CPM and Balanced Scorecard with SAP

Foreword ... 13

Acknowledgments ... 15

1 Introduction and Overview ... 17
1.1 How this Book is Organized ... 18
1.2 Getting the Most out of this Book ... 18
1.3 Summary ... 19

Translating Strategy into Action: The Balanced Scorecard...21
2.1 Overview ...21
2.2 History of the Balanced Scorecard ... 21
2.3 The Balanced Scorecard: Conceptual Foundations ... 23
2.4 The Balanced Scorecard: Components and Structure ... 24
2.5 The Need for a Balanced Scorecard Process ... 26
2.6 SAP BW: Conceptual Foundations ... 27
2.7 Building SAP BW InfoCube Architecture ... 29
2.8 SAP CPM: Conceptual Foundations ... 33
2.9 Summary ... 35

3 Introduction to SAP CPM ... 37
3.1 The Balanced Scorecard Model using SAP CPM ...38
3.1.1 Managerial Approach ... 38
3.1.2 Systems Approach ... 40
3.2 SAP CPM Components ... 41
3.2.1 Strategy Management and Its Components ... 42
3.2.2 Performance Measurement and its Components ...65
3.3 Integration of CPM with other SAP components ... 72
3.3.1 Integration with SAP BW ...72
3.3.2 Integration with SAP HR ... 73
3.3.3 Integration with SAP Financials: FI/CO, BPS, and BIC.74
3.4 Drilldown Applications in the Management Cockpit ... 74
3.5 Summary ... 77

4 The Measure Builder ...79
4.1 Overview of Measure Builder ... 79
4.1.1 Performance Indicators ... 80
4.1.2 Leading and Lagging Indicators ... 80
4.1.3 Balance of Measures ... 81
4.2 The Measure Builder Framework ... 81
4.3 Components of the Measure Builder ... 84
4.4 Creating Your First Measure . 87
4.5 The Measure Configuration ... 89
4.5.1 Definition Tab . 89
4.5.2 URL Tab . 93
4.5.3 Data Source Tab ... 95
4.5.4 Attributes Tab ... 98
4.5.5 Industry Tab ... 99
4.5.6 Benchmark Tab . 101
4.5.7 Provider Measure Tab . 103
4.6 Assigning Measures to a Scorecard ... 105
4.7 Risk Catalogs and the Measure Builder ... 110
4.8 The SAP Measure Catalog ... 111
4.9 Summary ... 115

5 Creating Your First Scorecard ... 117
5.1 Introduction ... 117
5.2 Creating Your First Scorecard ... 118
5.2.1 Creating Strategies and Strategy Categories ... 118
5.2.2 Creating Perspectives ... 120
5.2.3 Creating Objectives ... 121
5.2.4 Creating Common Objectives ... 122
5.2.5 Creating Your Initial Scorecard Hierarchy . 123
5.2.6 Creating Measures ... 128
5.2.7 Creating Initiatives ... 131
5.2.8 Creating Value Fields for Navigation Display ... 134
5.2.9 Putting it All Together ... 136
5.3 Adding Data to Your Scorecard ... 140
5.3.1 Adding Value Fields to your Scorecard ... 140
5.3.2 Linking BEx Queries to Value Fields ... 142
5.3.3 Configuring the Formula Tab ... 144
5.3.4 Configuring the Graphics Tab ... 144
5.4 Lower-Level and Derived Scorecards ... 148
5.5 Summary ... 152

6 The Management Cockpit ...153
6.1 What is the Management Cockpit? ... 153
6.2 Structure of a Cockpit ... 155
6.3 Creating Your First Management Cockpit ... 158
6.3.1 Creating the Cockpit ... 159
6.3.2 Creating Walls ... 162
6.3.3 Creating Logical Views ... 163
6.3.4 Creating Frames ... 164
6.4 The SAP Transport Process ... 178
6.4.1 Best Practices for Managing Objects ... 178
6.5 Linking Measures to Specific Frame Types ... 180
6.5.1 Reports and Link Frames ... 180
6.5.2 Document Frames ... 183
6.5.3 The Tachometer Chart ... 185
6.5.4 Bar and Column Charts ... 192
6.5.5 Line and Combined Chart ... 198
6.5.6 Radar Chart .. 207
6.5.7 Other Available Charts ... 213
6.6 The Management Cockpit Monitor . 214
6.7 The Cockpit Presentation Tool ... 216
6.8 Summary ... 224

7 The Risk Management Module ...227
7.1 Risk Management: General Overview ... 227
7.1.1 The International Importance of Risk Management ... 228
7.1.2 Different Types of Risk ... 229
7.1.3 Implementing a Risk Management System: General Overview ... 230
7.2 The Risk Management Process in SAP CPM ... 231
7.3 Components of the Risk Builder . 233
7.4 Adding Risk to Your Scorecard ... 235
7.4.1 Risk Identification ... 236
7.4.2 Risk Analysis and Assessment ... 238
7.4.3 Risk Handling ... 242
7.4.4 Risk Control ... 245
7.4.5 Risk Planning ... 246
7.5 Risk Management and the Risk Monitor ... 247
7.5.1 The Risk Monitor ... 249
7.6 Adding Risk to your Balanced Scorecards ... 250
7.6.1 Effects of Risk Management Module on Balanced Scorecard ... 254
7.7 Risk Management Options in the Balanced Scorecard ... 257
7.8 Summary ... 259

8 Monitoring the KPIs: The Strategy Map and the Value Driver Tree ...261
8.1 General Overview ... 261
8.2 The Strategy Map ... 263
8.2.1 Creating Your First Strategy Map . 264
8.3 The Value Driver Tree ... 274
8.3.1 Understanding the VDT . 274
8.3.2 Measures and the Value Driver Tree ... 276
8.3.3 Creating a Relational Value Driver Tree ... 279
8.4 Linking Your VDTs to Your Scorecard Applications ... 290
8.5 Summary ... 291

9 SAP CPM Tips and Tricks ... 293
9.1 Overview ... 293
9.2 Creating CPM Variables ... 293
9.3 Using CPM Variables in Cockpits ... 296
9.4 Using CPM Variables in Scorecards ... 309
9.5 Working and Configuring Trend Indicators ... 314
9.6 Creating Formulas and Score Assignment Tables ... 318
9.7 Status and Score ... 323
9.8 Using the Graphic Editor Wizard ... 327
9.9 Creating Substitutes ... 336
9.10 Periodization and Time Variables ... 337
9.10.1 Periodization ...338
9.10.2 Time Variables ... 346
9.11 Using the Balanced Scorecard Launchpad ... 351
9.12 The Web Application Server (WAS) and Cockpits ... 353
9.13 Transporting Scorecards to Other Systems ... 355
9.14 Scaling Factors ...359
9.15 Summary ... 361

10 Corporate Governance: SAP CPM and
10.1 The Sarbanes-Oxley Act: A Brief Overview ... 363
10.2 Corporate Governance and Sarbanes-Oxley ... 364
10.2.1 IT Requirements for SOX ... 364
10.2.2 Additional SOX Requirements ... 365
10.3 The COSO Framework of Internal Controls ... 366
10.4 The SAP Sarbanes-Oxley Process ... 368
10.5 Summary ... 370

11 Concluding Remarks ...371
11.1 Final Tips .373
11.2 Summary ... 376

Appendix ...377
A Glossary ... 377
B Bibliography ... 379
C Author ... 381
Index ... 383