Investment Planning
Purpose
Investment planning supports various steps when planning investments. As a rule, investment planners are involved both at group level, as well as at the level of different organizational units. They execute a preinvestment analysis for an individual investment plan – an investment idea – to objectify the planning as far as possible. Through the comparison of different realization possibilities of an investment using the preinvestment analysis, the decision for a certain realization becomes comprehensible. For the execution of the preinvestment analysis, planning areas are available for static and dynamic procedures.
In addition to planning for individual investment plans, planning is supported for an investment program. The investment requirements of individual organizational units are gathered according to the bottom-up procedure in the context of an investment program. Budgeting can be executed in which the investment volume is distributed top-down. In this case it is guaranteed that the investment sum distributed over the lower levels never exceeds the budget value, which the superior organizational unit has at its disposal.
Integration with Other Planning Applications
Investment Planning, and Profit Planning
The aim of an investment is to improve the return on investment of an enterprise area – whether it is by lowering costs or increasing the profit. For this reason, on the one hand, it should be taken into account in planning, that from the view of the investment project, the preinvestment requirements are fulfilled. On the other hand, from the view of a market segment (for example, a product group), the investment should lead to an improvement of the contribution margin.
This
connection is explained using a
Multi-Planning
Area, that contains the planning areas of investment planning, and profit
planning. Prices, and cost of goods manufactured are imported from profit
planning for investment planning. The aim of the investment project is
lowering the cost of goods manufactured. The reduced cost of goods
manufactured, which would result from the execution of the investment, are
then returned to profit planning,
so that the data flow runs in both directions: from profit planning into
investment planning and back again. In this way, you can simulate the effect
of an investment on the result of the responsible organizational
unit.
Investment Planning, and Balance Sheet Planning
The connection with balance sheet planning is also produced in a multi-planning area, where the data from investment planning is transferred in aggregated form into balance sheet planning. The values, which were entered in investment planning as investment volumes, are posted as current acquisitions in the asset portfolio in balance sheet planning.
Investment Planning in Corporate Investment Management
Investment planning with SEM-BPS is part of the analytical application Corporate Investment Management. The functions and data structures established in SEM-BPS are used for strategic investment planning on aggregated data structures within this application. In addition, an integration takes place with the functions for investment processing in their operative SAP System. In particular, Corporate Investment Management makes the necessary technical infrastructure available in order to be able to execute the data exchange between the strategic and operative view in both directions:
Extraction of operative data from the SAP System into the SAP Business Information Warehouse for further processing with SEM-BPS
Retraction of the planning values generated in the strategic view into the operative system for detailed further processing.
The analytical application Corporate Investment Management brings together objects from the following areas:
Functions and Business Content of the SAP Business Information Warehouse
Planning objects from SEM Business Planning and Simulation
SAP R/3 4.5B, 4.6B, 4.6C (support of future R/3 products is planned)
Plug-in 2001.1
For
more information, see
Corporate Investment
Management.
Process Flow
The general process of investment planning consists of the following steps:
...
1. Executing the preinvestment analysis for an individual investment plan.
2. Simulating the effect of the plan on profit planning, if the profitability of the investment project is sufficient.
3. Entry of all planned investment measures per organizational unit in a bottom-up procedure in an investment program.
4. Aggregation of requested funds by a central planning coordination, copying of data into a budget version, budget distribution by a central investment planner.
5. Distribution of the budget by the area manager of the different organizational units over the subordinate organizational units and appropriation requests
See also:
Dynamic Preinvestment Analysis