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Going Beyond Efficient Transactions to Good Decisions: New Innovations for Your Finance Organization from mySAP ERP

by Jeff Stiles | SAPinsider

January 1, 2006

Finance departments that can efficiently close the books and conform to standard accounting procedures have become the norm. It’s finance departments that ensure compliance and improve financial decision making that set a company apart. mySAP ERP 2005 includes new innovations that integrate financial processes with broader business strategy so financial teams can make the most of their contributions to the bottom line.
 

Financial organizations have long enjoyed stability in their core role within companies — at least from a day-to-day, operational perspective. Look at some of the measures of success that still apply: how fast the books are closed each period, conformity with standard accounting procedures, how well cash is managed, and so on.

On the other hand, finance hasn't escaped new and growing business demands. In addition to competitive pressures to continually reduce costs, financial organizations are under increasing pressure to also plan effectively and bring predictability to the business, ensure compliance and transparency under new and changing regulations, align day-to-day operations with strategic business planning, and still manage the costs of all those control-related activities.

In response to competitive pressures and demands for cost savings, many companies have traditionally focused their attention on streamlining internal transactions and processes. Many financial organizations have already significantly shortened their period-end close, reduced days sales outstanding (DSO), and driven cost out of recurring operations. But what about improving financial decision making and the quality of the actions that are taken?

For example, successfully managing the operational end of your collections activities on each outstanding invoice is a clear requirement of good financials. But can your credit managers make good decisions about these invoices? Can they see beyond this individual invoice to a customer's aggregate spends and how they are spending across each division of the company? Another example is in line-of-business (LOB) planning: You can gather a bunch of spreadsheets from each LOB with headcount and other resources detailed for the coming quarter. But what if you could tie this directly to corporate objectives with centrally managed information, and still retain LOB planning flexibility? In what ways can your financials team shed some of the tasks better done by the direct participants in the process?

mySAP ERP 2005 Brings Enhancements to Finance

To help customers address these issues, mySAP ERP 2005 delivers a unified solution for financial and corporate performance management (CPM). This release includes significant functional enhancements in key areas of financial management and strategic enterprise management (see Figure 1), as well as human capital management, operations, and corporate services. This solution also covers financial areas such as corporate governance, analytics, credit limit management and other areas of financial supply chain management (FSCM), budgeting, and planning services for various users.

The innovations you'll find in mySAP ERP 2005 are designed to support enterprises and their financial organizations as they take steps to:

Make better decisions, not just better transactions. Improve decision making with analytics, credit management tools from mySAP ERP's FSCM solution, and CPM tools integrated directly into the financials functions.

Broaden the reach of business processes. Financials transactions no longer have to exist in isolation from other areas of the enterprise. mySAP ERP extends financial processes to a broader swath of users. Express Planning and Project Mendocino are two key examples of bringing mySAP ERP processes more directly to users. These extend the reach of financial management to business users throughout the enterprise, ensuring that all users are more productive, reducing training costs and speeding time-to-productivity. A finance organization or other department can take this opportunity to streamline administrative tasks and focus on core strategic initiatives.

Consolidate the core. As companies upgrade to mySAP ERP, they are also consolidating their R/3 instances and other vendor applications around this release. The cost savings associated with consolidation of physical systems also extend to business processes — companies are looking at functions and determining where there's scale or potential reductions in cost. mySAP ERP 2005 delivers additional flexibility for deployment, especially in the area of industry solutions.1 Other key mySAP ERP 2005 enhancements support simplified process standardization; delivery of shared services that centralize your procurement or other functions; and improved support for business process outsourcing, so that SAP customers can lower IT infrastructure costs and total cost of ownership.

This article focuses on the new features across all areas of mySAP ERP 2005 that will benefit the financial organization in your enterprise — from financial functions (the bread and butter of the finance organization) and corporate governance to the analytics, planning, end-user services, and budget monitoring that will support users across the company to perform better and improve everyday decision making.

Objective SAP Development
Focus
Examples of New Capabilities
Continuous innovation and key new features to ensure customers' current and future business requirements are addressed
  • Inclusion of industry standards as well as legal and regulatory requirements

  • Functional enhancements in financial accounting, financial collaboration, and corporate performance management
  • New financial general ledger (G/L) and financial supply chain management (FSCM)

  • Improved financial consolidation

  • Express planning

  • Advanced invoice
    management
Enhanced efficiencies to ensure rapid user adoption even by casual users; enable users to complete their daily tasks faster
  • The portal as entry to system

  • Support for multiple devices (PCs, PDAs, and mobile phones)

  • Creation of pre- packaged roles, content, and work centers
  • Preconfigured user business roles with focused business-process content

  • Guided procedures

  • Latest and unified user- interface technology

  • Adobe forms for information gathering
Greater solution flexibility; ensure that organizations have the agility to enable, modify, and deploy processes that support fast-changing business requirements in a timely manner
  • Enterprise Services Architecture (ESA) and delivery of enterprise services

  • Development of open framework for composite solutions

  • Simplified system integration, both technically and using master data management
  • Service-enabling of functionality, such as invoicing and billing for financials

  • Composite applications for dispute and collections management

  • Support for business- process outsourcing and shared-service center (SSC) functionality
Figure 1
Guiding Development Principles for mySAP ERP 2005

Innovations in mySAP ERP 2005 Financials

mySAP ERP Financials enables finance professionals to focus on value-adding activities, improve the visibility of all business operations, and provide analytical capabilities to all functions in order to accelerate decision making and improve the response to leading performance indicators. Innovations within mySAP ERP Financials are concentrated throughout the solution, especially in the following areas:

Financial and Management Accounting

With mySAP ERP Financials, organizations of all sizes and from any industry can effectively and cost-efficiently meet national and international accounting requirements, such as complying with US GAAP and International Accounting Standards (IAS) and supporting multiple currencies and languages — a traditional strength of SAP solutions.

But now, not only is accounting-related data recorded, but cost and revenue information is also gathered for management reporting and valuation purposes. The tight integration of financial and management accounting with logistical applications means that all employees have access to the same consistent information, thus accelerating internal communication processes and the period closing.

One major area of innovation within mySAP ERP Financials is the new general ledger (G/L), which is now closely linked to financial and management accounting. This ties the G/L more closely to the way the rest of the business is run — expenses, for example, flow directly into the G/L through an expense management application, giving the finance team the ability to manage them from here on out. This general ledger is also superior to the classic G/L in that it offers:

  • A standardized G/L to fulfill all business requirements

  • Mapping of parallel accounting principles and valuations

  • Delivery of industry-specific, extendable G/L templates

  • Split functions for balanced books by any G/L dimension for management and segment reporting

  • Increased transparency and, consequently, improved auditing capabilities for corporate governance

  • Faster period-end closing

Corporate Governance

mySAP ERP Financials enables organizations to comply with national and international legal requirements as well as with the specific laws that affect them, such as Basel II. Starting in 2005, many organizations are subject to the Sarbanes-Oxley Act in addition to increasingly complex statutory and regulatory requirements. mySAP ERP brings multiple capabilities to support section 301 (whistle blowing), section 302 (sign-off), section 404 (internal control documentation and testing), and section 409 (material changes in business). In addition, SAP software uses inherent and configurable business controls to regulate fraud prevention at the transactional level.

For many companies, section 404 is particularly challenging. mySAP ERP provides a module for the management of internal controls to support Sarbanes-Oxley 404 projects. This not only enables organizations to document their internal verification systems, but also lets them evaluate the design and effectiveness of internal checks, making them transparent for executives and auditors. With the whistle-blower function, employees can anonymously report irregularities to the auditing committee.

mySAP ERP provides an audit information system application for internal and external auditors to evaluate mass transactions. In addition, the service-oriented architecture of mySAP ERP has facilitated the use of enterprise services to seamlessly integrate value-adding partner solutions such as the SAP Compliance Calibrator by Virsa Systems.2

SAP Analytics

mySAP ERP 2005 delivers significant enhancements in leveraging analytics to manage and run the day-to-day operations of an enterprise in SAP Strategic Enterprise Management (SAP SEM), analytic applications, embedded analytics, and high-performance analytics.

With mySAP ERP 2005, SAP SEM provides a set of analytical capabilities that enable effective budgeting and planning, preparation of corporate performance scorecards, generation of consolidated financial statements, and strategic risk management. In addition, mySAP ERP 2005 includes Express Planning to guide managers through recurring tasks in planning and budgeting for cost centers (see Figure 2). Express Planning eliminates "spreadsheet hell" and streamlines all communication between people involved in planning processes. Typically these spreadsheets are very error-prone, time-consuming, and difficult to consolidate — and they're not tied into the other areas of the business. With Express Planning, you don't store these plans in spreadsheets; instead they're now part of your SAP system.

Figure 2
Express Planning

This self-service composite application combines various services into one convenient and easy-to-use planning application for occasional users, such as line managers, and:

  • Supports the technical preparation of planning, communication, execution of planning, and the review and release of planning details

  • Includes reference planning guidelines

  • Provides status overview for planners and planning supervisors

  • Replaces or integrates current reports, presentations, emails, workflow, planning tools, and specialized transactions

mySAP ERP 2005 delivers more than 100 predefined analytical applications. These are well supported by technical innovations in the search engines and indexing technology in SAP NetWeaver 2004s, which has led to significantly enhanced query performance in mySAP ERP 2005.

mySAP ERP 2005 also takes advantage of Enterprise Services Architecture (ESA) to embed analytical tools and dashboards directly within business processes. Perhaps as importantly, business people can quickly create analytical applications that serve the exact needs of their line of business — without programming.

Financial Supply Chain Management

Driving effective collaboration with partners throughout the financial supply chain is crucial for organizations to effectively manage cash and liquidity, and to mitigate and manage risk.

Organizations can finally realize the promise of a fully integrated treasury and cash management function with mySAP ERP. Deals, risk, credit, and commodity transactions no longer have to exist as an isolated branch of the enterprise. Today, mySAP ERP helps organizations realize greater control over treasury and reduce the risk of fraud that could occur in treasury or cash management departments.

Credit Limit Management and Control is one function of mySAP ERP FSCM, and it equips credit managers to make decisions that affect key performance indicators associated with their business. It provides a list of documents that are blocked due to their credit status, as well as automated work lists for credit limit checks triggered by sales orders and delivery documents (see Figure 3). This solution ensures greater productivity of credit departments and improves your organization's ability to monitor credit risks along the entire financial supply chain.

Figure 3
Credit Limit Management and Control

With mySAP ERP 2005, SAP's proven solutions for electronic invoicing, automatic invoice verification, and structured complaints processing have been extended with solutions for protecting against risks related to customer defaults, currencies, and interest rates. These integrated functions of mySAP ERP Financials enable more precise and up-to-date planning of an organization's cash flow.3

Extend the Reach of Business Processes for Greater User Productivity and Lower Cost

mySAP ERP enables all users to be more productive by delivering role-based information, transactions, and business processes to users based on their needs, expectations, and goals.

To better connect people to business processes and to their tasks within those processes, mySAP ERP 2005 delivers composite applications that allow SAP customers to adapt business processes supported by SAP solutions to their organization-specific needs at a lower cost of change. The solution also delivers new work centers that push role-based triggers to individuals and connect people to their specific tasks and areas of responsibility across all business processes.

One dramatic change is the introduction of Project Mendocino, which is bound to revolutionize information workers' access to enterprise business applications.4 SAP and Microsoft are jointly designing and developing this new product to link SAP process functionality directly to Microsoft Office. Based on SAP's Enterprise Services Architecture, these capabilities will be integrated into and delivered with mySAP ERP 2004 and 2005. Example functionality includes:

  • Budget monitoring to receive reports in the Microsoft Outlook Inbox and to work offline

  • Report distribution of analyses and reports from SAP transactions and data warehouses through Microsoft Outlook

  • Time management with the Microsoft Outlook Calendar as the front end for SAP time reporting

  • Leave management to add leave requests as calendar items that are integrated with approval guidelines in SAP software

  • Team management to integrate up-to-date information about employees in Microsoft Outlook Contacts

Project Mendocino delivers information, transactions, and capabilities from mySAP applications through the familiar Microsoft Outlook interface. In Figure 4, as activities for team members are scheduled in Microsoft Outlook, mySAP ERP is automatically updated to charge time to the appropriate projects, and a summary of activity as well as impact on budget and plans is presented to the appropriate manager.

Figure 4
Team and Time Management with Project Mendocino

Lowering TCO

Increasing solution flexibility and lowering total cost of ownership (TCO) have been major objectives in the development of mySAP ERP 2005. This release offers flexible deployment options to meet diverse customer requirements — from small organizations with few users, which often look for simple central deployments, to distributed landscapes for large global organizations. This flexibility also facilitates the implementation of shared services and outsourcing intentions.

Industry solution availability is significantly improved with mySAP ERP 2005 as well. With this release, the majority of industry-specific functionality is delivered as extensions in mySAP ERP 2005, released with the SAP ERP Central Component 6.0 and in sync with the release cycles of mySAP Business Suite components, thus further improving TCO.

Conclusion

mySAP ERP 2005 represents a very significant release for SAP, and a tremendous set of capabilities for new and existing SAP customers. Innovations in key areas of financials and all other mySAP solution areas — as well as major improvements in user experience, analytics, and TCO reductions — mean opportunities for financial teams and areas across the business to find ways to reduce costs and make the most of their value to business strategy and the bottom line.

mySAP ERP 2005 is currently in Ramp-Up, with mass shipment expected in mid-2006. For more information to evaluate mySAP ERP, and for additional upgrade resources, please refer to the references listed in the sidebar above.

mySAP ERP Resources


1- See "Can Your Enterprise Solutions Adapt to New Industry Demands?" by Chris Hanna in this issue of SAP Insider (www.SAPinsider.com).

2- For more information on how SAP can help customers meet compliance requirements, see "A 4-Step Blueprint for Achieving Sustainable Compliance" by Neetin Datar in this issue of SAP Insider (www.SAPinsider.com).

3- For more information on FSCM, see "Transform Your Cash Flow Processes with Financial Supply Chain Management" by Jürgen Weiss in this issue of SAP Insider (www.SAPinsider.com).

4- The preview version of Mendocino is planned for the fourth quarter of 2005, with general availability planned for mid-2006. See "SAP as Easy as Opening Email? Introducing Project Mendocino" in this issue of SAP Insider (www.SAPinsider.com).


Jeff Stiles heads mySAP ERP Solution Marketing, working with the SAP Solution Management and Development teams to ensure that product innovations address market and customer requirements, and leading the team that brings those innovations to market. He joined SAP in April 2005 after spending seven years at PeopleSoft and Oracle. Jeff is a 20-year industry veteran with broad experience leading teams in sales, corporate and product marketing, corporate strategy, and product management.

 

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