Why Master Data Forms the Core of an SAP IBP Strategy

Key Takeaways

• Master data and planning area design must be treated as ongoing strategic elements rather than one-off technical tasks; failing to do so can lead to long-term operational issues and a lack of trust in the system.

• Organizations need to establish a clear and consistent planning language that aligns stakeholders across departments, preventing misinterpretations and ensuring all teams are on the same page regarding data and KPIs.

• Shifting focus from merely matching data to making informed decisions is crucial for SAP IBP's effectiveness, transforming it from a simple repository into a strategic asset for the business.

Leaders and implementation teams looking to go live with SAP Integrated Planning (IBP) often view Master Data and Planning Area design as a one-off technical task. However, Nikki Sheridan, Functional Lead in the SupplyChainPaths practice at CloudPaths, noted that this view can be dangerous.

In a recent interview with SAPinsider, Sheridan warned that when companies treat data design as a mere configuration milestone based on what data is currently available, they create a ticking time bomb. “You might get the system live, but the damage often arrives six months later,” she said. “As a result, the teams, frustrated by a system that doesn’t reflect their reality, retreat to spreadsheets to fix the plan outside the tool.”

“To build a sustainable system,” Sheridan argued, “we must stop looking at master data as a backend requirement and start viewing it as the language of planning.”

False Sense of Success

The most significant risk in an SAP IBP implementation is what Sheridan called a “false sense of success”.

“It’s risky of us to say, ‘Let’s take what we have in the system, get it in and get a result,’ because it gives us a false sense of success,” she explained.

The system runs, but it is hollow as the underlying structure doesn’t support actual decision-making. If the foundation is intentional, SAP IBP becomes an asset. If it is a one-time setup based on convenience, it becomes a number catcher that holds data nobody trusts. “And once trust is gone, adoption becomes nearly impossible,” Sheridan observed.

Defining Your Language

An organization’s planning area isn’t just a database schema. It defines how the business sees itself and dictates the products, locations, and time horizons used for planning. “It becomes our language of planning,” Sheridan noted. “If that’s inconsistent or unclear at all, then all of the downstream functions interpret the plan differently.”

According to Sheridan, a well-designed planning area forces alignment before a single number is calculated. It compels the business to answer the hard questions, such as: What is our planning grain? Who owns this data? What does Available to Promise mean for us?.

“When you skip these conversations to speed up configuration, you end up with teams planning on different data grains and KPIs calculated differently across the organization,” Sheridan stated.

From Matching Data to Making Decisions

The goal of a robust master data strategy is to shift the user’s mindset. In a poorly designed system, planners spend their energy trying to match data between the source system and SAP IBP.

However, in a well-designed system, planners stop focusing on data alignment and start looking at the decisions they are trying to make. That is the pivot point where SAP IBP transforms from a repository into a strategic engine.

In the second part of our interview with Nikki Sheridan, we take a deep dive into governance and what it really means for SAP IBP users.

What This Means for SAPinsiders

To move from a technical go-live to a genuine business transformation, organizations must rigorously audit their planning and design. Here is how:

1. Move away from a lift-and-shift approach for data structures. According to Sheridan, organizations must challenge the lift-and-shift approach by refusing to build a model that merely matches their current process. SAP partners like CloudPaths force these difficult conversations early. This prevents the common scenario where a new SAP IBP system simply digitizes old pain points. By designing for the future rather than the present, SAPinsiders can avoid costly implementations and retrofitting six months post-go-live.

2. Treat the planning area as a dictionary for business. Implementation partners like CloudPaths focus on harmonizing definitions, ensuring that specific product hierarchies mean the same thing to sales, finance, and supply chain before any configuration begins. When this language is clear, trust in the data skyrockets. Users stop debating the validity of the numbers in meetings and start debating the strategy those numbers Reveal, eliminating the “Excel creep” where planners maintain shadow P&Ls outside the system.

3. Ensure a foundation-first health check agenda. Organizations that believe their current implementation does not meet the standards they need must run this three-point diagnostic based on Sheridan’s principles. The checklist includes listing the top five strategic decisions planners must make and if the current data grain in SAP IBP supports them directly; a check to see if the organization is limiting its SAP IBP design based on legacy ERP constraints and Identifying where bad data in the source is dictating future strategy; and questioning if a system redesign will be needed if the company introduces a new market or product line tomorrow. If the answer is yes, then the foundation is brittle.