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Financial Integration in PPM

Gerald B. Steele
Principal Consultant, SAP America, Inc.

Financial Integration in PPM


Introduction to Financial Integration Where is the Financial Data-Overview Project Systems ECC 6.0

cProjects 4.0 xRPM 4.0


Questions & Limitations

Business Case #1 PS Business case description A mid-market Pharmaceutical company decides they need a better integrated tool to manage their R&D projects. Their requirements included:
Resource planning along a discrete curve over a long period of time. Detailed cost planning for external partners with procurement process. This includes multi-country/multi-currency highly regulated procurement and invoice postings. Use of settlement to move costs to multiple receivers based on type fo costs.
G/L for R&D costs, CCtr for clinical trials costs, PCA for other costs.

Extensive use of Graphics to build and manage project structures.

Use of CATS to enter time against projects for every employee in the R&D organization.

In this case, PS was a better fit as it best met the demands of the customer to integrate HR, FI/CO, MM, and PCA.
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Business Case #1 PS Chose to use Integrated Planning on WBS elements due to requirement to discretely plan resource across extensive duration. They also chose to use the Project Planning Board to manage ALL aspects of their Project Structure Planning and utilize WBS Cost planning to manage their resource planning against cost centers.

Summary:

This Pharma customer is live with PS and most of the ERP modules for their R&D organization.
This Pharma customer implemented PS for the purpose of integrating their financial and procurement tools with their project management tool.

They utilize integrated planning with CO to get a better view of their required resource load over time across projects.

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Business Case #2 xRPM Business case description Customer uses PS in their R&D organization and MS Project in their IT organization. They do not have a solution to manage ANY portfolio data. They have the need to view and manage their IT portfolio across their enterprise. Because they currently use MS Project for IT projects and will want to manage their entire project portfolio, we proposed using xRPM. Questions regarding this decision surrounded the long-term vision of portfolio management. Data origin (where the data comes from:
Project structures (MS Project, Artemis, Plan View, Primavera, etc)
Resources (MS Project, PeopleSoft/Oracle, SAP, etc) Costs (MS Project, Primavera, Oracle, SAP, etc)

The use of xRPM allows this customer to continue using their existing project management tools while providing the capability to add additional tools to manage the enterprise portfolio as they determine their portfolio design.
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Introduction to Project Financial Integration A key differentiator in the SAP tools for Project & Portfolio Management (PPM) is the integration into the back-end Financial and Controlling systems. This functionality eliminates the need to enter data into multiple systems and therefore maintains the official system of record. All of the PPM tools SAP offers have this functionality. The SAP Portfolio tool, xRPM, also provides connectivity from other back-end Financial Management, Human Resources, and Project Management tools to provide greater flexibility across the Enterprise portfolio.

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Financial Integration in PPM


Introduction to Financial Integration Where is the Financial Data-Overview Project Systems ECC 6.0

cProjects 4.0 xRPM 4.0


Questions & Limitations

Where is the Financial Data In the world of PPM tools such as Project Systems (PS) in ECC, cProjects 4.0, or xRPM, neither costs nor revenues originate via direct transactions. As such, costs are moved into the PPM tools PS, cProjects, and xRPM from other parts of the system such as Purchasing, Goods Movements, Sales Document Billings, Labor Confirmations, etc. The following slide demonstrates how labor costs are generated and stored in the Organizational Breakdown Structure (OBS) and then moved to the project (PS) via labor confirmations and later off the project via settlement. Direct posting to the project occurs when goods receipt from a PO is executed, an invoice is posted, or a goods issue occurs.

Revenue is posted to a project via a customer invoice (billing) posting.

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Where is the Financial Data

Cost Center OBS Dollars

Work Centers
Activity Types/ Rates $50/hr

Cost Center
1,250 2,500 750

Engineering Craft Design

1.1
$25/hr
Design 750

Project
$75/hr
5 hrs 10 hrs 100 hrs 10 hrs

1.2
Engineering 250

0020
Craft 2,500 20 hrs 25 hrs

1.1

1.2

1.3

0040
Engineering 1,000

0020

0030 0060

blue = actual hrs Consumed red = planned hrs

0010 0040 0050

Asset Settlement

Airplane $4,500

Project $4,500

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Financial Integration in PPM


Introduction to Financial Integration Where is the Financial Data-Overview Project Systems ECC 6.0

cProjects 4.0 xRPM 4.0


Questions & Limitations

Cost Planning in Projects

Overall planning (hierarchical planning) Cost planning using activities/ network costing
600.000 400.000 200.000

Cost element planning

400000 150000 415000 75000

400000 180000 415000 80000

E E F F

10h 10h service service 1421 1421 10h 10h vendor vendor 1000 1000 ce ce 466000 466000

Unit Costing
1

K K $5000 $5000

S
Projects and Orders Easy Cost Planning
I/0099

PP

PM/CS

CO

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Network Cost Planning


Project Cost Planning Using Activities

P
1

P-1
0010 (E), 80h, 0020 0020 (F), (F), 10h, 10h, Wctr 2000, AT 1421 550000017 PurcInfo PurcInfo

P-2
0040 0040 (E), (E), 80h, 80h, Wctr 2100, AT 1420 $5000 $5000 0050 0050 (K), (K), CE CE 400000, 400000,

0030 0030 (K), (K), CE CE 466000, 466000,

$5000 $5000

0060 0060 (K), CE 417000,

$2000

P P-1
0010 0020 0030

P P- 2
0040 0040 0050 0050 0060 0060

Shifting a work package Shifting cost planning automatically

Planned costs
1 2 3 4 5 6 7 8 9 10 11

Periods

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PS Financial Planning Questions

Do you need multiple CO plans? Do you need varying levels (detailed vs. lump-sum) of cost planning? Do you need cash flow planning?

Do you need budgets and/or availability control?


Do you need integrated planning? (PS & CCtr planning) Do you need more than labor cost planning? Do you need overhead costing sheets?

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Actual Costs on Projects

Dates

Costs, Revenues

Payment data
X

Resources

Availability control Integration


SD MM PP FI

PS
PM AM

CO HR

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PS Financial Posting Questions Do you need Accrual (FI) postings? Do you need Settlement? Do you need Internal Order integration for FI/CO control? Do you need statistical projects? Do you need Earned Value/Progress Analysis?

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Direct Procurement Procured Material Costs on Project

Material procured directly by means of an activity.


Purchase requisition

Purch. req. commt for activity


Request for quotation

Invoice verification

Materials

Goods receipt

Item category Quotation

"N"

entry

Actual costs

Purchase monitoring

Vendor selection

Purch. req. commt for activity

Purch. order processing

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PS Procurement

Do you need direct Procurement?


Purchase requisition, purchase order, PCard

Do you need material planning? Do you need procurement commitment tracking? Do you need Project Stock?

Do you need GR/IR tracking?

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Stock or Make-To-Order (MTO) Procurement


Procurement Steps
T - 100##

T - 100##.4 4100 T - 20600


Delivery Production order Production Goods issue Production order Goods issue Network activity (consumption)

Production Production order order T T -- 20600 20600

T T-- 20610 20610

T T -- 20620 20620

T T-- 20630 20630


Goods receipt for purch . order

Vendor 1000

Purchase components

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PS Using Production Do you need production integration? Do you need to track production costs and WIP in your project? Do you need ETO/MTO BOM integration with inventory and cost management? Do you need Variant Configuration?

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Revenue Planning in Projects

Sales order without billing plan

Manual revenue planning


2001

2000

Total
P S D D O C M T D I S T R B T

E - 1399 E - 1399 - 1 E - 1399 - 1 - 1 E - 1399 - 1 - 2 E - 1399 - 2 . .

L N D T O T A L

... ... ... ...

Revenues Sales order with billing plan Billing plan in WBS element

Time

Billing plan

01 02 03 04 05 06

B B
Billing plan

Billing plan

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PS Revenue Integration Do you need revenue planning?


Manual or automated from Sales Order?

Do you need Results Analysis? Do you need Profitability Analysis & reporting? Do you need Billing?
Resource Related Billing (RRB), Lump Sum, Fixed Price, Progress Payments/Down Payments, Milestone Billing, etc

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Financial Integration in PPM


Introduction to Financial Integration Where is the Financial Data-Overview Project Systems ECC 6.0

cProjects 4.0 xRPM 4.0


Questions & Limitations

cProjects: Project Accounting Project cost controlling using integration to mySAP ERP Financials and Project System (PS) Multilevel controlling: cProjects structures can be replicated into PS structures Costs can be settled on internal orders or WBS elements Calculation of project costs based on role demand (plus integration with Easy Cost Planning in mySAP ERP)

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Set up Accounting

Project Manager

Task:
Link project structure to accounting structure

Solution:
cProjects 4.0

Benefits:
Use SAP Project System for Planned and Actual Costs

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cProjects 4.0: Multilevel Controlling

Set-up project plan Execution in time, in scope (and in budget!)


Project lead

Plan costs and budget Monitor execution


Project controller

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Multilevel Controlling 1/2 Functionality


You can flexibly assign WBS Elements as cost collectors to project tasks. It is also possible to assign multiple Internal Orders.

Different controlling scenarios are available


Assignment objects
WBS Elements Internal Orders

Assignment types
Manual assignments
Automatic assignments to WBS Elements

Assignment rules
Role based Task based

Enhancements
Customer-specific scenarios can be executed using the BAdI IAOM_DET_CO_SCENARIO
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Multilevel Controlling 2/2 Enables bottom-up planning and top-down budgeting, billing and results analysis (RA) aggregating values and quantities in the hierarchy Calculation services to create cost estimates based on the assigned cProjects structure while costs (actual/planned) are stored on the WBS elements. Settlement of costs originating from various sources:
Actual costs derived from recorded and confirmed time on cProjects tasks using CATS. Costs derived from procurement or goods movements Costs derived from project-related travel.

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cProjects 4.0: Multilevel Accounting Assignment of work breakdown structures (WBS)

cProjects Structure

PS Structure

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Assignment in PS data

A new tab cProjects in the WBS elements sight is coming with ECC 6.0 (ERP 2005) The assigned cProjects item is shown here.

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Time and Expense Recording on cProject-elements


Current Integration New Integration Option

SAP ECC
cProject Controlling Object (PS/IO) Contract cProject

SAP ECC
Controlling Object (PS/IO) Contract

Pre-Billing T&E Billing T&E

Pre-Billing

Billing

T&E on Controlling Object Manual Update of confirmed days in cProject-tasks

T&E on cProject-task / role from worklist Confirmed hours / days automatically updated in cProject-task Costs updated on CO-Object => Less process steps and one world for project team

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Financial Integration in PPM


Introduction to Financial Integration Where is the Financial Data-Overview Project Systems ECC 6.0

cProjects 4.0 xRPM 4.0


Questions & Limitations

Plan Financial Data

Product Manager

Task:

Plan Financial Data


Plan Capacities

Solution:
xRPM 4.0

Benefits:
Compare forecasted, planned and actual data

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xRPM FI Integration Does financial data come from various systems?


SAP and/or others

Does project data come from various systems?


SAP and/or others

Do you need to report on projects that are not yet projects?


Concepts that do not exist in the tactical project management tool

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Financial Integration in PPM


Introduction to Financial Integration Where is the Financial Data-Overview Project Systems ECC 6.0

cProjects 4.0 xRPM 4.0


Questions and Limitations

Limitations Budget control data in PS


Does not get passed on to cProjects

CO Plan version data


Only plan version 0 will get passed in to cProjects or xRPM cProjects and xRPM do not support multiple CO plan versions

Portfolio project plans


You cannot push project plans from xRPM down to PS or cProjects

CATS and cProjects


While it is true that you can post time to cProjects using CATS, you can only post time against one project per timesheet

Effort required to upload data to xRPM


This effort requires a significant amount of time to execute the extensive number (6-7 programs) of programs required to move data from cProjects/PS into xRPM
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Questions

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