SAP SEM is designed to provide Value Based Management to organizations. The solution contains a set of components which includes software functions, applications and processes, which helps the management of an organization to implement various processes and to operate management functions effortlessly. It helps the executives to analyze data, monitor the various functions, optimize information and communicate with the various aspects of the enterprise.
It helps in providing the value based management which means the organization can find out answer to queries such as how to increase profit? Or why the company is not getting the needed market? The methods can help in reducing cost and the motives that drives the company. It helps in promotion of value creation for the company.
The methods help in finding out the meaning of value drives for a company and also the methods which helps in creating value drives. It helps in decision making and to embed value into the culture of the organization. The solution helps in finding out the value and non value creating business units.
The value drive is basically corporate value which is derived from the turnover growth, cash profit margins, cash tax, fixed assets, working capitals, cost of equity, and cost of debt and capital structure.
The management decides about the way the resources should be allocated and to increase overall returns from various projects. The resource allocation should be based on strategies and resource allocation should be an integral part of the strategy appraisal.
SEM components include consolidated financial reporting and Business planning and Simulation, budgeting and forecasting, Corporate Performance Monitor, Scorecards, Stakeholder Relationship management, Business Information Collection, Business Consolidation and risk management.
Business consolidation reporting and financial consolidation - In financial reporting, it provides reports for units located at various geographical locations. SAP SEM helps in generation of consolidated financial and managerial reports for global business organizations. The application integrates the data from SAP and non-SAP applications to provide a single reporting environment and it helps the user to monitor the financial performance of various units and subunits of an organization.
Planning, budgeting and forecasting - The planning, budgeting and forecasting modules of SEM helps in planning tasks such as planning related to cost centers and planning about the sales. The solution helps in supporting the traditional methods of budgeting and defining forecasts.
Scorecard - Many famous scorecard methodologies can be adopted using the KPI methods which includes balanced scorecard, costing methods based on activities, linking the operational and strategic plans.
Risk management - Risk management is used to identify and analyze the business risks in a production unit, and to define the various methodologies which can help in reducing risks.
Communicate and define targets - Various SEM processes helps an organization to connect and communicate from top to bottom. The system combines the historic views and predictive views, and provides entire value management. The data from the internal and external systems can be integrated and analyzed. A comparison of data can be used to create management's information. The plan designed from the modeling of information helps the management to define targets.