Variance analysis begins much earlier than month end. It begins the previous fiscal year when sales, production, and cost center plans are created. You then create cost estimates for the following fiscal year which provide plan costs for the manufacture of products, and when compared with actual costs, allow variance analysis.
With the introduction of SAP S/4HANA there have been many improvements in SAP Controlling which we'll cover in this Webcast, including new Fiori apps which access the universal journal for improved views of variance analysis.
10 Skills You Should Master as an SAP Consultant
In our last article, we defined SAP Consulting as the activities, processes, and tasks SAP consultants undertake to help SAP customers manage and optimize their business operations. While SAP consulting comes in various forms and flavors, a successful SAP consultant typically excels in certain aspects and qualities, irrespective of his or her domain. In this article, we will cover ten basic skills every SAP consultant needs to be successful and why.
Fixed Asset Depreciation - A Taxing Situation for ERPs
Is your company's tax asset depreciation managed within SAP ERP or in a separate tax-specific system? Over the past 30+ years, Kent has encountered many tax managers and some finance managers, with a risk-aversion or reluctance to connect the tax asset depreciation process to SAP.
Join ERPfixers and Kent Bettisworth for this recorded session to discuss:
- SAP fixed asset designs that work for both, finance and tax departments.
- The ERP process and system challenges and suggested mitigation actions.
- Two specific SAP fixed asset designs with choices for finance and tax integration
- The impact of design choice , Tax tight integration or relaxed-integration on the risks.
Basics of SAP for Young Professionals
Written By: Ndz Anthony Business Intelligence Expert
SAP, commonly pronounced as 'sæp' or S-A-P (System, Application, and Products In Data Processing), is a software company that offers transformative enterprise management solutions to businesses around the globe.
The SAP company is a leader in ERP technology and business solutions.
SAP ranks amongst the Fortune 500 as the third-largest publicly-traded company(by revenue) globally.
One reason for these statistics is their top-tier customer base. SAP solutions are frequently expensive, closed source, and require professionals to implement.
Here at ERP Fixers, we know too well how challenging implementing SAP software can be, hence the need for trained SAP experts, typically known as SAP consultants in the SAP Ecosystem.
This article will discuss SAP Consulting, the types of SAP Consulting, how to become an SAP consultant, and finally, the prospects of SAP consulting.
What is SAP Consulting?
We can define SAP Consulting as the activities, processes, and tasks. SAP consultants undertake to help SAP customers manage and optimize their business operations.
Types of SAP Consulting
There are numerous SAP consultant types; as a matter of fact, there are as many SAP Consultants as SAP Products.
However, we can group sap consultants into two main categories, functional consultants and technical consultants.
Who is a Functional SAP Consultant?
This category of SAP consultants works closely with the domain experts and developers to set up and enable the use of functional SAP modules deployed within user departments.
The Key roles & Duties of a Functional SAP Consultant include:
Liaising with Heads of Departments during business process design and implementation phases.
Liaising extensively with heads of departments and "super users" to understand their SAP requirements and provide solutions to business needs. Enforcement of internal controls within SAP and other business systems.
Provide user manuals and training to users of enterprise systems.
Provide operational and periodic ad-hoc reports to administration to aid decision-making on SAP and SAP-related Systems.
Examples of functional SAP consultant roles are SAP MM Consultant, SAP PaPm Consultant, SAP HCM consultant, etc.
Technical Consultants:
These categories of SAP consultants are more tech-savvy and work closely with the functional consultants to implement, modify or enhance the existing SAP system.
Their Key roles & Responsibilities include:
Based on approval, work together with functional consultants to proactively implement new features, introduce new systems and modify existing business processes to improve efficiency.
Oversee and manage projects to modify, enhance, or implement new functionality on SAP and other related products.
Support users on change control and management.
Examples of technical SAP consultant roles are SAP ABAP Developer, SAP BW Consultant, SAP Basis consultant, etc.
How to Become An SAP Consultant
We have found two significant routes to commence your career as an SAP Consultant.
1. The SAP YPP Program
The SAP Young Professional Program is an initiative by SAP Digital Skills Center created to bridge the digital gap existing in today's workforce.
The program is designed to:
Sieve top graduates and subsequently equip them with soft skills, accredited SAP certifications, and a sense of belonging within the SAP Community.
Set a stage for career growth within the SAP Ecosystem as potential SAP consultants.
Balance the demand for SAP consultants across the SAP Ecosystem.
If you are interested in an SAP career and a B.s.c in Business Administration, Management Information Systems, Engineering, or a related field, you should consider applying.
2. SAP Certification and Training
Suppose you already have some experience working with SAP, maybe as a superuser in your company. In that case, you might want to consider this path.
Pick your preferred SAP module.
Invest in the training course for that module
Write certification exam
Intern or Volunteer to join up with an SAP Consulting firm to gain experience.
With this route, your credibility and experience will be evident to potential employers. You stand a higher chance of being considered for SAP Consultant roles.
Prospects of SAP Consulting
SAP is an in-demand profession, and there are many possibilities within the sap consulting space.
In this section, I will outline a few prospects for sap consulting.
1. High Earnings
SAP software is to the ERP ecosystem what Apple products are to the tech-gadget industry. SAP software is relatively expensive and usually deployed by enterprises with high budgets and large-scale businesses. Hence, the reason for top-notch earnings in the industry. The compensation for SAP consultants ranks among the highest, with opportunities for job growth prospects, salary, quality of life, and other benefits. PayScale estimates an average SAP Consultant salary at $89,129k per year.
2. In-demand Profession
According to most recent articles and employment agencies, jobs in SAP consulting are high in demand. Due to the increased demand for technology solutions, they will continually rise.
3. Top-Tier Firm
According to Glassdoor, SAP ranks as the "best places to work in 2022". Due to its success as an international brand, SAP consultants are highly regarded and respected in the corporate world.
From R/2 to S/4HANA: Journey of SAP Controlling
Learn about the history of how SAP software has evolved over the last five decades. Topics will include CO FI Real Time Integration example in ECC; Changes brought in by HANA, cloud and various acquisitions; Important design and configuration changes for Controlling in S/4HANA; Cost Elements are now part of G/L Account; Material Ledger is mandatory in S/4HANA; Cost components and variances break down can now flow to Financial Accounting; Move towards Margin Analysis and Other Features and Innovations.
How to Consolidate Financial Data in S/4HANA
The SAP S/4 HANA Finance Group Reporting module is SAP’s latest financial consolidation reporting tool which streamlines month-end close processes by unifying operational entity and financial consolidation group close processes. The new group reporting logic was implemented as of S4 HANA 1909. The new group reporting logic includes a set of features to support legal and management consolidation
An Overview on SAP Analytics Cloud Planning
Companies might experience challenges in Planning as the economy has been transitioning towards Digitalization. Enterprises face new challenges with the latest changes and developments. Top and middle-level management across organizations have questions about leveraging the ever-growing data available to enable quick and fast decision-making. Accounting and Finance officers have planning, budgeting & forecasting at the top of their priority list of initiatives for improving performance. Well-integrated financial planning is necessary for their initiatives. Companies with these capabilities grow faster and can better serve their customers to seize new opportunities than their competitors.
How to achieve Realtime Profitability using Margin Analysis in S/4HANA
SAP Margin Analysis (previously known as Account Based CO-PA) allows organizations to gain insights into their margins, revenues, and costs of specific market segments such as products, customers, material groups and other dimensions. The goal is to provide management with contribution margin information to aid in the decision-making process. With S/4HANA, you can perform Profitability Analysis using both the Costing-based CO-PA and Margin Analysis methods. SAP recommends Margin Analysis as the default solution even though both Costing-based and Margin Analysis can co-exist. This is because, only the Margin Analysis solution updates the universal journal (ACDOCA), and all future innovations will only be made for Margin Analysis.
Profitability Analytics Center of Excellence (PACE)
Many organizations that use SAP are far from where they want and need to be with improving their performance. They typically apply intuition and externally oriented financial information, rather than information designed for internal decision support, when making decisions.
To address this problem a non-profit Profitability Analytics Center of Excellence (PACE) was created. PACE is based on a framework that integrates revenue management, capital and intangible investment management, and managerial costing. The framework provides a roadmap for finance to support strategy formulation, validate strategy with operational and financial models, improve the quality of strategy execution, and support strategy evaluation for continuous improvement. The result is improved forecasting and decision making.
Foundational to the PACE framework is the “causality principle” which is the basis of scientific insight, including decision science, as it applies to economic, financial, and operational decisions. Effective economic modeling is essential for all of the enterprise and corporate performance management tools.These include: a strategy maps and its companion balanced scorecard; product, service line, channel, and customer profitability analysis; capacity-sensitive driver-based budgets and rolling financial forecasts; enterprise risk management; supply chain management; and lean and Six Sigma quality management for operational improvement. Each method should be embedded with advanced business analytics of all flavors.
An Overview on “Performing GR/IR Account Maintenance in SAP S/4HANA 2020”.
The GR/IR clearing account is used for clearing GRs and invoices. In case of quantity differences between GRs and IRs, some items remain open in the GR/IR clearing account. If further deliveries, return deliveries, invoices, or credit memos do not clear a quantity difference for a purchase order item, you must maintain the GR/IR clearing account for that item. In this article, I would like to provide an overview on GR/IR account maintenance & How to perform GR/IR clearing account maintenance.
Using CASE expressions and Substring function in SELECT statements- A Short Guide for ABAP and ABAP on HANA Developers
Within newer versions of Open SQL, you can now add both simple and complex conditions using the CASE.. ENDCASE expression. In addition, you may use the SUBSTRING function in order to extract part of a character field. In this article, we will see the two topics, along with coding examples and output illustrations.
What happened to the Controlling Module in S/4HANA?
By now, everyone has heard about some of the major changes that occur in S/4HANA Finance, such as the Universal Journal, New Asset Accounting, mandatory Material Ledger, and so on. A huge difference between S/4HANA Finance and ECC, is the merging of the Financial Accounting (FI) and Controlling (CO) modules (the proverbial “Single Source of Truth”), and most of the Controlling functionalities are now subsumed into the Universal Journal.
Cost Flows in SAP Controlling
One of the most misunderstood aspects in all of SAP is how to analyze production variances. This is partly because SAP’s method of Product Cost Controlling is different from other accounting software systems, in that production costs are passed through the P&L as well as the Balance Sheet. And also, because production activity (Labor, Machine Time, Overhead) is tracked using Secondary Cost Elements, which are not part of your typical Financial Statements. Even some of the most seasoned cost accountants are flummoxed with how the manufacturing information is represented in Financial and Management Accounting, and how to measure price and efficiency variances. To put it simply, Production Variance Analysis involves three steps:
Creating a standard cost estimate, which calculates the expected cost to manufacture an assembly.
Collecting the Actual manufacturing costs on a manufacturing order (production order/process order /product cost collector).
Calculating the Variance, which is the difference between:
actual costs: components, labor, overhead
actual credits: value of finished goods manufactured.
SAP Product Costing Controlling Configuration and Beyond
- Look into the design aspects that are jointly owned by CO, MM and PP teams. (e.g. Resource / Work Center and their Standard Value Keys, Formulae for Activity Types).
- Review options to add freight, other incidental costs in the standard cost estimates and track actuals (e.g. Costing Sheet, Additive Costs, User exit for material valuation, Accrual pricing conditions in Purchase Order, etc.)
- Understand how to investigate and rectify messages encountered during product costing
- Deep dive into movement types and account determination, analyze MM-FI accounting flow
How Funds Management (PSM/FM) Interacts with Material Management (MM) Lifecycle
Some public sector companies must control the annual budget to certify that its expenses are below the budget provided for each cost center and cost element. The primary objective of the SAP Funds Management (FM) module is to address this.
When this module is activated, it interacts with several other SAP modules, especially MM, which controls all acquisitions made by the company. This interaction begins from Purchase Requisition to Invoice Verification.
Variance Analysis in SAP Controlling
One of the most misunderstood aspects in all of SAP is how to analyze production variances. This is partly because SAP’s method of Product Cost Controlling is different from other accounting software systems, in that production costs are passed through the P&L as well as the Balance Sheet. And also, because production activity (Labor, Machine Time, Overhead) is tracked using Secondary Cost Elements, which are not part of your typical Financial Statements. Even some of the most seasoned cost accountants are flummoxed with how the manufacturing information is represented in Financial and Management Accounting, and how to measure price and efficiency variances. To put it simply, Production Variance Analysis involves three steps:
Creating a standard cost estimate, which calculates the expected cost to manufacture an assembly.
Collecting the Actual manufacturing costs on a manufacturing order (production order/process order /product cost collector).
Calculating the Variance, which is the difference between:
actual costs: components, labor, overhead
actual credits: value of finished goods manufactured.
Gain better Visibility of Inventory Costs within your ERP System
In the standard ERP system (and even S/4HANA) it is difficult to find reports that give you a multidimensional view of your inventory costs. Many customers download the information to Microsoft Excel or use external reporting tools such as BI to do the analysis. There is nothing wrong with these options, but sometimes they lead to reconciliation errors (in the case of Excel) or realtime update issues (in the case of BI). With the Material Ledger Activated and by utilizing an enhanced report, there are several reporting options that will give you a more granular view of your inventory values.
Absorption Costing-Accounting of Activities
SAP Controlling practitioners who have used activity types for absorption costing, have often asked about the integration of SAP Production Planning and SAP Controlling and how this setup works behind-the-scenes. This blog post is an attempt to explain the mechanics of activity types, their configuration, master data and transactional data setup. I hope this write-up is useful to SAP Controlling practitioners.
Recording Stock-in-Transit in Accounting and Logistics Transactions
Stock-in-Transit can occur when goods transferred between two entities have left the sending entity, but ownership has not yet been transferred to the receiving entity. In traditional SAP the Stock-in-Transit of Inventory can be identified in Inventory Management reports, but this is not reflected in Accounting. With the Business Function LOG_MM_SIT, which is available in ECC (from Enhancement Pack 5) and also in S/4HANA (switched on by default), you can reflect the Stock-in-Transit in dedicated G/L Accounts.
Reorganizing Profit Centers in SAP
As of ECC 6 EHP 5, SAP rolled out a functionality which allows for reorganization of the profit center on the core SAP objects in the Logistics and Accounting functions.
This includes changing profit centers on Materials, Sales Orders, Cost Centers, Orders, Projects, AR, AP, and GL Open Items. With this functionality companies can update the core data in their SAP ERP systems to enable financial reporting which better aligns with how they manage their business today versus 10-15 years ago when they first implemented SAP. Learn how SPX Flow used this functionality to transform their financial reporting and enable full financial statements which align with a new management structure.