SAP

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.

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.

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.

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.

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.

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

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

Posted by Akhilesh Mittal at 2:59 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

It was an interesting question that triggered a healthy discussion on the essence of EPM – Is it only about putting together KPIs in dashboards? Providing good analytics and analysis trails of how you are running your business? Is it just another fancy term for BI? Or, is there more to it?

To answer this best we will need to consider two aspects of your business – strategy and execution, while optimizing the execution makes your business more efficient, optimizing the strategy makes it more effective. In order to ensure value creation through aligned action, an organization’s strategic initiatives need to be integrated with the execution processes while the results from execution need to be fed back to strategy formation for further improving effectiveness. This closed loop management of the strategy to execution cycle is what EPM is all about and it would not be possible without the constant visibility and insight into the performance of the organization that BI provides.

Consider that you are a part of the CEO’s office of a food product company and have planned for growth through major exports to a developing neighboring country, there is sudden political turmoil in this country and import policies are changed. You now need to look at domestic growth and head-on competition with smaller local players i.e. change your strategy and execute it perfectly to ensure that you can tackle this business challenge and come out winning. Your need to quickly react to changes in the business landscape with strategic adjustments by evaluating different strategies èassessing risks è select the right strategy èplanning for execution at all levels èconsolidating results of execution èfeeding results back to strategy. This business agility would be very difficult to achieve without a robust and well integrated EPM and BI landscape.

The immediate next question that comes up is how EPM ensures this and what it comprises of? Please watch this space for the next part of this blog!

Posted by Rakhi Makad at 6:28 AM | Permalink | Comments ( 3 ) | TrackBacks ( 0 )

Let me first table the various models that we have been talking about

1.            Pricing linked to percentage of spend – The provider will charge a % of the spend processed through the platform. There would be no limitations on the transactions.

From a customer’s perspective the model lacks the granularity of the effort based pricing. As for long providers have been providing FTE based pricing which is directly attributable to the number of FTE deployed on the job. Some customers find the spend based model to be opaque and hard to compare.

On the other hand from a provider’s perspective any “end to end” or managed services model like platform has to be linked to the business outcome. The business of procurement is to manage spend and hence a provider who helps manage spend should charge as per the spend processed rather than the underlying transactions.

I guess a change in outlook coupled with mechanisms to measure service providers value-add in terms of impact of spend can help move to this model

Posted by Nitin at 5:15 AM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

Is moving to ERP 6.0 really the end of journey for Upgrades? Not necessarily so, please read on..

With the move to SAP ERP 6.0, SAP had promised that there would be no more Upgrades. Initially I brushed this aside as another ploy of SAP to make clients consider this to be the last hurdle and be motivated to get it over with. After all, I do remember, it was sometime in early 2001 when I was working at Delphi, when SAP came over to conduct a lunch and learn session. Over pizza and soda we were told that with the Upgrade to SAP 4.7, our upgrade woes would come to an end as this would be the final version that SAP would ever release. We were also told that as there would be no more versions, SAP was renaming this release as the Enterprise version. All improvements were supposed to be plug-ins going forward.  It didn’t take us long to realize that the whole thing was a myth and that upgrades would be around long enough for me to build a career around it.

Coming back to SAP’s recent promise, it looked like SAP was all set to be firm with its commitments this time. EHP1 through 3 were all as promised by SAP and could be implemented fairly easily using SPAM/SAINT. But with the advent of EHP4, things seem to have changed once again. Though SAP has introduced the enhancement pack installer “SAPehpi” which makes downtime shorter as most processing is done on a shadow system, too many standard SAP programs have been modified and so, it calls for thorough testing. And so it is déjà vu time with all the steps involved in an upgrade project needing to be thought through and strategized all over again!  What’s next SAP?

Posted by Srinivas Anne at 12:06 PM | Permalink | Comments ( 1 ) | TrackBacks ( 0 )

Master Data Management as a concept has existed as long as the ERP market or even before. The concept has been to help efficiently manage transactional and reporting functions within an application by having a separate repository for master data. The master data function gets called dynamically within the execution of a transaction.

This concept has evolved over the years, due to complexity of businesses and hence the IT Systems that are required to support it. In recent years the concept is gaining maturity by looking at Master data as a function to feed systems enterprise wide, not ERP alone. Hence MDM is now being viewed as a de-coupled application from the ERP applications.

Many vendors, some niche and other ERP vendors, have products to address this space. Though Gartner has reported the relative capability across various products in the ‘Magic Quadrant’, Consultants and Clients alike, are aware that none of the products have matured enough to warrant the name of ‘MDM Package Solution’. The products are still in the form of a tool/platform and a basic framework over which clients are expected to build a custom solution. Depending on what the client wants to achieve, the solution build up can be as expensive as a custom solution on any other platform.

SAP’s MDM product addresses master data across the enterprise like Material, Vendor and Customer. It also has certain content that is much suited for an SAP environment, hence there is good amount of data modeling effort that can be saved if the company has a SAP based landscape. These are some of the key differentiators for SAP MDM against other contemporaries.

The other features, like de-duplication, merging, harmonization etc are also part of the Product offerings.

However, the above alone does not make the offering a rich or a mature one. Today, the companies need to orchestrate and manage master data as a central application to the Enterprise. This needs a robust, user friendly and configurable package with a host of functionalities. The requirement from the Industry is the following:

• User friendly screens
• Complex validations that may need to be called from other applications
• Easy to configure and
• Manage workflows for data approval

What can SAP do to meet the above requirements with the current MDM package?

• SAP needs to bring the Key components of Enterprise Portal and MDM together. This would mean that the configuration of screens and fields should be in sync and should not appear as two disjoint applications.
• Since the companies preferring SAP MDM are predominantly SAP shops, SAP needs to have EP-MDM ready for an SAP landscape. The lead time to configure and set up a Central master data management should come down drastically. This will increase the adoption and usability of SAP MDM
• SAP has tried to merge BO with SAP MDM, but these again should not be viewed and communicated as two different components. This should be communicated and projected as one single component. Currently there is a lot of confusion on what is the ETL recommended, is it of BOBJ or SAP MDM? These confusions in messaging adds to the reluctance in adoption
• Workflow is a major component of central master data management. The workflow in some cases can be as complex as running across SAP MDM and SAP ECC or other SAP applications. This can be done using the new BPM, but this again needs to be offered as a part of the product.

SAP needs to work on maturing the product to make it a robust single unit, than expect customers to work on multiple components such as BPM, EP, Webdynpro and MDM to put up a MDM Solution. Essentially, the concept can be borrowed from ECC, where-in you have; Transactional processing UI; Configuration and Developer workbench. The skills required for the same are Functional and ABAP technical and it is easy to implement and use.

The skills required for setting up the current MDM solution –using number of SAP components- are too many and can act as a big entry barrier for larger customer adoption.

Posted by Ravishankar Subramanyam Hossur at 11:59 AM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

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

Posted by Atul Chorbele at 11:44 AM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

In the recent past we had multiple interactions with prospects and existing customers on the pricing model for Platform based solutions for "Source to Pay" (managed services).Various stakeholders have expressed opinions which rightly address their concerns but it’s hard to conclude to a single model.

Let me start out with a fundamental argument. What is the objective of an outsourcing engagement? Is it to impact business process from a business requirement standpoint or to impact at transactional level?
In my view a transactional view does not enable a service provider to create any transformational value for clients. Service providers will perform the transactional work as per agreed SLA but will not be in a position to appreciate or contribute larger business goals that client organizations strive for. The transactional view probably provides benefits which are tangible, but are far from business benefits that is the need of the hour.

A pricing model should also reflect the basic premise (transformational v/s transactional) and should use the right metrics accordingly. In the next post I would like to discuss with the audience various pricing models that can be proposed. Till then please feel free to share your views on pricing.

Posted by Nitin at 5:49 AM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )

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.

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.

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.

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.

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.

Posted by Akhilesh Mittal at 4:15 PM | Permalink | Comments ( 0 ) | TrackBacks ( 0 )