Using SAP Grants Management and Project System for effective Research Management
Many research intensive universities seem to be struggling to understand the full benefits of implementing a Grants Management solution within SAP. If you or your university is considering an investment in SAP GM, read on…
In this blog I share the reasons we have implemented the SAP Grants Management module in addition to using the SAP Project System and HR modules for complete integration. I hope that this will help you in your decision making process.
At the University of Leicester, we use the Project System for the project management aspects and internal representation of the project. We use Grants Management for the Sponsor / Funder’s perspective.
The project system is used for financial postings cost object, because a ‘Grant’ in SAP is not seen as a cost object for posting purposes. So all postings still need either a Cost Center, Internal Order, or Project WBS Element to be the cost object. The grants management ledger is a special purpose ledger that allows costs to be reported against different funds, funds management account assignments, and the sponsor’s sponsored classes and programs.
The project system also allows a lower level of detail for planning expenditure against specific G/L Accounts or Cost Elements, whereas in GM the lowest level is the sponsor’s cost categories or sponsored classes.
Posting to a GL account allows you to always reflect the expenditure internally against the same accounts for the same types of expenditure e.g. travel, but the GM ledger allows those postings to be reflected differently for different grants / sponsors.
For example Travel: we can always post Train Fares to the same GL account – say 70011. However for Grant A this might roll up to a category called ‘Travel’, but Grant ‘B’ might be ‘Non-staff costs’. This means the end-user does not need to know which category to post the costs to for each sponsor or grant. They simply handle all transactions in the same way, at the lowest level of detail. The FM and GM derivation rules then derive the appropriate Grant / sponsor-specific account assignments when posting to the GM ledger. All postings are only entered once, but all the various ledgers are updated at the same time.
Using the GM ledger has also allowed us to represent the portion of costs funded by the university separated from those funded by the sponsor.
Advantages to using GM in addition to PS are:
- GM gives greater flexibility for Grant Master Data over Projects.
- The Grant special ledger allows the posting to different Funds, Sponsored Classes and Programs
- Resource related billing
- Budgeting for expenditure against the sponsor’s categories allows for different availability control scenarios for different grants and sponsors
- Accurate view of the total grant expenditure and which portions the University is funding and which portions the Sponsor is funding.
Advantages of not trying to us PS only for grants management:
- It frees up the use of PS for what it was designed, a project management system
- It allows PS Projects to be used as the internal representation of the research project
- Departments can have their own levels of planning and control on projects in addition to the central plans
Some limitations to the standard GM module which we overcame by doing in-house development:
- The SAP standard cost sharing and indirect cost recovery functionality did not meet the UK requirements for fEC (Full Economic Costing) for Research Councils, so we have developed our own cost splitting routines. Effectively we post 100% of the costs and then at month end, split the balances between internal funded portions and externally funded portions according to each grant / sponsor’s rules. We have our own cost-object assignment and sponsored class assignment tables which the derivation rules are coded to reference during account assignment derivation at posting time. These tables place the control of the cost sharing rules in the hands of the research finance staff who manage each grant. End-users posting transactions such as purchase orders and invoices etc do not need to worry about the detailed funding rules, they simply post 100% of the cost to the project.
- We developed our own balance sheet adjustment routine for posting the funding position to the balance sheet.
- We developed our own overhead schedule for controlling to posting of recurring indirect costs to grants on a monthly or scheduled basis.
- We developed our own disbursement routine for sharing surplus funds on projects between departments and the centre after first recovering internally funded direct expenditure.
- Pre-award project proposal costing. We developed our own in-house solution within SAP for the forecasting of salary costs linked to the SAP HR module. It also allows for the calculation and input of other non-staff costs such as PhD studentships, consumables, travel, equipment, biomedical services costs, research facilities and other directly allocated or directly incurred costs. We also built into this tool the required pre-application approval workflows which our central research support office require before academics can submit their applications to funders. Once completed, a grant is automatically created in application status within GM and populated with all the relevant master data.
- Various project Income analysis reports and budget vs. actual reports have been developed using the SAP report writer tool. The only useful standard report is the Grant Line Item Report. If we had SAP BI I’m sure we’d have developed many more reports as well. We hope to implement BI for this purpose in the not too distant future.
The GM implementation project was about 9 months including the bespoke master data extensions and month-end processing developments (1.5 FTE)
As we already had SAP HR, FI, CO in place before switching on GM, there was a lot of testing which needed to be done to ensure existing system processing worked as before (due to the introduction of the special purpose ledger). This involved including as many end users in the testing phase as possible.
The pre-award project costing development project was about 18 months (1.5 FTE)
All in all we are very glad that we have the SAP FI, CO, HR, PS and GM modules because having them all has allowed us to create a very tightly integrated, total grants management solution which caters from pre-award costing through to project award and closure. Having the SAP infrastructure in place has sped up any in-house development efforts because the SAP development tools are fairly easy to learn and there is a lot you can do to customise the system and build on extra functionality. Being able to do this has enhanced our return on investment in the SAP product. It has also simplified the technical support basis and account management for all these functions in one place. Our SAP system is extremely robust and we’ve had virtually no downtime during service hours over the past ten years since we implemented it.