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August 31, 2009

Comparative Analysis between New GL and Classic GL

New GL and Classic GL are two ways to implement General Ledger functionality in SAP ECC5 and ECC6. New GL provides lot of benefits over classic GL. The New GL benefits

-          Provide an extension to the existing functionality in classic GL, or

-          Provide new functionality compared to classic GL, or

-          Provide a technologically superior way to perform a functionality in Classic GL

It is imperative to understand the differences between Classic and New GL to be able to understand which solution addresses the business requirements better. I am providing a comparative analysis of the basic differences between Classic and New GL.

 

(1)   Extended Data Structure provides flexibility

SAP has consolidated the multiple totals table (GLT0, GLPCT, etc) in classic GL into a single FAGLFLEXT Totals table with New GL. One Summary Table provides flexibility and faster response time for reporting. FAGLFLEXT can also be enhanced by adding customer defined fields.

 

(2)   Segment Reporting to ensure Statutory Requirements

IAS accounting standards define the statutory requirements for segment reporting. New GL has document splitting functionality that enables segment reporting. Standard Segment Reporting functionality is not available in Classic GL.

 

(3)   Real Time Integration between FI and CO

Classic GL has the period-close reconciliation ledger functionality to synchronize FI and CO for cost transfers across functional area, business area and company code originating in CO.  New GL has a real-time integration between FI and CO that happens with each transaction originating in CO instead of a summary posting done by reconciliation ledger during period-close.

 

(4)   Parallel Accounting

New GL provides Non-leading ledgers for parallel accounting like IFRS and GAAP. Parallel accounting can also be implemented using Account based approach which is also available in classic GL.

 

(5)   Reduce TCO by Faster Period Close Activities

Faster Period Close is possible with New GL as,

(a)     Reconciliation Ledger is not required

(b)    Balance sheet Adjustments are not required

(c)     Profit and Loss Adjustment are not required

(d)    Activities related to Special Purpose Ledger are not required

(e)     Depreciation posting is online instead of a batch session

 

(6)   Flexible Drill-down Reporting in New GL

New GL has advanced drill-down capabilities by segment and other characteristics.

August 25, 2009

Green ( Purchasing? ) SRM….

Recently, a thought struck me on while most of the SRM projects are judged on the basis of ROI, process efficiencies achieved, transactional savings etc., can they also be judged on the basis of environmental impact pre and post implementation?

From green purchasing perspective, though CPO’s have been focusing on the type of raw material sourced, manufacturing technology etc. process related issue seems to have taken a back seat. Buyers are big contributors to CO2 footprint of the organization, thanks to their huge travel and communication needs and paper based buying processes. Organizations that have implemented technology solutions to achieve process KPI’s, have inadvertently been benefitted towards making the process green as well. Organizations have increasingly realized that during future business transformation initiatives, designing green processes can be a big support. Some of the following considerations will help the initiative further.

1. Focus on achieving paperless operations throughout P2P process lifecycle. This is indeed a key consideration and blocked mindset can be a big hindrance in achieving this. E.g in one of the SRM implementations in East Asian country, we were told that Government prescribes a paper based PO to have a valid legal contract. On persuasive follow up with legal cells, we were told that as long as there is an acknowledgement and acceptance of terms by the supplier, even an E purchase order is fine. Accordingly we blueprinted the process to enable the acknowledgement and acceptance of terms. Not only did it help to save process cost but also avoid huge paper wastage.

2. Collaboration is not merely strategic – Supplier collaboration is always seen as a strategic tool. While it definitely achieves strategic intent, it needs to be viewed from tactical glasses as well. Real collaboration on online transfer of various documents, E-bidding, remotely conducted reverse auctions etc. not only brings out efficiencies of operations but they also helps to improve green score by reducing papers in the system, avoiding interpersonal meetings and hence travel needs etc.

3. “Vendor Managed Inventory”, “Just in time” are established supply management concepts. SRM solutions improve information visibility in the system and hence help implementation of VMI or JIT avoiding unnecessary transit / system wastages.

4. Appropriately indexed, Document management systems not only capture the documentation during the entire procurement life cycle but also help to reduce the physical space and paper monitoring.

Looking at these process design aspects from green lenses do support strategic objectives and also helps the cleaner environment.

Comments invited….

Regards,

Atul Chorbele

August 5, 2009

Is it time to move to New GL?

SAP introduced New General Ledger functionality with the Enterprise release (ECC 5). The SAP FI/CO components for Classic General Ledger, COS Ledger, Reconciliation Ledger, Special Purpose Ledger and Profit Center Accounting have been merged to provide an integrated solution known as New GL. New GL provides document splitting functionality that enables generation of financial statements for Segments (As per IAS 14 Accounting Standard, segment reporting is a legal reporting requirement for specific business or geographical segments). New GL supports multiple ledgers, hence, reducing the need to rely on Special Purpose Ledgers for parallel valuation. New GL facilitates real time FI-CO Integration resulting in real-time legal and management reporting. An integrated solution like New GL ensures better SOX compliance and Fast Period End Close resulting in reduced TCO.

 

Classic GL has been around for years; we understand it and are so comfortable using it. New GL sounds like a bag full of goodies, but we may need to understand New GL features completely before we can implement it. Implementation New GL would also have a change management impact. So is it time as yet to move away from classic GL?

 

Reasons for upgrading to New GL may not be justified if we are planning to use limited functionalities of New GL. I am documenting some of the other reasons that build a strong case for upgrading from Classic to New GL.

 

(1)   Reduced Total Cost of Ownership (TCO) with New GL

New GL provides real time integration between various Financial and management functionalities. It eliminates execution of reconciliation ledger and reconciliation across FI/CO sub-modules resulting in fast close and reduced TCO.

 

(2)   Future enhancements only for New GL

SAP will continue to support classic GL till the planned phase out of SAP 4.7, but support packs and future enhancements will be released for New GL only.

 

(3)   Legal Compliance  with New GL

New GL provides system solution for legal requirements relating to segment reporting and a phased movement from US GAAP to IFRS. Among other things, Integration and transaction flow across GL, CCA, PCA sub-modules also improve SOX compliance.

 

(4)   New GL is inevitable

It is not very clear at this point in time if classic GL will be supported after maintenance support for SAP 4.7 comes to an end. If SAP decides to support classic GL, it may result in an increased maintenance fees. New GL is inevitable and on a product roadmap is the successor to classic GL. We can be either proactive and implement it now or wait till it becomes a necessity.

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