SAP Activate in S/4HANA rollout to Brazil

Introduction

The idea for the post is to propose a discussion on the topic of SAP S/4HANA rollout and current challenges of some SAP Activate phases in a specific type of project.

I will focus on the initial phases of the project (Discover, Prepare and Explore) until the execution of “Fit-to-Standard Workshop”.

In a “template project” a global organization builds the “working model” for their base operations in finance, sales, procurement and so on, then the next steps would be to deploy this model to all the subsidiaries around the world, this would then be divided into the roll-out projects.

In the template projects companies try to define best practices based on their business and industry that can be deployed in their legal entities across the world. The current methodology for SAP implementation, SAP Activate, has a lot of material about the template project, but I have not seen many discussions specific for rollouts.

I found an excellent post by Jan Musil related to multi-country deployments in the SAP community – SAP activate in multi-country projects.

It explains the basic theory for how to do such projects and is one of the best articles so far on this matter. The image below (created by SAP) represents both the template and rollout projects.

One of the main challenges of the roll-out project is to deploy the system to a specific country trying to keep it as close to the “global template” and at the same time to meet the country-specific requirements.

I’ll mention in my blog post some of the challenges I have seen when using SAP Activate methodology to do a rollout to Brazil, specially in the initial phases of the rollout (Discover, Prepare and Explore).

Specificities of country roll-outs

The most common requirements for country-specific adjustments in templates are related to Finance. We have always the following discussions in all roll-out’s:

– What we need to include as legal requirement in GL Account/Chart of Accounts

– What we need to define about Taxation in Sales/Purchase and Tax codes

– What we need to implement about fixed asset rules and depreciation

– What we need to deliver to government agencies in terms financial and legal reports

These are just some examples of common discussion and analysis to be done in Discover/Prepare phases.

There are as well other cross module requirements like additional business partner or material master data  (with country-specific fields), there can be specific payment terms and payment methods required by customers/vendors, there are form outputs (printouts that require local language and local standards) and there is also payroll and travel expense booking requirements.

For Brazil we do have all these normal country-specific challenges plus e-invoicing, e-reporting and a completely different taxation system including multiples taxes and dozens of tax rates.

This differences would usually be checked during the “Discover/Explore” phases of the country rollout, but some of them would be too big in this case if we compare to other countries.

I’ll try to cover a bit the main challenges I have seen in previous projects in the next section.

Specifities of S/4HANA Roll-out to Brazil

I selected the points I believe make the Explore phase ( “Fit-to-Standard Workshop” ) a bit more complicated for Brazil. So the road for “Fit-to-Standard Workshop” in a roll-out of global template to Brazil would require adaptations mainly due to the following topics:

-Tax Calculation

Brazil does not work with FI Tax codes defined in FTXP for determining the tax rates in sales and purchase, so here we already will see the first deviation from any “Global Process” defined in SAP in other countries. But there is more related to taxation.

In SAP Best Pratices scope item 43D the default Tax Engine for BR in S/4HANA is an external tax calculation.

So to be able to execute the very first workshop of the roll-out (“Fit-to-Standard Workshop” in Explore) you’d need to have S/4HANA “test/demo/sandbox” connected to SAP BTP and a subscription for the tax Engine for Brazil and already a subscription for the tax calculation partner, that makes the effort preparation for “Fit-to-Standard Workshop” much bigger.

Another option is to configure traditional pricing schemes (without external tax calculation), but that’s already a deviation from best practices that would require some BC-Set’s and manual SPRO configuration prior to “Fit-to-Standard Workshop” (also another deviation from any global pricing scheme).

– e-Invoicing (Nota Fiscal NF-e)

In Brazil the Sales Invoices for goods (and any process to send goods out of the company like stock transfer, deliveries for repair or return to vendor) require a Nota Fiscal (which is a type of e-Invoice). This scope item 2RP also requires SAP BTP and the SAP Document Compliance, outbound invoicing option for Brazil so another external communication with BTP needed prior to workshop A. The other option would be to use GRC NFe On-Premise, but that would be already another change for a global invoicing process.

– Tax Reporting (e-Reporting SPED)

The Tax Reporting for Brazil in scope 1J2 would require the usage of S/4HANA Advanced Compliance Reporting Brazil or Tax Declaration Framework for Brazil.

Both solutions are framework based, they require developments or complimentary solutions to be used, as they don’t provide in standard the tax appraisal of Brazilian Taxes.

So this activity (quite important in Fiscal department in Brazil) can’t be explored in detail during Workshop A unless an additional product or development is already done and that’s not the original idea of “Fit-to-Standard Workshop”.

– Process changes (Global Process X Local Process)

In Brazil the country-specific requirements are not only in the end of process, but they differ sometimes end-to-end like the standard tax setup determination in SD which is based in Sales Order Type and Item type. The STO process in logistics require a nota fiscal, the freight invoices from vendors also require a CT-e posting with specific tax calculation and many other differences that require an extensive analysis during the discover and prepare phases.

Besides those differentes it’s still necessary to factor the timeframe for Multi-Year deployments as there are frequent legal changes that would require updates in the system to be able to perform even basic validations. The idea here is just to exemplify that if we just activate best practices as they’re and use the examples we would have a very theoretical “Fit-to-Standard Workshop” as the main topics would not be discussed in detail.

Final remarks

I don’t really have an answer right now on what is the best theoretical approach to tackle those challenges, in different projects I have seen many distinct approaches to cope with those challenges.

What I have seen in some projects I participated was that the methodology was a bit altered in the case of Brazil rollout to do some developments and complementary product implementation prior to “Fit-to-Standard Workshop”.

In some companies extensive workshops were executed in the Discover/Prepare phases to be able to understand the minimum requirements that would come up during the Explore phase.

That happened as a result of Brazil not being considered in the original requirements of the global template and also due to additional complexity of country-specific requirements that are not usual in other countries.

What would be your thoughts on this topic? Do you have similar experiences or you have seen better approaches? Would be glad to have some discussion on this topic.

Regards,

Renan Correa

If you wanna know a bit more about Brazilian localization and S/4HANA, you can also read my blog post in https://blogs.sap.com/2020/09/28/erp-rollout-to-brazil-in-times-of-sap-s-4hana…/