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During the last two years, in my company, we have started a series of projects to enhance our SAP ECC platform, in the direction of business integration across the software modules.

This happened because we have spotted some limits in the architecture of this ERP system. SAP is a well-integrated software suite, in his main areas (Financial, Logistics, Sales, Real Estate, HR, etc.) it offers a bulk set of functions, that cover the typical business processes in a very wide set of industries. So, where are these limits?

I will try to suggest some ideas and discussion topics across the posts of this blog.

My company operates in the Construction and Real Estate industry. Our business processes start from the acquisition and development of lands, until the sale of residential properties or the management of commercial properties that are leased out. SAP ECC was installed in late 2005, replacing a previous Italian ERP solution. Initially, SAP was not a successful project. Since 2008, we have started a complete re-engineering of SAP implementation, changing the design from a module/office centric design to a business-centric design.

Let’s start now from a small development that we are carrying on now: cash management by an economic business perspective.

We have a very basic configuration of the CM (cash management) module: bank and cash accounts, customers and suppliers accounts, are classified according to categories that are relevant for our business. With these settings, we are able to perform a basic analysis of financial flows; this is important, because our business relies heavily on the financial supplies from banks, and our finance dept. needs to monitor the cash levels versus the financial planning.

Unfortunately, the simple analysis of bank accounts doesn’t allow us to understand how the sources and destinations of liquidity have influenced their balances. So we need to drill down this analysis across our business units, and across the development projects that are active.

A good perspective of our business is given by the Profit Center hierarchy: it is roughly divided in the following areas:

  • commercial real estate
  • residential real estate
  • property development
  • operating expenses
  • corporate finance

       

Each area is divided according to the management perspective of the underlying business: residential real estate, as an example, is detailed at building level; several buildings are grouped together according to the land on which they are built.

We are simply building a set of reports that allows our financial analysts to separate incoming and outgoing cash flows according to the building, building part, or single controlling-relevant business element that originates the costs or incomes from which the income or payment comes.

Our target platform is clearly SAP BW, but, as a first step, we are prototyping the functions needed to properly enrich the standard data from CM (cash management) on the ECC platform. I will provide details about the tecnlologies involved in the following posts.

The key of those reports is a function that, given a cash management relevant posting, goes back to the invoice or other FI document, with a controlling destination, that is paid or collected.

I will discuss in some following posts why this solution fits our needs. The point now is the importance to link one area of the ECC system – Controlling – with another area – cash flows analysis, giving the financial analyst a perspective that is the same shared by the financial planners, the production manager, etc.

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