Leveraging Predictive Analytics for Finance: The why and how.

No one can capture and analyse data from the future. However, there is a way to predict the future using data from the past. It’s called predictive analytics, and organisations do it every day.

What is predictive analytics?

Predictive analytics can help CFO’s to use the existing data and identify trends for more accurate planning, forecasting and decision making. By using predictive analytics your organisation can predict outcomes, identify untapped opportunities, expose hidden risks, anticipate the future and act quickly.

Every company wants to see into the future. How much will a product sell next month or will the demand drop off? How much will the business have to spend on manufacturing, distribution and other overheads? Does the business have a “next best offer” for a product or an estimated revenue for a newly launched product? Predictive analytics techniques are used to help answer all these questions and to create a better understanding of possible variables to aid smarter decisions.

Gain valuable insights

One of the biggest developments in SAP’s Predictive Analysis Tool has been its integration with SAP HANA. HANA provides remarkable output possibilities by using complex and heavy algorithms run on the in-memory platform.

Big Data which is the large volume of unstructured data from data sources such as external financial reporting systems, RFID sensors, Twitter, Facebook and other social media, can now be used to its advantage by using this powerful tool to forecast future performance and drive strategic decision making.

There are several routine processes that can be improved or enhanced using predictive analytics, including:

  • Target more profitable customers: By analysing the customers it is possible to identify small customer segments which are highly profitable.
  • Cash forecasting: Cash flow management is a key aspect of business to plan its future cash requirements to avoid a liquidity crisis. Leveraging data insights, financial professionals can look at trends to identify slow payers, detect and address system issues and improve receivable management.
  • Detection of financial risks: Financial departments can leverage predictive analytics to establish baseline criteria that makes it easier to identify outliers before they can damage overall company performance.
  • Demand planning: Predictive analytics can be used to forecast the sales over a period determining the demand of the product. This will help reduce returns from the customer and scrapping of the product, increasing the profitability of the company.
  • Company performance risk management: Predictive analytics can also help finance professionals get a forecasted “sneak preview” into the financial mid-period to avoid surprises.
  • Receivables aging: Finance professionals can optimise receivables aging processes and collect overdue amounts faster by setting alerts when customers deviate from past payment patterns.

SAP Activate – the innovation adoption framework for SAP S/4HANA

What is SAP Activate

With the launch of S/4HANA, SAP has undoubtedly delivered a ground breaking next generation platform for digital transformation. But with so much talk of S/4HANA, the adoption accelerator SAP Activate deserves a share of the limelight too.

SAP Activate is a content rich and agile methodology for implementation and/or upgrade of SAP solutions across industries and customer environments. It sets out an innovative adoption framework that expedites SAP S/4HANA implementations.

Agile Methodology for a Smooth Transition to S/4HANA

In my opinion, SAP Activate is an essential and greatly anticipated refresh by SAP to incorporate agile delivery concepts in different SAP Project scenarios.

The agile methodology employs an incremental approach with much more focus on users by incorporating Scrums, Sprints for Delivery and more effective documentation while keeping the quality framework intact.

I feel the most important benefit of SAP Activate is the built-in ability to ‘fail early in order to correct the course of action’. In the previous waterfall method, a long business blueprint phase was followed by another long phase of build and test, before the solution was released for user acceptance. In many cases customers rejected the solution as it wasn’t what they expected which inevitably incurred high failure costs. With SAP Activate, this risk is eliminated as the solution is delivered incrementally and user involvement in Sprints ensures that users are in constant touch.

The Customer Journey to SAP S/4HANA using SAP Activate:

SAP Activate Methodology

The phases of SAP Activate provide support throughout the project lifecycle with value delivery and quality checks to make sure that the solution delivers the expected value.

Invenio’s adoption of SAP Activate

At Invenio, we have built our expertise on SAP Activate in two ways.
1. Our project teams are being certified through SAP courses on SAP Activate.
2. We are using the Activate methodology for SAP S/4HANA migrations for our internal SAP systems. While writing this blog, we are in the process of running multiple SAP S/4HANA implementations.

Please contact us for a personalised assessment of your SAP S/4HANA adoption journey from our experts.