“Every minute you spend in planning saves 10 minutes in execution; this gives you a 1,000 percent return on energy!”― Brian Tracy
Future targets drive every present action of each department of an organization. These targets are ‘planned.’ This plan needs to be flexible to deal with uncountable market variables in today’s time. Assume your firm did better than expected sales in a new country for the first three quarters, the planner may adjust the targets for upcoming quarters, and the related departments may work accordingly.
In SAP Analytics Cloud, the planner can take care of the end-to-end planning process flexibly with standard planning features provided at the click of a button. Learn more on SAC’s planning features here.
This blog discusses one such planning feature, the ‘Allocation process,’ which enables allocating values between members using a rational basis of allotment. Following are some scenarios where this feature can be used:
- In the cost center budgeting process, you can allocate the following year’s budget based on the budget proportions in the current year’s budget values.
- For a retail chain, you can allocate the quantities to each store during a new product launch based on the last year’s sold quantities for a similar product.
- To do a what-if analysis about the product mix based on profit margins.
- For cost allocation, to move costs from one account to another, either 1:1 or based on a proportion.
Pre-requisites to creating an allocation process in SAC
- The planning model must have an unassigned member for each dimension other than account, version, date, and cross calculations.
- The planning model should be a classic account-model only. Currently, allocations are not supported for models with measures.
How to create an allocation process?
An allocation process consists of one or many allocation steps which define how the source value is distributed among the target dimensions. Allocation steps consist of a set of allocation rules which specify the distribution route. Values can be distributed directly to a leaf member or can be derived based on the driver column.
An allocation process is created for a particular model, whereas an allocation step can be part of multiple allocation processes.
We are in the budgeting cycle for the marketing team, and they want to allocate the marketing budget values given by planners from unassigned to the city level.
Further, the planner wants to analyze how a 5% increase in the overall marketing budget impacts the numbers for each city. The planner may create a new private version, ‘what- If analysis,’ increase the unassigned budget by 5% & run the allocation process on this version.
In the below GIF, you can check the allocation step & allocation rule created for our business case.
Configuration options in Allocation Steps
Let us check the commonly used options.
If you check the ‘Keep Source’ option, the allocation copies the value to be distributed instead of dividing the source value. If you check the ‘Overwrite Target’ option, the value in the target will be cleared before allocating. A use case for these options is when you want to do what-if analysis, you can run the allocation, change the source value, and rerun the allocation to get the new result.
You can use the ‘Filter by Account’ option to define the scope of the allocation step. If you want to allocate forecast quantity values from the city level to the store level but want to have different allocating logic for one store, you can filter out that store from the allocation step and create another step specifically for that store.
It is also possible to select both ‘Source’ and ‘Target’ as the same dimensions. In addition, you need to specify the number of ‘Repetitions’ to be performed. A use case for this is when you want to allocate the unassigned Human Resource department budget to all departments based on the number of employees. Here, some part of the budget is also assigned to the Human Resource department as they employ people. This allocation is executed based on the reciprocal method of cost allocation.
The allocation process is a feature that is needed in most of the planning-related business scenarios, and the various options provided in SAC’s allocation process make sure it covers from the simple to complex planning scenarios. In the upcoming blogs, we shall discuss other features available in SAC planning.
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If you are interested in learning more about SAP Analytics Cloud features, please check our blog series here. Check this blog series to know more about the planning features in SAP Analytics Cloud.