IBM Global Business Services

IBM Global Business Services

SAP Overview

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Introduction to SAP Modules

–SD –FI
–Sales & –Financial
–Distribution –Accounting

–MM –CO
–Materials –Controlling
–Mgmt.
–PP –TR
– –Product
–Planning –Treasury

–QM
–Quality
–Mgmt.
–SAP –PS
–Project
–System
–PM –WF
–Plant Mainte- –Workflow
–nance
–HR –IS
–Human –Industry
–Resources –Solutions

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Basis System: Three-Tier Architecture

–Central Database
–(Storage of all data)
–Access to Data base:
–(Read / Write data)

–Database

–Input / Output
–of data to users

–Processing of data
–Application
–using application logic

–Presentation of the
–processed data to
–Presentation –the user

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System Landscape
 Systems
The systems that are used in the current implementation environment are
• DEV- Development
• QAS - Integration testing
• PRD - Production
 The various clients which come in the transport path is shown in figure below.
DEV QAS PRD
C 2C
10 – System C C
100 – Golden Master C C Integration C
Testing 300 – Production
C C

130 – Unit Testing

C C
C
C
C
120 – ABAP Develop. C
C

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SAP Organizational Structures - Overview

Client

Credit Controlling
Control Area Chart of Area
Accounts

Business
Company
Area Profit center

Sales Area
Purchasing
Org. *
Plant Distribution
Sales Org. Division
Channel

Material (Purch. Org. connects

via plant)

Purchasing
Group Shipping Storage Sales Office
Location
Point

Purchasing Loading Ware Sales Group

Area Point House

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FI Organization Structure North America

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Existing Organization Structure in North America

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SD Organization Structure North America

Jubilant HolisterStier Jubilant HolisterStier

Jubilant Cadista
Sales Org Sales Org
Sales Org 7300
7301
4101

10 Direct 10 Direct 10 Direct

Direct

40 20 CMO
Generic 10 Allergy

Generic, Allergy, CMO

Sales Area Sales Area Sales Area

1 2 3

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–Data in the System

–Configuration Data –Master Data –Transaction Data

–Company Code –G/L Account –Invoice

–Document types –Customer –Payment

–Payment Terms –Vendor –Credit memo

–Tolerance Settings –Cost center –Goods Receipt

–Pricing Conditions –Material

–Bill of Material

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Master Data in SAP

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Master Data

Material Master

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Organizational Level: Material Master..

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Master Data: Material Master

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Business Interaction : Material Master…

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India Localization in Logistics

–Roorkee Plant –Nanjangud Plant

–R&D Noida Plant

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India Localization in Logistics

Legal Functionality Supported

CENVAT
VAT
Local and Central Sales Tax
Service Tax

Key Benefits:
 India part of Global Roll-out
 Unicode Compliant
 Technical co-existence with other Country versions and IS Solutions

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SAP Navigation
Overview Training

–This presentation is solely for the use of Client personnel. No part of it may be circulated, quoted, or reproduced for distribution outside the Client organization without prior written approval from IBM.

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–Click on SAP Logon Icon on your desktop to launch SAP

Logon PAD

–Double Click on one of

the System in the list
–OR
–Select System and Click
“Log On”

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–Purchase Order Display

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–Purchase Order Display

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–Process Order Display

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–Process Order Display

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–Process Order Display

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–Sales Order Display

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–Sales Order Display

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Change Tracking

29
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Concept of User Specific Variant & Layout in Reporting

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Concept of User Specific Variant & Layout in Reporting

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Concept of User Specific Variant & Layout in Reporting

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Concept of User Specific Variant & Layout in Reporting

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SAP Authorization Concept

Security within SAP is achieved through the authorization concept

The authorization is designed to ensure :
 Maximum security
 Sufficient privileges for end users to fulfil their job duties
 Powerful user maintenance

34
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–
SAP Authorization Concept
–Three levels of security in SAP

–User master
record
–User requires valid
user-ID and password –1

–T-code check

–User requires an
authorization for –2
transactions

–Authority check
–User requires an
authorization for
underlying –3
authorization objects
and field values

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–SAP Authorization Concept

–SAP User Master Record (UMR)
–Master data for SAP users

–Transaction Code (t-code) –ME21N – Create

–Provides access to specific functions within SAP –Purchase Order

–Authorization Object:
–Template for security that contains fields with blank values (uncut key)

–Authorization (Field Values):

–Authorization object with completed fields (cut key)

36

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Project Methodology
Evaluation / Localize Design Realization Phase Final Prep Go Live & Support
Preparation

Project Acceptance / Go - Live/

Fit Gap/Design Build / Test
Preparation Cutover Support
Project Management
Data Migration
Data Migration
Team setup and Data Migration Data Migration to
Strategies and
Mobilization
Plan
Conversion test trial Production GO - LIVE
system

Project
Requirement Realization to Post
Procedures, Baseline
Validation and Cut - over Plan Production Implementation
Methodologies Configuration
Process Design (Cut - Over) Support
and Workplans

Technical Design Unit Test, System Knowledge

Functional Design
Development and Integration test Regression Test Transfer
(RICEFW)
Coding and UAT Session

Test Strategies Training End User

and Plan Preparation and Preparation and Project Closure
Train the Trainers Training

Infrastructure and Authorization

Basis Strategies Matrix

Change Management

Key Completion of
Delivery of Project Completion of Fit Completion of System Completion of User System Go
Milestone Post Implementation
Management Plan gap Phase Integration Test Acceptance Test Live date
Support

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Thank You

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Overview of the CO Module

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Controlling with the CO system

EC- CO-
EIS CO OPA
CO- CO-
SD FI CCA ABC
MM CO
PP IM
R/3 EC-
PCA
CO-
PA
CO-
PC
QA Client/Server PS
ABAP/4
PM WF
HR IS

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Reporting Requirements

External reporting
Cash
Balance flow
Sheet statement
Profit & Retained
External Accounting loss earnings
(P&L)

Internal Cost
center
reporting reports
Plan
Product activity
cost Profit prices
Internal Accounting reports center
reports

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The Components of Controlling

 Overhead Cost Controlling:

- Cost and Revenue Element Accounting
- Cost Center Accounting
- Internal Order Accounting
 Product Cost Controlling:
- Product Cost Planning
- Cost Object Controlling
 Profitability Analysis
 Profit Center Accounting

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Cost & Revenue Element Accounting

Overhead Cost Controlling Profit

Cost & Revenue
Overhead Center
Element Order Accounting
Accounting Acc. Cost Center Acc.
Activity
Based
Answers Costing
PrCtr 1 PrCtr 4
the question:
Product Cost PrCtr 2
Controlling Cost
Object PrCtr 3 PrCtr 5

CO Profit
Center Acc.
Which costs Profitability
were incurred? Analysis

Profitability
segments

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Cost Center Standard Hierarchy for US

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CCA Master Data

Overview

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Master Data in CCA

Cost Cost
Element Center

Statistical
Activity
Key
Type
Figure

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Followings are the Master Data Pertaining to CCA

 1. Cost Center
A cost center is the basic organizational/responsibility component of a
controlling area where cost is incurred or where responsibility for cost may be
assigned. It represent smallest unit of responsibility within the organizational
structure of an enterprise. A controlling area is broken down into cost centers,
which are organized in a "standard cost center hierarchy." Cost centers may
also be linked to a specific business area, company code, and profit center
(i.e., business areas, company codes, profit centers and controlling areas may
all be viewed as collections of cost centers).

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CO Master Data Overview…Contd.

 2. Cost Element
A chart of accounts is created for a company (company code) within the financial
accounting module of SAP R/3. In SAP R/3 terminology, cost and revenue
accounts within a chart of accounts that are involved in cost accounting are
referred to as "elements,“ i.e. Cost Elements are the controlling elements which
describe the nature of the cost incurred. There are two types of cost elements;
 Primary Cost element: Primary cost elements are created in controlling with the
reference of GL Accounts. These act as a cost carrier between FI and CO. It is one
to one relationship between P/L GLs, to capture the cost / expense in controlling
Module.
 Secondary Cost Element: Secondary cost elements are created in the CO module
and are used exclusively within CO to account for internal cost flows among cost
objects within a controlling area (e.g., cost allocations among cost centers).

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Cost Elements in CO

Primary Cost Element Originate outside CO

Secondary Cost Element Originate within CO

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Primary Cost Elements

FI CO
G/L Primary
Automatic Cost
Account
Interface Element

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Secondary Cost Elements

CO
Primary Cost Element Secondary Cost Element

Cost Object Cost Object Cost Object

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CO Master Data Overview…Contd.

 3. Activity Types
 Activity types are production or service activities rendered to a work center or
cost center that are used to allocate costs.
 Activity types generally include different types of labor (e.g., setup, production
labor, machine labor, etc.) that are performed by personnel within a work
center or cost center.
 The measure of the activity type quantity (e.g., hours worked), which is
essentially a cost driver measure, may be used to allocate all or a portion of
the costs of a cost center to other cost objects (e.g., other cost centers,
production orders, profitability segments, etc.).
 The cost center in which the activity is performed is referred to as the
"sender," and the cost objects receiving the allocated costs are called
"receivers."

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Activity Types

Allocation

Cost Center Cost Object

Activity Type

Activity types define functions or services performed by a cost center, and are used
to allocate that cost center’s costs to other cost objects.

Not all cost centers have activities (outputs).

Activity types are frequently used in the allocation of overhead to production.

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CO Master Data Overview…Contd.

 4. Statistical Key Figures

SKFs are a second type of cost driver used in the R/3 system to allocate costs
from sender cost objects to receiver cost objects. These cost drivers, which
are often referred to as tracing factors, are used in allocation methods (e.g.,
distribution and assessment) that do not involve the explicit development of
activity (transfer) prices. Nevertheless, the allocation approach is quite similar.
A lump sum amount associated with the sender cost center is allocated to
receiver cost centers in proportion to the relative amounts of the SKF
associated with each receiver.

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Statistical Key Figures

Cafeteria
Costs: $ 100,000

Allocation
based on SKF
Number of Employees

$ 20,000 $ 70,000 $ 10,000

Admin: 20 Production: 70 Sales: 10

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Master Data Groups

Root Node

Nodes

Individual Master Records

(here: Cost Centers)

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Allocations: Cycles and Segments

Sender Receiver
Segment Segment Segment

Cost Center: Admin Buildings “Administration” Cost Centers

1

Allocation: 100% actual costs Tracing factor: m 2 floor space

Cost Center: Energy “Administration” Cost Centers

2

Allocation: 30% actual costs Tracing factor: m 2 heated space

Cost Center: Energy “Production” Cost Centers

Tracing factor: Gas consumption
3

Allocation: 70% actual costs per meter reading

Cycle

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Periodic Allocations
Distribution and Assessment
Distribution Rule:

Cctr. 1100 Cctr. 1800 Cctr. 1400 Cctr. 1900 Original

40% 25% 20% 15% Primary
Cost

1100 1800 1400 1800

#467000 #467000 #467000 #467000
$4,800 $3,000 $2,400 $1,800

Assessment Rule:

Cctr. 1100 Cctr. 1200 Cctr. #1300

30% 25% 45%
Secondary
Cost
Element
Cost Center 1100 Cost Center 1200 Cost Center 1300

Gen Admin Alloc: Gen Admin Alloc: Gen Admin Alloc:

#991990 $12,000 #991990 $10,000 #991990 $18,000

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Information System: Overview

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Interactive Information System

Cost Elements Actual Cost Plan Cost Var.(abs.) Var.(%)

400000 Material consum. 100,000.- 100,000.-

Line items 400000 100,000.- USD

FI Document 40 400000 Material consum. 100,000.-

50 113100 Bank 100,000.-

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Internal Orders

Internal Orders

Overhead Investment Accrual Orders with

orders orders orders revenues

Cost Accounting Functions

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Function of Orders

Planning Costs

Budgeting Costs

Posting Actual Costs

Settling Costs

Evaluating Costs

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Using Overhead Orders

1 Without overhead orders

Cost Center
Trade External Costs
M
 _____________
M
Fair 1 Internal Activities  _____________
 _____________
 External Costs
Trade External Costs  Internal
Fair 2 Internal Activities Activities

2 With overhead orders Settlement

Cost Center
Order 1
M Ext. Costs _____________
Trade Ext. Costs

M Internal  _____________
Fair 1 Activities
Int. Activities  _____________
 External Costs
Order 2
Trade Ext. Costs  Internal
Ext. Costs
Fair 2 Internal Int. Activities
Activities
Activities

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Real Orders

“Real” Real Order

Posting Settlement
Document

Cost center

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Statistical Orders

Statistical Order
Statistical
Posting

Document

“Real”
Posting

Cost center

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Account Assignment Logic

1 Real
Cost Object
(… the rest is just statistical)

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Budget Management In Internal Order

Order: 400010
Original Current
Budget Budget
Overall 40,000 50,000
1998 20,000 25,000
1999 15,000 18,000
2000 2,000 3,000 Budget Line Items
2001 3,000 4,000
Order 400010 Chicago Trade Fair
Document Year Activity Amount ...
030000001 1998 Original 20,000
030000200 1998 Supplement 7,000
030000306 1998 Return 2,000-

Total 1998 25,000

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Availability Check: Settings

–Budget
–Or –Profile
–Bud
der –00001
get
–Tota –!
l –100

–1997 –20
–1998 –30
–1999 –30 –Tolerances
–2000 –20
– Pr – A – Action %
–Or ofi cti
– Warning 90
der le vit
–ty – 00
y – Error 100
pe 00 – A
message

–Control Parameters – 01 LL
Business Events
– 00
INVOICE
– A PURCHASE INTERNAL
• Automatic or Manual 00 LLORDER ACTIVITY

activation? 01
• Check against overall or
annual value?

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CO Product Costing
Overview

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Product Cost Controlling: Review

Product Cost Cost Object Controlling

Planning Preliminary Costing,
Material Costing Simultaneous Costing
BOM Routing Product Cost Order
by Order Planned costs, Internal $
$ $ actual costs Material $
External $
$ $ $ on order Overhead $
Process $
(cost object)
Total ...
$ $ $ $
Product Cost
by Period

Value Structure
Final Costing
Prices Period-End Closing
Product Cost
For Material by Sales Order Work in
For Activity Types process
For Overhead
Scrap
$
Variances
Settlement

Cost Estimate:
Standard Cost

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Standard Cost Per Car (HONDA): Review

Product Cost
Planning
Material Costing

BOM
, Internal $
$ Material $
External $
$ $ o Overhead $
Process $
n
Total ...
$ $ $
Product Cost o
r
d
Value Structure e
Finalr Costing
Prices Period-End Closing
Product Cost
For Material Work in
For Activity Types process
For Overhead
Scrap
$
Variances
Settlement

Cost Estimate:
Standard Cost

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Standard Cost Per Car (HONDA): Overview

Material Cost

BOM ( Material & Qty) HONDA BEAM / GP system

will be interfaced with SAP
PP to capture Raw Material
Price (Material Master) Cost

Direct Activity Cost

Production Routine
( Production Resource i.e. Power &
Labor Qty) Not Applicable in case of Honda
Activity Rate maintained at Cost center

Indirect Overhead

Costing Sheet
( Percentage based
Not Applicable in case of Honda
overhead absorption)

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Actual RMC Capturing ( Honda)

Product cost by Period

Material issuance data will be captured
in SAP PP from GPCS system via interface
to enable calculating actual RMC for each
car variant. This will be achieved thru SAP
PP/CO Integration

Period End Closing

Variance
Calculation During Period End System will give RMC
(Budgeted RMC Variance ( Price & Usage) based on actual
consumption / issuance
V/s Actual RMC)

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Valuation Alternatives
–CONTROL – RESO – VALUATION
URCE STRATEGIES
– MATER • Standard Price
–Costing
IAL • Moving Average Price
–variant
• Planned Price
• Commercial Price
– ....
–Valuation
–variant • Planned Activity Price
– INTERN • Average Planned Activity
AL Price
– ACTIVI • Activity Price of Previous
TY Period
– ....

• Costing Sheet, Overhead

– OVERH Key
–Costing EAD
–sheet

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Activity Price Maintenance at Cost Centers

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Cost Component Rollup

Product E Cost Component Split – Total

Internal External
Material
activity activity
Overhead Process ...
E Cost Component Split – Upper Level

B2 Internal External
B1 -
activity activity
Overhead Process ...
R1 R2 R3 Cost Component Split – Lower Level
Internal External
Material
activity activity
Overhead Process ...

Assembly B Cost Component Split - Total

Internal External
Material
activity activity
Overhead Process ...
Raw mat. R Cost Component Split - Total

Material - - - - ...

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Summary of Period - End Closing in Cost

Object Controlling

–Overhead Surcharging
–Revaluation with
–actual prices

–Calculation of
–Work in
Progress
–Calculation of
–Variances
–Settlement of the Cost
Object

–Profitabilit
–Profit –Financial
y –Accountin
Center –Analysis
––PRO
Accountin g
–PRO
FIT
–CEN
g –CEN
FIT

TER – TER
PRO
–1 –2
FIT
–PRO –CEN –PRO
FIT TER FIT
–CEN –5 –CEN
TER TER
–4 –3

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Profitability Analysis -
Overview

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Typical Questions in
Profitability Analysis

Market
Billing
documents customer

Company

product
 Which are the largest and fastest growing customers?
region
 How have sales and contribution margins changed
in the last period for each product?
sales
division
 What are my worst and best performing products
in the different regions?

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Profitability Analysis - An External View

The goal of CO-PA is to determine the profitability of market segments:

Company Market

Key Sales Figures: CO-

Revenues, Cost of Sales... PA
SD

Market Segments:
Customer, Product,
Billing Document Product Group, Profitability Analysis
SD Distribution Channel CO-PA

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Basic Concepts of CO-PA

–Characteristics
–Sales Region North

W
–REGION
–Product Prod1
–Product Group Electronics

.
N

RP
–Customer Cust1

.G
–Customer Grp Wholesale

T
–S

US
–State Illinois

–C
–Food Bicy. Elec.
–Sales Rep Miller
–PROD. GROUP
–Value Fields
–Revenues 800
–Sales Deducs. 100 –Revenues
–Expected Frght 150 –Sales Ded.
–COGS 650 –COGS

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Data Flow in Profitability Analysis

Sales Billing Document
Profitability
Analysis
SD Order Settlement of Production Variances
CO-
Production PA
PP
PP Financial
Accounting
Direct FI Posting
Product FI
Costing
Costing
CO-
PC

Doc
Cost of Goods Sold

Dynamic Process Allocation

Overhead Direct Activity Allocation

CO-
Management OM
Indirect Activity Allocation
Cost Centre Accounting
Internal Order Accounting
Assessments
Activity Based Costing Accounting
Settlements

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SAP – Integrated Planning

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Planning Integration in SAP

–Logistics –Sales Planning/
–Forecasts –Profitability Planning
–Information
–System

–Sales
–quantities –Sales quantities
–Cost
–components –$
–Production –Material
–Product
–SOP –Master
–Costing

–Production
–costs
–Activity requirements –Cost Centers
–Activity prices

–$
–Personnel Cost
–Planning
–Profit Center
–R

–Asset Cost –Plan-Integrated –Planning

–Planning –Orders

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Profit Centre Accounting -

Overview

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Aims of Profit Center Accounting

The goal of EC-PCA is to measure the profitability of

areas of responsibility within the organization.

Billing Document
Company
Dire
Direc

SD
ctt Labor

goods/services

Revenue
PrCtr 1
EC- PrCtr 4
PCA
Company M

PrCtr 2 Company M

Revenue

PrCtr 3 PrCtr 5
Utility Costs

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Data Flow in Profit

Center Accounting

V
PCA
A
L
U
E

F
L
FI CO-OM CO-PA
O
W

CO-PC
Business
Sell , Bill
process + Procure
MM
Produce
PP
Move Stock R SD
data

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Balance Sheet Items

and Key Figures

Result

Balance sheet items

A
- Assets N
- Material stocks A
- Work in process
L
- Payables/receivables
- Down Payments Y
S
I
Key figures S
- Return on investment
- Return on sales
- Equity turnover

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Profit Centre Accounting –

Master Data

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Standard Hierarchy

Europe

Stock External Custom Admin &

Products Services Products Int . Service

External Elevators
Services

Pumps Paints Vehicles Vehicle Internal Admin

Access. Services

Pumps Motor- Autos

cycles

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Profit Center Assignments

Prof.
Prof. segment

Cost center,
Sales order
ABC business
process
Profit
center
Cost object Asset

Internal order,
Production order
Project,
Maint . order

Material

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Assignment of Controlling Objects

Master record

Cost center,
Code
Asset ABC business
process BArea

Internal order, PrCtr

Profit
Maintenance
center
order

Cost object

Prof.
Prof. segment

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Assigning Materials

Plant I Plant II Plant III

Profit
Material A
center I

Profit
center III
Material B

Material C

Profit
center II

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Assigning Production and Sales

Material master:
General plant data

Sales order

Plant 1

Profit Center
Material A
Production order

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Monitoring Assignments

(Objects) Not
Check assignments for: assigned

 Material
 Cost Centers
 Orders (CO, PP, PM, SD)
Objects per
 Work Breakdown Structures profit center
 Cost Objects
 Business Processes

Profit centers
without
Assignment objects

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THANK YOU

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