Editor’s note: Recently, Mitresh Kundalia, SAP Financials expert and consultant with Quality Systems and Software, held an exclusive Q&A in the Financials Forum and took questions on migrating to the latest version of SAP General Ledger. Read the summary below, or view the entire discussion here.
Sarah Cenedella, Insider Learning Network: Welcome to the Financials Forum on migrating to the New General Ledger hosted by Mitresh Kundalia.
Thank you for joining us today, Mitresh! Could you start by sharing what you consider to be the top reasons for customers to migrate to New G/L?
Mitresh Kundalia: New G/L offers some of the most powerful and robust functions in the areas of Financials. Let me mention some of the great features now offered in New G/L. [Please note that New G/L is now called SAP General Ledger]
One of the most useful and powerful features is that New G/L offers for Balanced Books at dimensions lower than Company code. To meet Balanced Segment Reporting requirements of IFRS-8 (or IAS-14), New G/L has introduced a concept called as SEGMENT and now you are a
ble to prepare fully balanced financials at Segment level.
The technical configuration in SAP is called Document Splitting. So, using Document Splitting, now, you are able to prepare fully balanced Segment Reporting in real-time. No more month-end adjustments or re-classifications!
My book on this topic is published by SAP PRESS.
You may be interested to know that approx. 70% to 80% of the customers migrate to New G/L for this reason – to be able to achieve Balanced Segment Reporting.
Another great feature is introduction of Parallel Ledgers in New G/L. Using Parallel Ledgers now customers can meet the parallel Accounting requirements. For example, you can now have a leading ledger (0L) for the US GAAP and additional Non-leading Ledgers to meet other reporting requirements, such as Local GAAP, IFRS etc. These so-called ‘Parallel’ Ledgers support additional reporting requirements, in addition to Main Ledger (or a “Leading” Ledger). Parallel Ledger will be a stepping-stone for the IFRS changeover.
Also, New G/L simplifies the ledger structures in Financials. Until now, you had so many different ledgers, such as Classic Ledger, PCA Ledger, Special Purpose Ledger, etc. New G/L unifies these ledgers into single ledger – ‘the single source of truth’.
In addition to these three great features, New G/L also offers a few other features – such as real-time CO-FI integration, extensibility of coding block, fast close, TCO reduction, compliance and more.
GaryByrne: Can you provide more
details on real-time CO-FI integration a little more?
Mitresh: With the introduction of New G/L and ability to fully balance the books by Segment (and Profit Centers), New G/L now offers a feature called CO-FI Real-time Integration. Any relevant postings made in CO will now be posted in New G/L (FI) in real-time – thus the name "CO-FI real-time integration". This assures that CO and FI are always in sync, for any postings made to the specific characteristics.
For example, if you have CO postings which cross Segments or Profit Centers, these CO postings will be integrated with New G/L (FI) and thus be able to get Balanced financials for Segments or Profit Centers.
Whenever a CO posting crosses any of these parameters (Company codes, Profit Centers, Segments etc.), these postings are made to FI also.
The key piece of configuration is 'Define Variants for Real-time Integration' and 'Assign Variants for Real-time Integration to Company Codes'.
Lucy Swedberg: Hi Mitresh. Thank you for taking our questions today!
I'm curious to know: What are the technical prerequisites for the new G/L?
Mitresh: Hi Lucy, The foremost technical requirement for New G/L is that you must be on ECC 5.0 at least. Recommended is ECC 6.0.
Also, the best practice is to have TWO SEPARATE projects - one for the upgrade to ECC 6.0 and a separate project for Migration.
Dave Hannon: Mitresh, I know you cover some best practices for document splitting in the book. Any tips you can share in that area? Pitfalls to avoid or common mistakes made in that area?
Mitresh: Hello: As you know, my book describes in detail the configuration steps required and best practices for document splitting.
Some of the mistakes to avoid are:• Avoid setting the “Balancing” characteristics at too granular level. As New G/L now offers you the chance to have balanced books at any dimensions lower than the company codes, in the over-excitement, some customers will want to set the 'balancing characteristic' at too granular level. Technically, there is no limitation; however it is important to analyze the impact of increased volume when you set the balancing characteristics at too granular level.
• Analyze the impact of Zero-balancing. Using Zero balancing system is able to generate fully balanced books for characteristics. However, at the same time, be aware that it is going to create extra lines. In normal situations, it is not a big deal, but analyze the impact of data volume.
Scott Priest: Hey Mitresh... I think it might be useful to the people viewing this forum for you to talk about one of the things you covered in one of your Financials Expert articles -- how group currency works with the new G/L.
Mitresh: Thanks for asking very important question.
It is important to analyze the impact of parallel currencies (or group currency) in the New G/L. As a part of New G/L assessment, you must analyze the existing set-up of currencies and how these will be impacted in the New G/L world.
Strictly technically speaking, you do NOT have to have Group Currency turned on prior to New G/L Migration. However, having consistent Group Currency for all the company codes is very desirable for migrating to New G/L as well as consistent reporting in New G/L.
Some of the key questions you need to analyze:
• Do you have Group Currency (GC) turned on for all company codes in the Classic G/L consistently?
• If the GC is not activated for Classic G/L, is this available in other applications, such as Special Purpose Ledger (SPL)?
• How do you transfer balances in all currencies - what are the sources?
• What if the GC is not consistently available? Can I turn on GC now in the live SAP system?
Simply do not turn on the Group Currency (GC) in the productive SAP environment. It is very critical to understand that the existing financials transactions, which are already posted in the system, are NOT updated with the GC amounts.
Please be extremely careful changing the parallel currencies in the live SAP system. You may find yourself with more problems than you started with! Do NOT change the currency settings in the live SAP system.
Activating or changing the parallel currencies (or group currency) once the system is live could cause serious system problems, and often the cost of correcting these problems is greater than the cost of investing in the correct activation approach.
Please refer to this technical paper, which describes the Impact of Parallel currencies and an approach to activating the Parallel currencies in the Live SAP System.
Sanjay Wagh: Hello Mitresh,
Can you please share your views on the need for a New GL for IFRS implementation? Specifically how New GL can help for IFRS.
Mitresh: Hello, Although the IFRS change-over date is not finalized, it is important to know that SAP's solution to meet IFRS reporting requirements is New G/L.
Until now (before New G/L), you had few options of meeting IFRS reporting requirements. These option
s (such as creating parallel sets of Company codes, using SPL, using Parallel Accounts) had very limited features and did not offer robust features.
With the New G/L, SAP offers a feature called as 'Parallel Ledgers'. These Parallel Ledgers offer very powerful and flexible options to meet parallel reporting requirements. So, one of the proposed solutions could be to use the standard default Ledger (0L) to meet your Corporate GAAP (say US GAAP) and then creating another Parallel Ledger for IFRS reporting requirements. You have the option to create multiple Parallel Ledgers (also called as Non-Leading Ledgers) to meet other reporting requirements.
Kristine Erickson: Can you clear up what seems to be some confusion around the migration cockpit? Is it required for migration? How is it delivered? And do you have any tips for project teams, so they make the best use of it? Thank you!
Mitresh: As a part of migration week-end, you will need to perform multiple cut-over steps to migrate from Classic G/L to New G/L. These steps must be executed in a proper sequence and in controlled manner. Instead of every customer making their own list of cutover steps, SAP has provided the specific steps to be executed – it’s called Migration Cockpit. In addition to the standard execution steps provided by SAP, MC also offers the flexibility to add your own step as a part of execution.
This Migration Cockpit (MC) has specific steps you must execute over the migration week-end. Also, it is important to note that these execution steps may vary depending upon your situation, whether you are just merging different ledgers, whether you are going to use Document splitting etc. These are specific "migration scenarios".
Migration Cockpit is delivered by SAP and installed on your system by your Basis team.
The practice we always follow is to execute
the Migration tests in your test environment to see if there are any issues as soon as practical. The test environment should be the most recent copy of your production environment, so that if any data- or process-related issues are identified upfront and appropriate resolutions are deployed.
Melanie Obeid: Hi Mitresh, Hope you could help here. Are parallel accounting and document splitting the major two factors to take into consideration when looking at migration scenarios? Should we be considering any other factors? Thank you!
Mitresh: Hello Melanie:
Yes, these (Document splitting & Parallel Accounting) are the top-2.
In addition, we also analyze and evaluate several others, depending upon your situation. Some of the factors could be: current isage of classic G/L, PCA, SPL; whether you want to activate document splitting later on; whether you want to change the Parallel accounting option. etc.
Currently, SAP offers these Migration scenarios:
1: Merge of FI Ledger
Merging of Classic G/L, consolidation preparation ledger and cost-of-sales ledger
2: Merge of FI, PCA and/or SL Ledger
Scenario 1 and additional merging of PCA and SPL
3: Scenario 2 + Document Splitting
Scenario 2, plus document splitting by, for example, profit center
4: Scenario 2 + Change from account solution to ledger solution for parallel accounting
Switch from parallel accounting by parallel account to parallel ledger
5: Scenario 3 + Change from account solution to ledger solution for parallel accounting
o 3, plus switch from parallel accounts solution in the classic G/L to parallel ledgers solution in the New G/L
6: Subsequent implementation of document splitting
New G/L has been activated without document splitting and now it has to be implemented subsequently
7: Subsequent implementation of a further ledger
Extend an existing new G/L by a further non-leading ledger. Introduction of a non-leading ledger while no parallel accounting was in use before
8: Subsequent change from account solution to ledger solution
Implementation of Ledger solution in new G/L for parallel accounting and replacement of existing account solution
Sarah: It's now a few minutes after 2:00, so thank you to everyone who participated and to Mitresh!
If you have any further questions for Mitresh, you can reach him here on Insider Learning Network and at Quality Systems & Software
Thank you again!
Meir: Thank you.