A Step-by-Step Guide to Automate Your Payroll

Process

Linda Crosby, United Launch Alliance

Mike Timm, Integrated Consulting Group

Produced by Wellesley Information Services, LLC, publisher of SAPinsider. © 2017 Wellesley Information Services. All rights reserved.
In This Session

• Learn how to automate the process using SAP-delivered tools

• Identify business requirements
• Create a method to meet business requirements
• Improve efficiency
• Minimize chances of payroll errors
• Exercises, exercises, and more exercises
• Volunteer and get hands-on experience
• We want a fluid dialogue so that you gain as much as you can from this workshop
 Don’t hesitate to ask questions or provide experiences

1
What We’ll Cover

• Business requirements gathering

• Payroll schemas, functions, rules, and operations
• Methods to streamline payroll
• Common error resolution
• Audit reporting options
• Wrap-up

2
Business Requirements Gathering

• Business requirements drive everything we do

• The business should always drive IT (Information
Technology) and not be the other way around
• We need to know what the business is trying to
accomplish and what tools we have available
• We then need to determine how we can best build
business process in a manner that is advantageous to the
user and ongoing support

3
Business Requirements Gathering Exercise

• We’ll start by identifying issues you experience

• Translate those into business requirements and put in our template
 Make sure to provide examples when possible

• Break down the business requirements into components

 Determine what area(s) of functionality is impacted

 Analyze SAP functionality to meet the requirements or if an enhancement is required

• We’ll use some of these examples in later exercises

4
What We’ll Cover

• Business requirements gathering

• Payroll schemas, functions, rules, and operations
• Methods to streamline payroll
• Common error resolution
• Audit reporting options
• Wrap-up

5
Payroll Schemas, Functions, Rules, and Operations

Payroll Program Schema

Table
Function Rule Master Data
Configuration

Table
Operation Calculation Master Data
Configuration

6
Payroll Schemas

• Schemas control the payroll processing steps

 Provide the instructions for payroll

 Supply the logical flow of data in, calculation performance, and data out

 Customizable and flexible to meet business requirements

 However, configuring has a feel of mixing table configuration and programming

together
• The payroll program contains code that is called by the schema
 The schema utilizes the snippets of code within the payroll program for
calculations, etc.
 Schemas control the use of functions

7
Payroll Schemas (cont.)

• Transaction code PE01 is used to maintain schemas

• Copy SAP standard schemas to a customer name range
 Copy standard payroll schema W000 and then only maintain the new Z000 schema

 Reduces issues when SAP provides updates to a standard schema with support
packages or upgrades
 When making an update to the custom schema, make a backup copy first since there is
no version management
 Makes it easier to reverse changes or scrap all the changes quickly if needed

• Compare schemas with menu path Schema  Compare after displaying the schema in
transaction code PE01
• Program RPDASC00 outputs a schema with differing levels of detail set by the user

8
Payroll Functions

• Functions are snippets of code found in the payroll program that are called by the
schema
 Function may or may not have parameters set in the schema — it isn’t always a
requirement
 You can determine the available parameters by using the F1 (Help) key when you put
your cursor on a function in the schema view
• Functions may:
 Read infotypes

 Process rules

 Process multiple tables to calculate wage types

 Process payroll internal tables

• Version management is available

9
Payroll Functions (cont.)

• Transaction code PE04 is used to maintain functions

• Functions are not as difficult to review and understand as most people first think, but a
basic understanding of ABAP is helpful
• Use custom functions only when existing options will not meet business requirements
 Just because you can, doesn’t mean you should

10
Payroll Rules

• Rules provide the logic flow of processing payroll

 They are attached to schemas and executed during payroll processing

 Functions in the schema process a rule

 Rules contain operations that perform calculations or other decision logic

• Configuring rules is not necessarily intuitive

 Configuration has a feel of mixing table config and programming together

 Not directly date delimited like table entries, but options are available to work
around this
 Placement of the rule in the schema needs to be carefully considered

11
Payroll Rules (cont.)

• Highly customizable to meet business requirements

 Rules may make decisions on a variety of objects such as employee group/subgroup,
personnel area/subarea, etc.
 Wage types contain splits that link related data, such as WPBP, to it and should be
considered when developing rules
 Wage type specific or generic

 Hard coding values should be avoided and table entries such as constants should be
used instead
 Variables may be set and used for later processing to trigger other rules to perform
specific tasks

12
Payroll Rules (cont.)

• Rules are configured in transaction code PE02

 Display or maintain rules

 Make decisions based on objects such as employee group/subgroup or wage type

processing class
 Operations are set within the rule

13
Payroll Operations

• Just like functions, operations are snippets of code found in the payroll program that are
called by a rule
• Operations perform calculations or other data manipulation steps
 Manipulate one wage type at a time and store the wage type in an output table

 May perform decisions within the rule to determine a path to follow — personnel area,
employee subgroup
 Up to six operations may be entered on one line of a rule and you have the option of
sequential rows allowing for more operations when needed
 Operations allow for parameters to determine how the operation should behave

• Version management is available

• Use standard SAP routines when possible
• Follow SAP standards when creating new operations
14
Payroll Operations (cont.)

• Do not hard code values in operations; look up the values in tables, allowing for easier
maintenance and date effectivity
• Variables seem to get overlooked and need to be cleared so they are not carried along
• Make sure to include error handling that provides useful feedback
• Do not sort internal tables used in the main payroll driver since the main program might
be expecting the internal table to be in a specific order
 If needed, copy data to a new internal table for use in custom operations or functions

• Maintaining and displaying the operations is done using transaction code PE04

15
Payroll Schemas, Functions, Rules, and Operations Exercise

• We’ll walk through how we can implement the business requirements gathered in the
previous section in schemas, functions, rules, and operations

16
What We’ll Cover

• Business requirements gathering

• Payroll schemas, functions, rules, and operations
• Methods to streamline payroll
• Common error resolution
• Audit reporting options
• Wrap-up

17
Methods to Streamline Payroll

• Streamlining payroll can take several different forms

 Increase the use of standard functionality

 Optimize standard functionality to gain efficiency

 Implement workflows and automate repetitive steps

• We’ll dive into each of these workflow and automation options

 Custom Area Menu

 Payroll Process Model

 Batch Jobs

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Method to Streamline Payroll: Custom Area Menu

• Area menus make life much easier because we don’t have to memorize every individual
transaction code
• SAP delivers area menus, such as PC10
• We also have the ability to create our own area menus specific to our needs
• Creating our own area menus is similar to menu favorites, but area menus are the same
for every user
• Custom area menus can keep users focused on their tasks and provide easier transition
when someone new is running a sequence of processes
• Transaction code SE43 allows us to create, copy, and maintain area menus
• We will also employ transaction code SE93 to create custom transaction codes to call
standard SAP programs, but with our specific variants

19
Method to Streamline Payroll: Custom Area Menu Exercise

• We’ll discuss our payroll checklist and then create a custom area menu following that
checklist

20
Method to Streamline Payroll: Payroll Process Model

• Process models consist of the payroll steps otherwise manually performed

• Process models are either off-cycle or regular payroll in design
• Breakpoint and wait points may be added to the process model so users can monitor and
validate payroll results prior to subsequent steps being performed
• Many companies do not implement process models and are missing out on the
automation functionality
• Some SAP-delivered reports may be put in the process model
• Custom programs may be added to process models
• We’ll see the addition of a custom program to Release Payroll, set to Correction, and Exit
Payroll at the appropriate time and conditions
• Finally, process models may be scheduled

21
Method to Streamline Payroll: Payroll Process Model Example

22
Method to Streamline Payroll: Payroll Process Model Exercise

• We’ll discuss the programs and reports we typically run during the payroll process and
incorporate those in a payroll process model

23
Method to Streamline Payroll: Batch Job(s)

• We have some easy enhancements we can put in place to make the payroll process
quicker and provide helpful feedback
• If a Payroll Process Model will not be used, create a scheduled batch job to automate the
following:
 Set the payroll control record to “Released for Payroll”

 Run payroll

 Set the payroll control record to “Corrections”

 Run reports

24
Method to Streamline Payroll: Batch Job(s) Exercise

• We’ll step through the creation of a couple of batch jobs to see how payroll running may
be scheduled and processed, along with report generation

25
What We’ll Cover

• Business requirements gathering

• Payroll schemas, functions, rules, and operations
• Methods to streamline payroll
• Common error resolution
• Audit reporting options
• Wrap-up

26
Common Error Resolution

• Accounting period issues are the #1 cause of payroll process model issues
 Towards month-end, you may run a payroll for the following month, but the account
period isn’t opened so errors during posting creation occur
 Get a schedule of opening and closing of periods from accounting

• Check printing issues are the second most common cause of payroll process model
issues
 Printers get jammed, disconnected from the network, etc.

• Another issue is when someone runs the subsequent processes of off-cycle activities
and doesn’t set selections correctly
 Make sure to limit process models, payroll areas, and exact personnel numbers being
processed so only the employees you should be processing are included

27
Common Error Resolution Exercise

• We’ll review some of the issues we discussed during the Business Requirements
Gathering section and see what methods we have to resolve them

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What We’ll Cover

• Business requirements gathering

• Payroll schemas, functions, rules, and operations
• Methods to streamline payroll
• Common error resolution
• Audit reporting options
• Wrap-up

29
Audit Reporting Options

• We’ve broken this section up in five areas and have some examples in each
 The Challenges of Payroll Audits

 Pre-Payroll Reports

 Payroll Verification Reports

 Post-Payroll Reports

 Periodic Reports

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The Challenges of Payroll Audits

• SAP delivers more than 200 Human Resources reports providing a solid reporting
foundation
• However, reviewing and gaining an understanding of each of the reports is a time-
consuming, but important, step to determine which will best meet requirements
• Payroll-specific reports are much fewer in number, but be inventive with how payroll may
utilize the HR reports
• Unfortunately, the delivered reports aren’t modifiable, data fields may not be definable,
and the output is fairly well fixed
• ALV allows some flexibility, but there always seems to be a field we really want that isn’t
available
• A defined reporting strategy is necessary to point users to the correct report for what the
user is after

31
The Challenges of Payroll Audits (cont.)

• The payroll department typically owns the end product – remuneration – just as the
quality assurance (QA) department owns the final product from the production line
 How many resources have been dedicated to QA departments for ongoing
improvements?
 Compare that to the resources dedicated to the payroll department for ongoing
improvements
• SAP provides some tools to audit payroll, and many companies develop their own or
purchase third-party software
• Unfortunately, the need for an auditing tool is often identified only after go-live and its
selection and use are afterthoughts
 A quick implementation often takes precedence over consideration for ongoing
support

32
The Challenges of Payroll Audits (cont.)

• Typically, payroll audits are performed by payroll administrators on payroll

processing day
 Many tools are time consuming to use and reside outside of the SAP system,
especially when implemented after go-live
 SAP-provided tools are not always understood or payroll administrators are unaware
of them
 Audits are time consuming and affect the timeline of payroll processing

• The last audit recourse is waiting for errors to occur or an employee to identify an issue
 We’ve now reached the reactive “put out the fire” stage

 Employees watch closer and lose all trust in the payroll department

33
Pre-Payroll Reports

• Pre-payroll reports reduce errors at the time of input and prior to the payroll process
beginning
 Validate data by running reports to verify all employees contain specific data, such as:

 All employees in a specific personnel area have NE as their Work Tax Authority

• Validate data entry using the SAP report Logged Changes (RPUAUD00)
 Run a periodic Logged Changes report to identify modified employee records

 If an employee infotype was modified several times during a specific period, it

should be flagged – there may have been an issue during entry

 Check for changes to infotypes (e.g., cost center changes) that will cause retroactivity
outside of a certain range
 Infotypes causing retroactivity are defined in configuration

 Infotypes must be set to log

34
Pre-Payroll Reports (cont.)

• There are several useful reports that can get our data in good order prior to payroll being
processed. Many should be run throughout the time frame between payrolls being run.
 Flexible Employee Data

 Missing Cost Center

 Ad Hoc Query

 Utility Remuneration Statement

 Locked Employee Records

35
Pre-Payroll Report: Flexible Employee Data

• Provides some basic information about employees

• Payroll can use this report to identify potential data inconsistencies or personnel
numbers to watch more closely
 If you have multiple payroll areas you can look for employees that may be in the wrong
payroll area based on company code or employee group
 Semi-monthly payroll should only have EE Group 1 Salaried

 Weekly payroll should only have EE Group 2 Hourly

 Check for missing Infotype 0001 cost center

 Look for recent Entry or Leave dates

36
Pre-Payroll Report: Missing Cost Center

• Use the Flexible Employee Data report (S_AHR_61016362) to identify employees with a
missing cost center in Infotype 0001
• Consider other objects that are necessary for payroll and see if this report can help
validate

37
Pre-Payroll Report: Ad Hoc Query

• Ad Hoc Query (SQ01) is typically underutilized in organizations and could add a great
deal of reporting power
• Infotypes can be selected and combined and then output to a file for analysis
• If you aren’t currently employing Ad Hoc Query, check it out as soon as possible
• I’ve run across some organizations that withheld the transaction code from end users
due to authorization concerns

38
Pre-Payroll Report: Utility Remuneration Statement

• Consider creating a utility remuneration statement

 Put the identification fields and wage types on one line in configuration (PE51)

 Run payroll simulation with the utility remuneration statement selected

(PC00_M16_CALC_SIMU)
 Download the print spool or onscreen output and open in Excel

 There will be one line per employee with the output from the remuneration statement

that can then be filtered

 This can be useful to look for specific wage types that you pay more attention to during
processing
 The simulation using the utility remuneration statement can be run at any time

39
Pre-Payroll Report: Utility Remuneration Statement (cont.)

40
Pre-Payroll Report: Locked Employee Records

• Use the “Personnel numbers that have to be unlocked for payroll runs” report
(PC00_M44_UCPL) to identify employee records currently being maintained by a user
 Payroll should communicate a time users should not be maintaining employee records

• Additional selections allow us some options on how to handle users locking an employee
record
 Payroll should be given access to run this report, but I have seen organizations that
won’t provide it due to some underlying objects that are typically Basis only

41
Payroll Verification Reports

• Once payroll has been run and we have payroll results, but before the checks and ACH
file are ready to go out the door, the verification process can begin
• We need to look for items that are out of the ordinary and determine what methods we
have to automate or reduce the manual effort required
• There are a few main reports available and within those we have variations that may be
employed to meet our needs
 Wage Type Reporter

 Payroll Journal

• Some of the Pre-Payroll Reports and Post-Payroll Reports could easily fit in this section
as well, depending on what we are after

42
Payroll Verification Reports: Wage Type Reporter

• The Wage Type Report is a great tool to analyze payroll data

• It is relatively fast and provides more fields than reports like the Payroll Reconciliation
Report
• The very useful feature of the report is to compare pay periods for absolute or percentage
differences for specific wage types
 Compare gross pay from one period to another
 Compare net pay from one period to another
• The object selection feature allows you to add and remove objects
 Company code, cost center, in-period, etc.
• You can also use the ALV Grid Control to generate the output and then make and save
your very own ALV layout to fit your needs
• Use the Wage Type Reporter (PC00_M99_CWTR) to identify variances from period to
period
43
Payroll Verification Reports: Wage Type Reporter (cont.)

• Enter selection criteria to narrow down the scope of employees to review those
potentially affected by configuration or master data changes
• We enter the two payroll periods we want to compare and the wage type
• Note that the Wage Type Reporter can be added to Payroll Process Models so output can
be generated automatically
• On the selection screen we can also further reduce the amount of output by specifying
our tolerances in an amount of percentage

44
Payroll Verification Reports: Wage Type Reporter (cont.)

• When we execute the report, records that fit our specific selection criteria will be output
• The output may be exported to Excel to analyze further

45
Payroll Verification Reports: Payroll Journal

• The Payroll Journal is configured using transaction code PE51 in the same manner the
remuneration statement is configured
• The delivered payroll journal provides some data, but through customization you can
make it better meet your organization’s needs
• We run the payroll journal using transaction code (S_AHR_61016204)
• Two important buttons on the selection screen are Delimitation and Retrocalculation
layout
• The Delimitation button provides us with the sorting and totaling objects
 SAP defaults company code, personnel area, and personnel subarea
 Personnel area and personnel subarea haven’t been as useful to most organizations so
they are removed and cost center is added
• The “Include OSS” reversal should be checked so out-of-sequence reversals are included
 Not having this checked has caused balancing issues

46
Payroll Verification Reports: Payroll Journal (cont.)

• Data is displayed in the output based on the configuration of our forms and the selection
screen options
• Take time to play around with the different selection screen options to see what each
object will do to change the output
• The forms are highly customizable through configuration

47
Payroll Verification: Payroll Control Center

• Reduces the high amount of manual steps to complete the end-to-end payroll process
• Reduces the time-consuming payroll data verification and reconciliation process
• Improves the insight about payroll processing status
• Monitors KPIs the user wants and needs
 Payroll data is continually validated throughout the payroll period based on master
data and payroll simulations
 Helps to simplify and quickly identify and then resolve errors during a productive
payroll run
• The Process Overview is the entry point for the payroll process manager and shows the
processes of the user responsibility
• Provides insights to each process at a glance (e.g., progress, quality issues, etc.)
• All relevant information for a process step is available in one single view. If required,
further details can be easily accessed.
48
Payroll Verification: Payroll Control Center (cont.)

49
Payroll Verification: Payroll Control Center (cont.)

50
Payroll Verification: Payroll Control Center (cont.)

• Error Overview displays the list of employees rejected in payroll along with the reason for
rejection
• Program Details display the list of parallel payroll jobs executed, as well as the status of
each, and provides the ability to display the result spool list
• User details for those able to support the Payroll Manager resolve the step

51
Payroll Verification: Payroll Control Center (cont.)

52
Payroll Verification: Payroll Control Center (cont.)

• During the monitoring process up-to-date information is provided about payroll data
quality
• Payroll data quality issues are displayed and automatically, or manually, assigned to
users
• KPIs illustrate the overall condition of the payroll process and identify issues at an early
point
 Issues should be resolved before payroll is processed

53
Payroll Verification: Payroll Control Center (cont.)

54
Payroll Verification: Payroll Control Center (cont.)

• Enhancement Package 7 for SAP ERP 6.0

• HR Renewal 2.0
• SAP NetWeaver® 7.4
• Requires declustered payroll results
• Does not require HANA
• Great blog post on SCN, but some information has become outdated
 http://scn.sap.com/community/erp/hcm/blog/2014/02/13/improve-payroll-data-
validation-with-sap-payroll-control-center-add-on

55
Post-Payroll Reports

• Post-payroll reports help us to reconcile and identify discrepancies between the payroll
results and what has gone to FICO, interfaces, and other department reporting
• The Wage Type Reporter is very useful to identify specific items and look at detailed
payroll results
• SAP provides several reports that fit well in this category
 Wage Type Reporter (already discussed)

 Completeness Check

56
Post-Payroll Reports: Completeness Check

• The Completeness Check (PC00_M99_CIPC) allows us to see all payrolls that have not
been processed through Posted to Accounting or Posting of Payments
• We enter the date we want to start the search and the Run Type
 Payroll Posting

• The output shows us the information we need to run the unposted payroll
 Keep in mind that if the payroll doesn’t have any wage types that post, it’ll still show
and we can’t get it to disappear

• The New Completeness Check (PC00_M99_CIPC_PNP) allows for more detailed

selections than the original
• We have PNP selection options and can really narrow down what payrolls we are looking
to verify have been posted
57
Periodic Reports

• Periodic reports may fall in categories discussed previously depending on your payroll
process flow
• However, most organizations will use the reports infrequently and may forget about their
availability
• On the other hand, a couple of the reports are geared more towards configuration
verification and the existence of the reports hasn’t been passed along to the payroll
department
 Many times these reports would help the payroll department troubleshoot an issue and
identify the root cause without getting support involved

58
Periodic Report: Wage Type Assignment – Display G/L

• The Wage Type Assignment – Display G/L Accounts report (PC00_M99_DKON) access
should be given to accounting
• Periodic reviews should be performed by Payroll and Accounting to validate the wage
types are posting correctly

59
Periodic Report: Wage Type Utilization

• The Wage Type Utilization report

(PC00_M99_DLGA20) allows for easy review of wage
type configuration
• Double-clicking a selection option takes you to more
detail
• Double-clicking the processing class 68 value 2 will
display all wage types assigned

60
What We’ll Cover

• Business requirements gathering

• Payroll schemas, functions, rules, and operations
• Methods to streamline payroll
• Common error resolution
• Audit reporting options
• Wrap-up

61
Where to Find More Information

• Hans-Jürgen Figaj, Richard Haßmann, and Anja Junold, HR Reporting with SAP, First
Edition (SAP PRESS, 2007)
• www.insightcp.com/res_01.html
 “Taking Control of Your SAP HR Reporting” (Insight Consulting Partners, 2005).

• Program RPDSYS00 or transaction code PDSY for HR documentation about specific

objects
• Steve Bogner, “When and How to Develop Custom Functions and Operations” (HR
Expert, November 2003).

62
7 Key Points to Take Home

• Requirements gathering is where it all starts and will drive the result
• Schemas and rules do not have version management, but functions and operation do
• Creating area menus will keep users focused and make easier transitions for users doing
new process steps
• Payroll process models automate the manual process steps for an end-to-end payroll
process
• Batch jobs should be considered if area menu or process model options are not an
option
• Carefully consider which report will best meet a given need
• Document each of the reports, when they’d be useful, what fields are available, etc. for
future reference

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Your Turn!

How to contact us:

Linda Crosby
Email: linda.crosby@ulalaunch.com
Twitter: @LindaJCrosby

Mike Timm
Email: mtimm@integratedcg.com
Twitter: @MikeTimmSAP
Please remember to complete your session evaluation
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