Event Information
New After-Sales Service with SAP for customers using SAP ECC Customer Service and SAP CRM Service
Hello SAP Community members,
[Part 2 of the series is now scheduled for 1 December, 2022. Detail on this article]
[Added additional information as responses for questions asked during the livestream — Thank you! The recording, a link to the presented material and others are available here]
My name is Noboru Ota and I am Vice President and Chief Expert, SAP S/4HANA Solution Management, and the author of the book, “Introducing SAP S/4HANA Service”. I have been working for SAP since 2002 and dedicated more than a decade as a front-line implementation consultant. After supporting many projects, go-live through the night, and producing a ton of documents, I currently focus on communicating different aspects of SAP S/4HANA Cloud to a wide range of audiences.
I put together this quick blog post to give you some insight into the SAP Community Call I co-presented with Chief Product Expert, SAP S/4HANA Service, Oliver Frick on the topic of Service in SAP S/4HANA. In his two decades at SAP SE, Oliver has worked with several teams, from Research to Development and Customer Support, from HANA based analytics to SAP CRM, before finally joined the SAP S/4HANA core development team where he is driving the product strategy and roadmap for the After-Sales Service in SAP S/4HANA.
Key Details
What: 30-minute presentation on Service in SAP S/4HANA followed by a 15-minute Q&A session. You will have the opportunity to submit your questions in the chat during the call.
When: May 18th at 10:00 CET
Where: Recording and links to material here
What you will take-away:
Many SAP customers rely on the Customer Service module of SAP ECC, and service capabilities of SAP Customer Relationship Management, for their after-sales service processes. In the after-sales service space, we observe an emerging trend, the “servitization” of everything, in which distinct sales and service processes merge together. This merge is focused on providing the outcome customers expect from using equipment rather than the sale and servicing of equipment as physical goods. Service management solutions from SAP with S/4HANA extend the existing service processes to support new processes for outcome-driven services. In this SAP Community Call, we provide a system demonstration to concretely illustrate how this is achieved.
We are considering making this call into a two-part series. With the move to SAP S/4HANA, many things are different, and many things remain the same.
This is Part I, focusing on a key differentiating feature of the new service management capability of SAP S/4HANA with SAP Business Technology Platform.
We are planning to do Part II around October – November (to be planned) to talk about aspects of continuity from SAP ECC and SAP CRM.
Be sure to follow the SAP S/4HANA Community page for updates on upcoming SAP Community Calls and related blog posts.
Looking forward to the call and taking your questions!
Best,
Noboru
Additional Information as Response to Questions
On data model / One Order model optimized for HANA DB. This blog post series might give you some insights. “Customer Management” is an old name to refer to what we now call S/4HANA Service. The blog is dated 2018 but it should be still good starting point to explore. Also refer to “Further Reading and updates” part at the bottom of the article for other posts from him in the series.
Please also ensure to validate the information by yourself. These blogs are not official documentation; the information provided may be obsolete or inaccurate as SAP can change these technical implementation without prior notice.
How can we explore and show new Service capabilities? You can set up fully configured S/4HANA (on premise) deployed on Cloud e.g. AWS, GCP, etc. I have written a step-by-step guide with some indication of the costs — no need for your manager’s approval; possible with 30-100 euro budget. There is a demo scenarios with which you can explore all the core capabilities of S/4HANA Service.
Our product road map is published and can be viewed via a tool called SAP Road Map Explorer. The link above takes you to the tool with pre-set filter to show core capabilities of S/4HANA Service
- Training courses for SAP S/4HANA
- Learning Journey for SAP S/4HANA Service (including the training courses above)
- If you are interested in SAP S/4HANA Cloud, here is the Learning Journey for Service
Additional Background for our SAP Community Call
We have seen an evolutionary trend in aftermarket services. Traditionally, product and equipment manufacturers tended to treat aftermarket services as operations separated from product sales. At that time, production and selling of products was primary focus of business operations. Aftermarket services tended to be limited to provision of spare parts and break-fix service; the interaction with customers was transactional in nature. Today, we see that many manufacturers manage long-term service contracts with their customers, providing regular maintenance services and on-demand repair services. They may have a central call center function to take advantage of the scale of centralized operations. Some manufacturers have moved even further and become a solution provider, focusing on providing business outcomes rather than physical products and equipment to their customers. These manufactures transformed their business model and operations to be able to charge customers based on the outcome and usage. Collectively, we observe a new type of business model is emerging: “everything-as-a-service” (XaaS).
SAP S/4HANA together with SAP Business Technology Platform have capabilities to support all these different types of services. SAP S/4HANA helps business organizations to leverage existing products and services, and flexibly reconfigure their aftermarket offerings and business processes. With S/4HANA, you can define a bundle of physical products and services to offer to customers. You can sell a bundle and set up a service contract to manage a long-term relationship with pricing agreements and automatic regular billing to customers. Delivery of the physical goods can be managed with standard logistic capabilities within S/4HANA, leveraging capabilities for inventory, warehouse and transportation. Execution of services are fully integrated with inventory of parts, with cost breakdowns recorded for the materials and labor hours consumed by individual services. If you have a field service team, you can enable them to connect with S/4HANA on their mobile devices with the SAP Field Service Management solution. These fine-grained details of business operations can be aggregated real-time to show profitability and other business outcomes at different levels for different roles in your organization from front-line employees to executives.
Hi Noboru
very interesting, innovative blog post and session. I have a few questions to the demonstration shown.
From our project experience having revenue and cost on different line items or even documents, as we see it in the solution quotation, is a major requirement but still challenging to achieve.
Best regards,
Dirk
Hi Dirk,
Thank for your comments and interest.
Let me quickly respond to your questions where I can.
Warm regards,
Noboru
Dear Noboru,
many thanks for your quick response
Let me elobarte in (4).
So we can see at 23:12 of the recording, that revenue for the subscription is driven by line item 190.
We have learned from a more simple scenario, where there is just a two tier bundle, that cost and revenue are reported on the main line item.
The question now is, which line items drive the cost within the bundle? And on which level of the hierarchy will revenue and cost be matched.
I assume it is challenging to apply any matching of cost and revenue, because the solution quotation document it self is no account reference object. But the solution quotation actually generates multiple different documents, which are account reference objects itself. Such as Subscription Contract, Service Contract, Sales Order (for robots), Service Order (for Installation).
Henrik Kiessler or Sebastian Doll from Service & Asset Management Product Management are very into this topic.
I am open to have a short call to go into more details.
Best regards,
Dirk
Dirk Buettgenbach I just realized that a response from my colleague Harald Reitz has not been connected to this thread (apologies for taking the time to realize this)
Here is the direct link to his comment below; you might not have seen it.
Hi Dirk,
the financial flow is outlined in the image below, short summary:
The goods issue for the equipment sales order delivery is posted to an asset accounting interim account, instead of to costs. We can control this from a configuration option in CPQ, adding a specific bundle node in the CPQ quote structure, which is replicated to solution quote, and from there triggers different item categories from solution quote to sales order to the delivery, to a schedule line category for the delivery, pulling a different movement type 9xx (copy from 601) which posts into asset accounting, instead of costs.
Then, the asset is activate in asset accounting, with the same value than the goods issue. From asset accounting, monthly depreciation runs post into the internal order, linked to a specific service contract item "equipment lease".
The service contract items for maintenance, and repairs, also have a separate internal order, on to which the service confirmations and parts are posted.
With that, the costs are all posted to the internal orders for the service contract items.
For the revenue, we have implemented revenue accounting (RAR) logic, to split the revenue for different subscription payments (payment for min usage, payment for usage above min usage, payment for secondary equipment efficiency metric), into different accounts for equipment subscription revenue, maintenance subscription revenue, and repair subscription revenue, booked as revenue on the internal orders behind the different service contract items.
With that, profitability, costs, revenues can be shown for the different service contract items and material numbers, broken down into equipment, maintenance, and repair costs and revenues.
The DWC/SAC analytics model pulls all those costs and revenues together for a specific solution quote, and can show the subscription revenue by subscription material, but also the revenue and costs broken down into asset lease, repair, and maintenance.
We can also have a call to discuss in more detail ...
Regards,
Harald
Financial Flow
Just to have a reference to a question and answer that occured in YouTube video that this blog article accompanies.
Here is the question from YouTube user user-hl5bq8cz2u and our response:
Thank you for your question. We will try to outline what we think might help you think through the problem. If you require further assistance, I suggest you might like to consider consultation from an expert from our consulting organization or one of our trusted partners.
Please take what follows as only a suggestion to take further with your team.
We will assume we are talking about the latest release 2022 of SAP S/4HANA.
With these two elements in your question:
The system would probably need a material for the bundle, and for each of the individual items sold separately. This way, you could have their own prices for each material (the bundle itself and the individual items).
It’s hard to answer this part of the question:
What we have shown is one way to leverage the capability of Solution Quotation Management [1]. In this context, as far as our demonstration goes, the question of LUMF and PSMB does not seem relevant.
“Category” here seems to mean the item category (or item category group) on the sales order – LUMF seems to be for a sales BoM (also known as sales kit) [2]. This is not something we have shown in the demonstration. “PSMB” may not be an item category on the sales order, but a pricing procedure for monthly subscription fee [3]; but we cannot be certain about it.
You might like to consider comparing the use of sales BOM (e.g. use of LUMF) and Solution Quotation (as shown in our demonstration), and assess the fitness to your requirements (not just the bundle, but also the process of how bundles are created, etc.) This would typically require further investigation of the context where your bundle is sold.
We hope that the suggestions above might help you get started in formulating the problem among your project members. All the best for your implementation project.
[1] Solution Quotation Management: https://help.sap.com/docs/SAP_S4HANA_ON-PREMISE/7b24a64d9d0941bda1afa753263d9e39/1a960c05123c4a9faf448083a3e99507.html
[2] LUMF seems to be for a sales BoM (also known as sales kit): https://help.sap.com/docs/SAP_S4HANA_ON-PREMISE/7b24a64d9d0941bda1afa753263d9e39/5d66b65334e6b54ce10000000a174cb4.html
[3] a pricing procedure for monthly subscription fee: https://help.sap.com/docs/SAP_S4HANA_ON-PREMISE/95ad0cb1c441447888d695da7f3fd3d9/ea4c86b89ae14121b59b230f5e074479.html