Cybernetic control has four components, the first one is the budget. In S/4HANA (an ERP system that enables integrated management of your main business processes) and SAP Analytics Cloud we have cost planning amongst others. This can be used to follow up Sales and Operation Planning, and the cost of your planned activities, and forms the final part of your planning cycle to conclude on cost. That enables you to determine the variance when the actual activities have been performed.
The other part of cybernetic control is financial, non-financial and hybrid measuring-systems. SAP combines it all in S/4HANA. From a financial point of view, it records all your transactions, and supports in holding employees accountable for e.g., their profit center or preparing statutory reporting for accounting purposes.
From a non-financial point of view, SAP records all kinds of business transactions, so we can follow up production and maintenance amongst others. We can track and follow up on the production plan, variance, and understand the performance of your production. SAP makes sure that you are following up on all KPI’s from a non-financial point of view.
The hybrid approach combines financials and non-financials. In a modern business, the balanced scorecard is used to see the cause-and-effect of KPI’s and combines these to understand the performance of your business. As S/4HANA has both financial and non-financial transactions for all types of areas, it is very easy to create a good hybrid approach and use that as a control mechanism to evaluate and drive behavior against your defined goals.