SAP Financials 2008 Prakhina Leverage Budget Management Functionality in SAP

Leverage Budget
Management Functionality
in SAP to Administer
Budgets for Projects,
Internal Orders,
and Cost Centers
Michael Prakhina
Lazar Consultants
© 2008 Wellesley Information Services. All rights reserved.

In This Session

• This session examines strategies for configuring and
deploying SAP applications to support Budget
Management scenarios
• Review functionality available across the SAP landscape
to manage budgets and receive best practices for
streamlining the budgeting processes for projects,
internal orders, and cost centers
• Get a handle on budgeting for more than one currency
• Examine the prerequisites for budget allocation and walk
through configuration of Budget Management
functionality for projects and internal orders

1

In This Session (cont.)

• Learn how to compare actual postings versus budgets
using cost center budget planning functionality
• Understand the impact that purchase order and invoices
have on budget through Commitments Management
• Get unique tips for displaying budget line items, and
learn how to run budget update reports
• Get tips for approving and releasing the budget on the
Internet

2

What We’ll Cover ...

• Overview of Budget Management in SAP ERP 6.0
• Availability Control
• Commitments Management (CO)
• Budget Management for Cost Centers
• Budget Management for Internal Orders
• Budget Management for Projects
• Web-Enabled Budgeting in SAP ERP 6.0
• Wrap-up

3

What Is Budgeting?

• Budget is the device by which management approves
the expected development of order costs over a given
timeframe

4

Planning vs. Budgeting

The budget is the
approved cost
structure for an
order or a project

• You administrate the approved cost framework for an
order or an order group using Budget Management
• You can enter the order budget manually or copy budget
information from any plan version
5

Budget Types
• Original budget
 This is the budget originally assigned, before any updates were
made.
• Budget updates
 Unforeseen events, additional requirements, for example, price
rises for external activities, and so on. This may mean you need
to update the original budget, in the form of:
 Supplements
 Returns

• Current budget
 This is derived from the budget types
already mentioned:

6

How Budgeting Works
• To create a budget for an order, you must define a budget profile and assign it
to the order type
• The budget profile defines the parameters for budgeting
• In Customizing, you must define a number range for your budget documents
• When you save the budget, the system checks that the sum of the annual
values matches the overall value for the order
You can:
Order: 400010
Original Current • Update and make changes
Budget Budget to the budget
Freeze the budget using
Overall 40,000 50,000
2000 15,000 19,000
•
2001 15,000 18,000 status management
2002 2,000 3,000 Budget Line Items
2003 3,000 4,000 Order 400010 Chicago Trade Fair • Display the budget line
Document Year Activity Amount ... items from the budget
030000001 2000 Original 15,000
screen
030000200 2000 Supplement 5,000
030000306 2000 Return 1,000- • Enter text for budget line
items to provide supporting
Total 2000 19,000
information for the budget
transaction

7

Define Budget Profile

The budget
profile defines
the parameters
for budgeting

Is Availability
Control activated
manually or
automatically
during budgeting?

• To create a budget for an order, you must define a
budget profile and assign it to the order type

8

Things to Remember

• The budget represents the funds approved by the
management. The budget types include the original
budget, budget updates, and the current budget.
• Line items are recorded for updates to the order budget.
• To create a budget, you must define a budget profile and
assign it to the order type or the project definition.

9

What We’ll Cover …

• Wrap-up

10

What Is Availability Control?

Is availability control
active?

For which transactions
will availability control
apply?

What are the tolerance
limits?

• As an order or project is executed, business events are recorded that call upon
available funds
• These events result in the posting of actual costs and commitments to the order
or project
• Commitments represent obligations that lead to actual costs through subsequent
business events; e.g., a purchase order may result in a CO commitment
11

How Budgeting Works with Availability Control

Use tolerances to
define how the
system should
respond to a given
degree of budget
overrun
12

Budget Carry Forward

• You can transfer unused
funds to the next fiscal year
using the budget carry
forward function
• SAP carries forward the
difference between the
budget and actual amounts
for the year specified

13

Budgeting in Different Currencies

• You can choose
different currencies
to enter your budget
• All budget items are
converted and saved
automatically in the
controlling area
currency and the
object currency

14

Things to Remember

• Unused budget amounts can be carried forward to the
next fiscal year.
• ERP system can perform active availability checks when
the order is debited. The ERP system checks whether
the order budget is adequate for the actual posting or
commitment.
• In Customizing, you specify the system response if
tolerance levels were exceeded.
• Budget can be entered in the controlling area currency,
object currency, or a user-defined currency.

15


• Wrap-up

16

About Commitments Management

• By recording commitments as well as actual costs, you can
compare the funds you have allocated to your budgeted cost to
determine funds availability
17

Commitments Carry Forward

• You can carry forward open commitment values into the
first period of the next fiscal year as part of year-end
closing

18

Types of Commitments Management

• There are three types of commitments, depending on
the account assignment object:
 Order commitment
 The commitment is initially assigned to an order

 Cost center commitment
 The commitment is initially assigned to a cost center

 Project commitment
 The commitment is initially assigned to a project or to a
work breakdown structure element

19

Activate Commitments Management

• You activate Commitments Management:
 For each controlling area from a chosen fiscal year
 For orders per order type Tip
 For cost centers
 For cost centers per cost center type

20

Commitments Reports

• In addition to the actual values and budget values, this
report displays commitment values

21

Things to Remember

• Commitments are specific goods ordered for an internal
order, a cost center, or a project
• A purchase order commitment is created that is
equivalent to the purchase order value
• Commitments are reduced by business transactions
(such as goods receipts) and actual costs are incurred
by the corresponding account assignment object
• At year-end closing, you can carry open commitment
values

22


• Wrap-up

23

Define a Budget Profile for Cost Centers

• You create a budget profile to specify technical and
administration values for budgeting by cost center

24

Maintain Cost Center Budget Information
You can
manually enter
budget for cost
centers

Use Excel to
upload values
automatically

• Entering cost center budget is simple! You can enter it
manually, copy/paste, or just simply upload from
spreadsheets
25

Cost Center Budget Planning in Excel Type Report

26

Cost Center Budget and Commitments Reports

Via the Report/Report
Interface you can
branch to the Cost
Centers: Actual Line
Items report

27

Budget Upload Using Excel
You can upload
budget values from
Excel

You can copy actual
costs or other
planning profiles to
your budget

• To be able to upload the files, you must specify the characteristic
values in the lead column of the corresponding planning layout. It
is not enough to simply specify the characteristic text.
28

Things to Remember

• The simplest way to define budget information is to enter
amounts into the Cost Center Budget Planning screen
for each cost center
• All reports in SAP ERP 6.0 are embedded into Excel
• You can upload budget information by using regular flat
files from your PC

29


• Wrap-up

30

Assign Budget Profile to Internal Order

You assign Budget
Profile to Internal Order
Type.

You can allocate budget
after the Created status
is reached. If you want
to prohibit budget
allocation in the Created
status, you need to
define a user status.

31

Change Budget for Internal Order

You can use Excel
to upload values
automatically

• You can manually enter a budget per internal order or
per order group
• Internal order commitments will reserve funds

32

Internal Orders Commitments Reports

• This report enables the internal orders manager to
compare budgeted and allotted costs on internal orders.
It also includes postings on statistical internal orders.

33

Things to Remember

• In order to budget by internal order you have to assign a
budget profile to an internal order type
• You can manually enter budget information or upload
using Excel
• All predefined SAP reports display budget, actual, and
commitments values
• In order to report in a number of different currencies,
you have to develop new reports or change existing
reports

34


• Wrap-up

35

Enter Budget Information for Projects

• You can enter or use Excel upload to import budget
amounts per project or for WBS elements

36

Assign Budgeting Profile to the Project Definition

• You store a budget
profile or order type in
the project definition
• The period of time
during which budgeting
is allowed
• Whether budgeting is
allowed for total annual
values, and/or annual
values

You should not maintain
budget profile if you
use Budget Control
System (BCS)

Tip
37

Releasing the Budget

Release

• You can release budget on a total or an annual level
• The release is based on the current budget, meaning the
original budget changed by supplements, returns, or
transfers 38

Budget Foreign Currency Recalculation for Projects

• Regardless of which currency you use for budgeting,
the system always translates the entered planning and
budget line items into the controlling area currency
and object currency and updates the values in both
currencies Tip
39

Consistency Check

• Consistency check of
plan/budget
• Transfer of plan to
budget
• Mass release of
budget for projects
• Currency
recalculation for
plan/budget

• The consistency checks you activated are run in the
background when you post or pre-post a budget amount
40

Budget Carry Forward for Projects

You cannot carry
forward a negative
budget into the
following year

41

Project Budget and Commitments Reports
• Using the navigation menu, you can break down a report by a number of
features, such as business transactions
• You can report overall budget as well as budget commitments information

Drilldown

42

Things to Remember

• The budget is carried forward on the basis of the values
in the currency defined in the budget profile
• To budget a project, you can transfer the values from
cost planning as a budget; you can also enter the
budgets directly in the WBS elements
• You can release a budget on a total or an annual level
(providing budgeting using total or annual values is
included in the budget profile)
• You can display totals records for supplements, returns,
and transfers for projects

43


• Wrap-up

44

Web-Enabled Budget Requests

Request for
Budget Request
(scenario SR61)

Budget Request
with Approval
(scenario SR62)

In SAP ERP 6.0 there
multiple predefined
Web-Enabled forms
such as this one.
Components → Internet/
Intranet Services →
Internal Service Request
→ Scenario Definition →
Define Scenarios

45

Internal Tasks

• You can define a follow-up action for an Internal Task that will
automatically be triggered and executed by the system
• A follow-up action can call one or more function modules that
execute specific functions (for example, printing or calling up a
transaction)
46

Document Flow

• The document flow allows you to identify:
 Preceding documents
 Documents from which the current notification originated
 Subsequent documents
 Documents that originated from the current notification
 “To-and-from” references between documents
 Document number
 Additional data (if available)

47

Things to Remember

• You can define Web-enabled scenarios for recurrent
internal service requests
• Budget scenarios SR61 and SR62 are predefined and
can be used as templates
• You can assign workflow tasks and display document
flow to list corresponding documents assigned to a
budget request

48


• Wrap-up

49

Useful Reports
• Calling up Cost Element Reports for Order Commitments
 Choose Accounting → Controlling → Internal orders → Information system
→ Reports for internal orders → Plan/Actual comparisons → Additional key
figures → Order: Actual/Plan/Commitments.
• Reports for Cost Center Commitments
 Choose Accounting → Controlling → Cost Center Accounting →
Information system → Reports for Cost Center Accounting → Plan/Actual
comparisons → Additional key figures → Cost centers: Actual/Plan/
Commitments.
• Calling up Cost Element Reports for Project Commitments
 Choose Accounting → Project System → Information System →
Controlling → Costs → Plan-based → Hierarchical → Plan/Actual/
Commitments/Rem. Plan/Assigned.
• To display totals records for supplements, returns and transfers
 Choose Logistics or Accounting → Project System → Information System
→ Controlling → Costs → Budget related → Budget updates

50

Budgeting Transactions
• KPZ2 – Cost Center Budgets Change
• KO22 – Internal Order Budget Change
• CJ30 – Project Budget Change
• CJCO – Project Budget Carry Forward
• CJCF – Project Carry Forward Commitment
• CJCO – Project Budget Carry Forward
• IMCCP3 – Transfer Plan to Project Budget
• IMCOC3 – Plan/Budget Consistency Check for Projects
• KO30 – Activate Availability Control
• KOCO – Internal Order Budget Carry Forward
• KOCF – Internal Order Commitment Carry Forward
• IMCCP4 – Transfer Plan to Order Budget
• KSCF – Cost Center Commitment Carry Forward
• KP06 – Change Cost Center Budget Cost, Activity Inputs, and Cost Elements
• IMCOC4 – Plan/Budget Consistency Check for Orders

51

Budgeting Menu Paths
• To define Budget Profile for Cost Centers in
Customizing, choose:
 Controlling → Budget Management → Budget Management →
Define Budget Planning Profiles
• To define Budget Profile for Internal Orders in
Customizing, choose:
 Controlling → Internal Orders → Budgeting and Availability
Control → Maintain Budget Profile
• To define Budget Profile for Projects in Customizing,
choose:
 Project System → Costs → Budget → Maintain Budget
Profiles

52

Budgeting Menu Paths (cont.)

• Another ways to assign a budget profile to a project:
 As a default in Customizing under Project System → Costs →
Budget → Maintain Budget Profile
 In the profile data of a standard project definition under
Accounting → Project System → Project → Special
Maintenance Functions → Project Structure Planning →
Project Definition → Create → Control tab page → Group box
Accounting → Budget Profile
 In the profile data of a project definition in Customizing under
Project System → Structures → Operative Structures →
Project Structure Plan → Create Project Profile

Resources
• SAP Service Marketplace*
 Cost Center and Internal Order Accounting
 http://service.sap.com/~form/sapnet?_SHORTKEY=01200252
310000079805&
• SAP Help Portal
 http://help.sap.com/erp2005_ehp_03/helpdata/EN/a9/
ab7f68414111d182b10000e829fbfe/frameset.htm
• SAP Developers Network
 www.sdn.sap.com/irj/sdn/bpx-forums

* Requires login credentials to the SAP Service Marketplace
54

7 Key Points to Take Home
• You can budget by cost center, internal order, and
project
• The main configuration feature is to create and assign a
budget profile
• All reports are Excel-enabled
• You can upload budget information into SAP from Excel
• You can display, enter, and request budget information
over the internet/intranet
• You can monitor your budget spending with
Commitments Management
• Availability Control feature prevents you from spending
unapproved funds
55

Your Turn!

How to contact me:
Michael Prakhina
michaelprakhina@lzar.com
56

SAP Financials 2008 Prakhina Leverage Budget Management Functionality in SAP

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