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What are the challenges of investment planning?
Investment planning comes with a number of challenges that make the decision-making process complex and risky. It is shaped by uncertainty and forecasting errors due to an unpredictable future with unexpected changes and developments. Investments also often tie up large amounts of capital over many years, and wrong decisions can rarely be corrected without incurring major losses. This makes capital commitment and long-term planning particularly difficult.
Another challenge is the evaluation of investments. Investments are not always easy to quantify, and the choice of evaluation method can strongly influence the decision. A comprehensive investment evaluation must also include an assessment of risks. Yet in today’s volatile world, it is extremely difficult to identify and correctly interpret political, economic, and technological risks.
In addition to these external conditions, which are often hard to assess, there are also internal challenges. These may include financing issues due to limited equity capital and expensive external financing, conflicts between departments with differing priorities, and time pressure that can lead to hasty decisions and insufficiently reviewed investments. Finally, regulatory and legal requirements — such as environmental standards, tax laws, or subsidy conditions — can have a significant impact on investment projects, especially when they change.
Investment planning therefore requires careful analysis, realistic assumptions, interdisciplinary collaboration, and a clear strategy in order to master these challenges.
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What are the components of investment planning?
Investment planning consists of several interrelated steps or components that need to be carried out systematically in order to make sound investment decisions.
- Defining the investment objective
In this step, the purpose of the investment is clarified. What is the goal of the investment? Typical objectives include growth, cost reduction, quality improvement, innovation, or market expansion.
- Determining the investment need
The next step is to assess the necessity of the investment. Is it a replacement investment for a defective machine, or an expansion investment to increase production capacity? This allows investments to be prioritised accordingly.
- Searching for and evaluating investment alternatives
What different investment options are available? At this stage, different providers, technologies, or approaches are compared and evaluated based on technical, legal, and economic criteria.
- Profitability analysis
The investment is then analyzed using business evaluation methods such as the capital value method, internal rate of return, payback period, cost comparison, or profit calculation. Factors such as duration, cash flows, risk, taxes, and residual value are taken into account.
- Financing plan
Here, the question of how the investment will be financed is addressed. Will it be covered by equity, debt, leasing, subsidies, or external participation?
- Investment decision
The responsibility for selecting the optimal investment alternative lies with top management — typically the executive board, managing directors, or an investment committee.
- Implementation planning
Once the decision has been made, time, resources, and responsibilities must be allocated and scheduled. This ensures effective project organization and management, including risk planning and milestone planning.
- Control and post-calculation
Finally, a comparison of planned and actual data must be carried out to evaluate profitability and the achievement of objectives.
The findings should be documented to inform future investment decisions.
How can investment planning be implemented in SAP?
SAP Analytics Cloud
Implementing investment planning in SAP Analytics Cloud (SAC) is a powerful way to make investment processes data-driven, collaborative, and transparent. SAC offers both planning and analytics functions, which makes it particularly well suited for investment projects.
Concretely, investment planning in SAC can be set up in the following five steps:
1. Defining the planning process
The first step is to clarify the framework: which types of investments will be planned, who will be involved in the process, and which time horizons and budget limits apply.
2. Data modeling
Based on these definitions, a planning model can be created in SAC with the required dimensions and key figures. Typical dimensions include investment type, cost center, time, region/location, or status. Possible key figures could be investment amount, duration, residual value, depreciation, ROI, or internal rate of return.
3. Using planning functions
SAC provides a range of planning functions. One example is data entry forms, which allow planned investments to be entered or updated. SAC also offers a version concept that supports working with multiple versions (plan, actuals, forecast) to enable comparisons. Editable versions make dynamic planning directly within SAC possible. Values can be distributed in various ways and with different weightings. Formulas are also available for calculating figures such as payback period or net present value.
4. Approval and commenting workflow
SAC includes collaboration features for the planning process. Users can submit planned investments, which managers or budget owners can then approve. Comment functions allow justifications or questions to be documented directly within the tool.
5. Creating dashboards, scenarios, and forecasts
Interactive dashboards can be built to monitor budgets (planned vs. approved vs. actuals), run scenario planning (“What happens if project X is postponed?”), compare forecasts and versions (plan, actuals, forecast, scenario A/B), and track KPIs such as ROI, investment volume, and budget utilization.
Overall, SAP Analytics Cloud provides an integrated, flexible, and collaborative platform for investment planning. Key benefits include:
- Transparency through centralised data management
- Scenario planning (“what-if” analysis)
- Workflow support through tasks, approvals, and comments
- Seamless integration into SAP system landscapes
SAP Analytics Cloud and SAP Datasphere
The combination of SAP Analytics Cloud (SAC) and SAP Datasphere provides a powerful platform to implement investment planning and analysis in an integrated, scalable, and data-driven way.
This solution also enables the adoption of the most modern planning approach: Seamless Planning. This describes a planning process in which all relevant data, departments, and systems are interconnected. The result is rapid responsiveness, as changes become immediately visible — a capability that is particularly critical in volatile markets.
The collaboration between SAC and Datasphere can be outlined as follows:
| SAP Datasphere | SAP Analytics Cloud |
| Data integration & modeling | Planning, analysis & visualisation |
| Central data sources (SAP S/4HANA, BW, non-SAP) | User-friendly data entry and evaluation |
| Governance & data quality | Collaborative planning & simulation |
This could be implemented in 6 steps:
- Build the investment data model in Datasphere
In Datasphere, all relevant sources are connected, and a semantic data model is created. Possible data sources include SAP S/4HANA, Excel spreadsheets, or even an investment history from SAP BW. The goal is to establish a unified, well-maintained, and trustworthy data foundation for planning in SAC.
- Connect Datasphere with SAC
The data models from Datasphere can be used directly in SAC. For this, either a live connection with real-time access to data or an import connection with replicated data in SAC is required.
Important: For planning processes, the import mode is necessary to enable data entry.
- Create the planning model in SAC
Based on the Datasphere data, a planning model with dimensions and key figures (see above) is created in SAC.
- Set up input forms and workflows (SAC)
SAC allows the creation of data entry and planning forms to capture planned investments. These can be enriched with comments, enabling a collaborative workflow for approval and authorisation processes.
- Build dashboards, scenarios & forecasts (SAC)
Interactive dashboards can be developed for budget monitoring (planned vs. approved vs. actual), scenario planning (“What happens if project X is postponed?”), forecasts and version comparisons (plan, actuals, forecast, scenario A/B), as well as KPI monitoring (ROI, investment volume, budget use).
- Optional feedback or reporting in Datasphere
Planned values or scenarios can be synchronized back into Datasphere or S/4HANA — for example, to support approval processes, integrate with corporate planning, or serve as part of a central reporting platform.
The combination of SAP Datasphere and SAP Analytics Cloud (SAC) provides a powerful solution for modern data management and integrated planning. Datasphere ensures a central and consistent data foundation — a true single point of truth. SAC complements this with self-service functionality for data entry, commenting, and collaboration. Planning and analysis come together in one tool, enhanced by real-time reporting via live connections. The solution is both flexible and scalable, making it ideal for organisations of any size.
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SAP Integrated Business Planning (IBP)
Investment planning in SAP IBP (Integrated Business Planning) is generally possible, but it is not the typical use case. SAP IBP is primarily designed for supply chain planning (demand, inventory, production, and sales planning). However, with custom configuration, investment planning can be mapped — particularly when investments are closely linked to operational planning (e.g., capacity, assets, production).
Using SAP IBP for investment planning makes particular sense when investments in plants, machinery, or capacities have a direct impact on the supply chain. It is well suited for proactively planning investment needs, for example when anticipating sales growth and the associated construction of new facilities. In addition, SAP IBP offers an integrated planning platform that holistically connects finance, supply chain, and resources.
SAP BPC
SAP BPC is a platform for financial planning, budgeting, forecasting, and consolidation. It provides extensive functionality to represent investment planning in a detailed, flexible, and well-controlled manner.
SAP BPC is ideally suited for a structured, detailed, and finance-oriented investment planning approach that can be closely integrated with corporate processes and systems.
How can we support you?
We offer comprehensive consulting services that combine deep expertise in best-practice processes for FP&A and xP&A with strong IT know-how in SAP planning solutions such as SAP Analytics Cloud. With this expertise, we can develop tailored solutions for your FP&A requirements and ensure that your processes run optimally.
We help you optimize your financial processes by implementing both efficient workflows and the right technologies. Our support covers the selection and integration of SAP tools, the automation of processes, and the training of your employees — enabling your company to fully leverage the benefits of modern FP&A solutions.
Conclusion
Investment planning is a central component of corporate management. Its goal is to allocate financial resources efficiently in order to drive growth, secure profitability, and minimize risks. Sound analyses, realistic assumptions, and a structured approach are crucial — from defining objectives to profitability analysis and post-calculation.
The challenges range from forecasting uncertainties and capital commitment to internal conflicts of interest and external conditions. Professional investment planning therefore requires not only business expertise but also the right digital tools.
SAP provides several solutions for this purpose:
- SAP Analytics Cloud (SAC) stands out with integrated planning, real-time analytics, scenario modeling, workflows, and user-friendly dashboards.
- In combination with SAP Datasphere, a scalable, data-driven platform with centralized data management (single point of truth) is created.
- SAP IBP is suitable when investment-related questions are closely tied to supply chain planning.
- SAP BPC is ideal for detailed, finance-oriented investment planning with a focus on budgeting and consolidation.
Taken together, these SAP solutions enable modern, transparent, and collaborative investment planning as part of an integrated corporate strategy.
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