Research Note : The Theory and Practice of SAP's ERP Forecasting Functionality

Abstract: Purpose - The purpose of this article is to provide a critique of SAP's enterprise resource planning (release ERP6.0) forecasting functionality and offer guidance to SAP practitioners on overcoming some identified limitations. Design/methodology/approach - The SAP ERP forecasting functionality is reviewed against prior seminal empirical business forecasting research. Findings - The SAP ERP system contains robust forecasting methods (exponential smoothing), but could be substantially improved by incorporating simultaneous forecast comparisons, prediction intervals, seasonal plots and/or auto correlation charts, linear regressions lines for trend analysis, and event management based on structured judgmental forecasting or intervention analysis. Practical implications - The findings provide guidance to SAP forecasting practitioners for improving forecast accuracy via important forecasting steps outside of the system. Originality/value - The paper contributes to the need for studies of widely adopted ERP systems to critique vendor claims and validate functionality through prior empirical research, while offering insights and guidance to SAP's 12 million worldwide enterprise system practitioners