM focuses to provide complete financial services include- Mining, engineering, and construction operation, Industrial Machinery & Components. The reason it demands attention stems from its exclusivity.
The function of SAPs Performance and Planning Management
The function of PaPM as a data aggregator-
In the case of any data aggregator, replication of data is the cause of various irregularities in the process of data collection. This problem accentuates when the data are pooled together from various sources, It is where the role of PaPM as a data aggregator comes into play.
SAP Profitability and Performance Management (SAP PAPM) gathers from various sources regardless of the nature of the platform, SAP native, or not. The inbuilt security measures shield the stored information. Also, the process of data collection has zero replication.
On a side note, if you find the need to replicate the data, the PaPM platform allows for it. But the replicated data does not affect the mainstream data. Other crucial benefits of PaPM, as a data aggregator includes setting up a real-time connection with fast loading.
The function of PaPM as a calculation engine
The second crucial functionality of the PaPM is to make sense of large numeric data gathered in the first stage. The PaPM calculation engine performs various mathematical operations to present data in a suitable form, which in turn helps in financial modeling.
The calculation mechanism includes components such as currency conversions, joins, and direct & indirect allocations. Users can also make customized calculation processes.
The calculation process follows a path, and traces of the path left behind for auditing. Also, with PaPM, the calculation can be written back to the SAP BW database. This completes PaPM as a planning tool that does not require coding skills for a normal business user to track back the data.
The second crucial functionality of the PaPM is to make sense of large numeric data gathered in the first stage. The PaPM calculation engine performs various mathematical operations to present data in a suitable form, which in turn helps in financial modeling.
Conclusion
Since it launched, SAP Profitability and Performance Management (SAP PAPM) has succeeded to instill changes in the perception of the financial solutions from the POV of businesses.
The perception was myopic in many ways, as there was an absence of solutions to inspire innovative changes. The PaPM platform with its limitation has brought back the vigor for innovation, and one feels that more improvements are on the way.