The Financial Information
subview of items and initiatives displays financial data that enables you to analyze, compare, and prioritize items or initiatives in terms of profitability. It contains financial key performance indicators (KPIs), which indicate how much value an item or initiative adds to your business, as well as a financial summary of the budget, costs, and revenues involved.
Most of the data provided in the Financial Information
subview can be calculated based on the financial planning data of the item or initiative. This section provides details about the financial information values and how they can be derived. For more information on financial planning, see Financial and Capacity Planning.
The automatic calculation of financial KPIs is active in the standard system. If you do not want to use it, you can deactivate it for performance reasons. In Customizing for SAP Portfolio and Project Management
under , deactivate the general default value 0042 Activate Automatic Calculation of Net Present Value
.
You have configured financial planning in your system. For more information, see Usage of Financial Planning.
In Customizing for SAP Portfolio and Project Management
under , you have assigned the appropriate amount types to your financial views.
In Customizing for SAP Portfolio and Project Management
under , you have assigned financial views to your portfolio types and selected the views relevant for KPI calculation on item or initiative level (see indicators NPV Item
and NPV Initiative
).
In Customizing for SAP Portfolio and Project Management
under , you have defined the interest rates used for KPI calculation. The following settings are relevant for this:
The general default value 0043 Reference Interest Rate for Calculation of Net Present Value
in Customizing activity Override Default Global Settings
Customizing activities Define Reference Interest Rates
and Define Values for Reference Interest Rates
If you want to use your own logic for KPI calculations, you have implemented the method CALCULATE_KPI
in Customizing for SAP Portfolio and Project Management
under .
In Customizing for SAP Portfolio and Project Management
under , you have specified whether the year-to-date (YTD) values sum up the financial planning values for the entire year, or only values up to the end of the current month. Use the general default values 0008 YTD Budget Cost up to Current Month
, 0009 YTD Planned Cost up to Current Month
, and 0010 YTD Actual Cost up to Current Month
.
If you want to use your own logic for calculating the values of the financial summary, you have implemented the method GET_BUDGET_STATUS_INFO
in Customizing for SAP Portfolio and Project Management
under .
You can access financial planning directly from the Financial Information
subview of an item or initiative. The following settings on this view are relevant for both, financial information and financial planning data:
Financial Planning Start/Finish
:
Period for which financial planning is to be carried out. In items and initiatives, these dates are copied from the corresponding bucket.
Financial Period Breakdown
:
Duration of the periods for which financial planning values are recorded. You can, for example, choose to plan by month or year.
Currency
:
Currency used for the financial information and the financial planning values of the item or initiative.
The standard system provides two alternative sets of KPIs:
KPIs for manual data entry:
These can be used, for example, to integrate KPIs from external sources in your portfolio item or initiative. They include Net Present Value (man.)
, Return on Investment (man.)
, and Internal Rate of Return (man.)
. The Expected Commercial Value (man.)
is calculated within Portfolio Management
using the same formula as the calculated KPI, but it is based on the manually entered net present value.
Derived KPIs:
These include Net Present Value
, Return on Investment
, Internal Rate of Return
, Expected Commercial Value
, and Payback Periods in Month
.
The derived KPIs are calculated by the system when saving changes to the item or initiative, or its financial planning data. This also applies if the changes have been made during financial upload from SAP ERP using the program /RPM/FICO_INT_PLANNING
, or when updating icons and KPIs using the program /RPM/SET_ITEM_ICONS
.
The standard calculation of all KPIs is based on the planned costs, including budget, and revenues recorded in financial planning. It only considers the values of financial views which have been marked as relevant for KPI calculation. Planned costs are derived using views of the amount types Planned Costs
and Budget
. Planned revenues are derived using views of the amount type Planned revenues
(see Prerequisites
).
The following sections describe how the individual KPIs are calculated in the standard system. If required, you can implement your own calculation logic, calculate additional KPIs, or deactivate KPI calculation for specific items or initiatives (see Prerequisites
).
Note
In Customizing for SAP Portfolio and Project Management
under Portfolio Management
-> Global Customizing
-> Global Field Settings
, you can adjust the field configuration of the Financial Information
subview so as to display only one set of financial KPIs.
The net present value is the sum of the discounted positive and negative cash flows of an item or initiative.
Based on the financial planning data of the item or initiative, the system sums up planned costs and revenues per month and discounts them back to the planned start date of the item or initiative. Discounting is carried out as compound interest calculation using variable interest rates defined in Customizing (see Prerequisites
). For each month, the interest rate valid on the first day is used.
NPV calculation always uses monthly discounting no matter which financial period breakdown you have specified in the Financial Information
subview (see Settings
). It only considers financial planning values recorded between the planned start and the planned finish of the item or initiative. If one of these dates has not been maintained, the financial planning start or finish is used instead (see Settings).
If neither finish date has been specified, all future values are taken into account. If neither start date has been specified, the net present value cannot be calculated.
Formula for NPV calculation:
NPV = CF0 + CF1/q1 + CF2/(q1 * q2) + CF3/(q1 * q2 * q3) + ... + CFn/(q1 *q2 * q3 * … * qn)
Where:
CFt is the net cash flow of the period t.
n is the total number of periods.
qt is the interest rate factor 1 + it.
The expected commercial value scales down the net present value of an item or initiative based on the probability of commercial and technical success determined in risk assessment (see the Additional Information
subview of the item or initiative overview). It also takes the launch costs and the development costs specified in the financial summary into account.
The net present value is calculated as described above in section Calculation of the Net Present Value (NPV).
Formula for ECV calculation:
ECV = [(NPV * pcs - C) * pts - D]
Where:
pcs is the probability of commercial success.
pts is the probability of technical success.
C are the launch costs.
D are the development costs.
The return on investment is the ratio of the net present value to the discounted costs of an item or initiative. It measures the success of the investment.
NPV calculation and discounting is performed as described above in section Calculation of the Net Present Value (NPV).
Formula for ROI calculation:
ROI = NPV / PVC
Where PVC are the discounted costs.
The internal rate of return is the fixed discount rate which results in a net present value of 0. If you use this discount rate, the discounted costs of the item or initiative are equal to the discounted revenues.
The net present value is calculated as described above in section Calculation of the Net Present Value (NPV). IRR calculation uses an adapted secant method to approximate the discount rate. If several solutions are possible, the lowest value found is displayed. The value is accepted when an accuracy of 0.01 % has been reached.
If there is no solution, the value 999999 is displayed.
The payback period is the number of month after which a net present value greater than or equal to 0 has been reached (for the first time). It identifies the moment when the item or initiative has reached the breakeven point.
The net present value is calculated as described above in section Calculation of the Net Present Value (NPV). If the investment does not break even, the value 999999 is displayed.
The financial summary sums up the budget, costs, and revenues of an item or initiative.
In the standard system, the budget, as well as the planned and actual costs and revenues, are derived from the financial planning views allocated to the corresponding amount types in Customizing (see Prerequisites
). Two types of values are calculated:
Total values:
The total values sum up all values maintained for the relevant financial planning views.
Year-to-date (YTD) values, including the annual budget:
The YTD values sum up either all values maintained for the current year, or all values maintained for the current year up to the current month (see Prerequisites
).
The forecast values as well as the launch and development costs can be entered manually.