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SAP Expert Series: Treasury DebtManagement

Vol. 3 How to use SAP TRM toManage Bond IssuesBy Lawrence Compagna, C.P.A.

First edition copyright 2017

Published by the Candco Corporation

ISBN-13: 978-1546853800

In this third volume of the SAP Expert Series we examinethe SAP Treasury and Risk Management (TRM) module.

SAP TRM is a powerful business tool. It integrates

seamlessly with the SAP General Ledger, handles manydifferent calculation methods, and supports the SAPElectronic Bank Statement. On the debt side of thebusiness it creates your service schedules, provides a toolfor managing your entire portfolio, and facilitates themanagement of serial, term, capital appreciation andmany other bond flavors. Issuing bonds is the focus of thisbook. From it, you will learn how to represent yourorganization’s issues, handle the load of legacy data,create the data load programs, and configure the system.

© Copyright 2017

All rights reserved.

SAP, R/3, SAP NetWeaver, and other SAP products and services mentionedherein as well as their respective logos are trademarks or registeredtrademarks of SAP AG in Germany and other countries. Some softwareproducts marketed by SAP AG and its distributors contain proprietarysoftware components of other software vendors.

SAP and the SAP Logo are trademarks of SAP AG. All other trademarksmentioned are the property of their respective owners.

Data contained in this document serves information purposes only, unlessexplicitly mentioned otherwise.

Dedicated to my mother for encouraging me, Madison forshowing me how to be creative, Conrad for the intellectualstimulation, and finally to Wyatt … who forever inspiresme

Table of ContentsPrefaceBackground

SAP’s SuccessSAP Enterprise Central Component

ForwardAudienceBond Issuance within TRMMaster Data

General Ledger AccountsBusiness PartnerClass (“CUSIP Number”)Security Account

Transactional DataBond Issuance Types

Term BondsSerial BondsCapital Appreciation BondsFixed BondsVariable Bonds

Configuration ConsiderationsProduct TypeGeneral Ledger IntegrationGeneral Ledger Account Determination

Prerequisites

ConfigurationEnterprise Extensions ConfigurationActivate Business FunctionsBusiness Partner Switch

Configuration SummaryProcedure

Business Partner Number RangeConfiguration SummaryProcedure

Define Grouping Characteristics (for Business Partners)Configuration SummaryProcedure

Treasury: Additional Company Code DataPrerequisite ActivitiesConfiguration SummaryProcedure

Define the Treasury PortfolioConfiguration SummaryProcedure

Define Reference Interest RatePrerequisite ActivitiesConfiguration SummaryProcedure

Settings for Reference Interest RatesPrerequisite ActivitiesConfiguration SummaryProcedure

Define Index

Prerequisite ActivitiesConfiguration SummaryProcedure

Set Primary CurrencyPrerequisite ActivitiesConfiguration SummaryProcedure

Rounding Rules for CurrencyPrerequisite ActivitiesConfiguration Summary

Define ExchangePrerequisite ActivitiesConfiguration SummaryProcedure

Define TradersPrerequisite ActivitiesConfiguration Summary

Define Number Ranges for TransactionsPrerequisite ActivitiesConfiguration SummaryProcedure

Assign Number Range Interval to Transaction TypePrerequisite ActivitiesConfiguration SummaryProcedure

Define Manual Reversal TypesPrerequisite ActivitiesConfiguration Summary

ProcedureDefine Reasons for Reversal


Define Global Settings (for Payments)Prerequisite ActivitiesConfiguration SummaryProcedure

Payment RequestsDefine Accounting Codes


Define Valuation AreaPrerequisite ActivitiesConfiguration SummaryProcedure

Assign Accounting Codes and Valuation AreasPrerequisite ActivitiesConfiguration SummaryProcedure

Define Update Types and Assign UsagesPrerequisite ActivitiesConfiguration SummaryProcedure

Assign Update Types for Accrual/DeferralPrerequisite Activities


Assign Update Type to UsagesPrerequisite ActivitiesConfiguration SummaryProcedure

Indicate Update Type as Relevant to PostingPrerequisite ActivitiesConfiguration SummaryProcedure

Define Product Types (Money Market)Prerequisite ActivitiesConfiguration SummaryProcedure

General Valuation Class for Money Market Product TypesPrerequisite ActivitiesConfiguration SummaryProcedure

Define Product Types (Securities)Prerequisite ActivitiesConfiguration SummaryProcedure

Assign Repayment Types to Product TypesPrerequisite ActivitiesConfiguration SummaryProcedure

Define Company Code Dependent Settings for the Product TypePrerequisite Activities


Define General Classification for SecuritiesPrerequisite ActivitiesConfiguration SummaryProcedure

Define Securities Account CategoriesPrerequisite ActivitiesConfiguration SummaryProcedure

Define Transaction Types for Product TypesPrerequisite ActivitiesConfiguration SummaryProcedure

Assign Flow Types to Transaction TypesPrerequisite ActivitiesConfiguration SummaryProcedure

Assign Position Management ProcedurePrerequisite ActivitiesConfiguration SummaryProcedure

Maintain Field Selection for Security Account Master DataPrerequisite ActivitiesConfiguration SummaryProcedure

Define Blocking FlagsPrerequisite Activities


Define Clearing Account for Payment RequestsPrerequisite ActivitiesConfiguration SummaryProcedure

Assign Accounting Principle to Ledger GroupsPrerequisite ActivitiesConfiguration SummaryProcedure

Define Account DeterminationPrerequisite ActivitiesConfiguration SummaryProcedure

Specify Update Types for Securities Account ManagementPrerequisite ActivitiesConfiguration SummaryProcedure

Assign Update Type to Condition TypePrerequisite ActivitiesConfiguration SummaryProcedure

Assign Repayment TypePrerequisite ActivitiesProcedure

Create and Assign DifferentiationPrerequisite ActivitiesProcedure

Additional Account AssignmentsPrerequisite ActivitiesProcedure

Define Condition GroupsPrerequisite ActivitiesProcedure

Assign Condition Types to Condition GroupsPrerequisite ActivitiesProcedure

Data ConversionLoading Data Treasury Risk Management – Bond IssuesSource of the Conversion ObjectsConversion DependenciesInput StructureCrosswalkAccounting EntryFile Format/Field MappingsConversion Tool to be UsedSAP Table/Transactions to Support the Data Validation Effort

Creating and Running an LSMW for TRMPreface and BackgroundIntroductionTarget AudiencePurposeCreate Your LSMW Program

The ProcessAssignment of Fixed ValuesSource Specification

Run Your LSMW ProgramStep One: Read Your DataStep Two: Display Read DataStep Three – Convert DataStep Four – Display Converted DataStep Five – Create Batch Input SessionStep Six- Initiate Load

Tips and TricksThe BenefitsConclusion

Appendix: A Summary of SAP Best PracticesGlossary of TermsAbout the Author

PrefaceThe SAP Enterprise Resource Planning system (ERP) is a German softwarepackage used extensively by the world's largest organizations for treasury, cashmanagement, accounting, management control, production control, humanresources, material management planning, and many other facets of business'operation. For those readers who do not know SAP stands for "Systems,Applications and Processes in data processing". ECC stands for "EnterpriseCentral Component". The predecessor of the Enterprise Central Componentwas R/3, and before that it was R/2. The origins of the SAP ERP system dateback to 1972 when it was founded as a mainframe software system. In 1992they developed their client server based ERP program and have dominated themarketplace since then. The hallmark of SAP is the tight integration of its corebusiness suite. This core product is based on industry best practices.

When I use the term partner, implementation partner, consultant, consultingfirm, advisor, integrator, or systems integrator all of these terms should beconsidered synonymous. All of these terms refer to a third party firm hired toassist an organization which has a license for SAP in making changes to it orusing it.

Lastly, when I use the term "the business", I am referring to any organization(both private and public sector) that is implementing, modifying, or upgradingSAP. This term will never be used to denote the implementation partner that isadvising and assisting "the business" with their implementation. Furthermorethe term "implementation" is used to denote any major SAP project (with anarbitrary budget of over $1 million). This encompasses re-implementations,enhancement projects, module deployments, end-to-end deployment of anentire new business process, and upgrades.

In all discussions, changes to the SAP ECC (SAP Enterprise Central

Component), and in particular the Treasury and Risk Management module are

central to the discussion.

BackgroundSAP’s SuccessThe success of the world's third largest software retailer, SAP AG, cannot bedenied. As of 2012 there were 44,000 installations worldwide of its flagshipsoftware SAP Enterprise Central Component, in some of the biggestorganizations: 3M, Kraft Foods, and Colgate Palmolive are but a few of themembers of the Fortune 500 that run this brand of ERP. On the public sectorside the Government of Canada, the US Army, and the State of California are afew examples of massive entities that run the SAP.

Thumbing through the 1,887 success stories on SAP's website you willencounter names such as Citrix, Proctor and Gamble, and the University ofKentucky. Time and time again the stories document gains in productivity,customer service, and a positive return oninvestment.

SAP is the most common type of ERP system that you will find in themarketplace, as indicated in this graph:

In 2000 SAP had a market share of 11%; by 2012 it had climbed to 25%. SAPhas a share in the ERP market that is equal to that of its three biggestcompetitors.

There is no denying SAP's success. The benefits of implementing it are welldocumented.

SAP Enterprise Central ComponentThe SAP Enterprise Central Component, often abbreviated to SAP ECC is thecornerstone of SAP`s software offerings. While SAP now offers many otherproducts that can be bolted on to the Enterprise Central Component, thiscomponent is the core.

It is also the software element that has helped SAP become the third largestsoftware retailer in the world, and the undisputed champion of the enterpriseresource planning (ERP) marketplace.

The Enterprise Central Component is a collection of modules that are allcontained on the initial compact disks that are loaded on to a client`s servers.Though they are referred to as separate and distinct modules the client in facthas them all loaded and they all exist in the SAP system whether they areactive or not. The Treasury and Risk Management module is part of ECC.

Initially when the Enterprise Central Component software is loaded on to thecustomer`s server it does not work. None of the modules can in fact be used"out of the box", despite SAP often being referred to as an "out of the box"solution. Any module desired for use has to first be activated and thenconfigured. Only after it is activated (and configured) in the ImplementationGuide can a user perform business functions.

The beauty of the SAP Enterprise Central Component lies in its real-timeintegration. The majority of modules pass information from one to another inreal time without having to run any batch jobs (there are a few exceptions, forexample the Contract Accounting module (FICA) and the Treasury and RiskManagement module (TRM), require a batch job to be run to move summarizedvalues to the General Ledger).

The hallmark of SAP is its integration. You enter information once into thesystem, and that information is carried through to all other modules, usually inreal-time. It is however, not heavily automated. As one SAP consultant oncesaid "SAP is integrated, not automated. It requires staff to think about what isgoing on … not to watch the system do their job". With the advent of automatedprograms like SAP Electronic Bank Statement that is changing.

There are numerous modules within SAP and within those is Treasury and itssubcomponents:

The general life cycle of any implementation involving SAP Treasury and RiskManagement will be similar to that shown below:

ForwardOf the information published concerning the SAP Treasury and RiskManagement (TRM) module, most of it pertains to the investment side of themodule. Very little exists to aid on the debt side, especially as it pertains to theissuance of bonds, despite the fact that organizations that use SAP issuebillions of dollars in bonds every year. A leading book on the TRM modulehas only one sentence on the matter: “you can issue bonds out of TRM if youwant.” On that note, I take you through the process of designing andimplementing a bond issuance solution out of the SAP-TRM module. Onefurther note, I wrote this book from an American perspective, thus its focus ison the types of instruments common to the United States. Other regions of theworld may have other types of bonds than those mentioned.

AudienceThis book is for those charged with implementing the Bond Issuance process inthe SAP Treasury and Risk Management module (TRM).

Bond Issuance within TRMBond issuance is part of the debt management and accounting process withinSAP. It covers the entire life cycle of the issuance process, from initial setup inSAP to retirement. It is the converse of the other principle, and as discussedearlier, the more commonly discussed (i.e. in other publications) process ofmanaging investments. Debt management looks very similar to the managementof investments in SAP-TRM and, in fact, both share the same importanttransaction codes. For example, FWZZ is used to create, display, and changemaster data for both aspects, while FTR_Create is used to post transactionsagainst master data for both sides. The Business Partner transaction, BP, isused in both as well.

Master DataThere are several master data objects that must be set up within SAP Treasuryand Risk Management (TRM) to support the bond issuance process. Chiefamong these is Class, the object used to represent CUSIP Numbers in TRM.Some of the other objects that require set up come from outside of the TRMmodule. These include General Ledger Accounts (from The Finance module),and Business Partners (Cross Application component).

General Ledger AccountsGeneral Ledger Accounts (GL Accounts) are required to set up the TRMAccount Determination tables that automate the accounting part of the module.

Business PartnerBusiness Partners represent those organizations that are involved in the bondissuance process. Generally there are three: the Issuer (which in the case ofbond issuance is your client organization itself), the counterparty (who handlesthe issuance), and a house bank (where money flows in and out of).

Class (“CUSIP Number”)At the heart of debt issues in TRM is master data known as Class. Class masterdata refers to the fixed elements of a bond issue that exist whether anyoneowns the bonds or not. It contains elements such as the repayment terms and theinterest rate (if it is fixed). In the United States, the number assigned to thismaster data object equates to the CUSIP number (CUSIP stands for Committeeon Uniform Securities Identification Procedures). A CUSIP number identifiesmost financial instruments, including: stocks of all registered U.S. andCanadian companies, commercial paper, and most important to our purpose:U.S. government and municipal bonds. Thus, this number in SAP must be set upas externally assigned.

Security AccountA security account is the master data object where position managementoccurs. With issuances and other debt instruments, this position is managedseparately from the investment side.

Transactional DataMaster data can exist in the SAP TRM system without your organizationowning it. For example, it can be part of a global load of all CUSIPinformation in the market place. Buying or selling a security creates a changeof ownership that requires a transaction be booked against this master data inSAP. Transactions that occur during the life of liability position, like interestpayable to bond holders, is another example of transaction data that must beentered against the CUSIP master data of the class. The transaction code forthis is FTR_CREATE. To edit it use FTR_Edit.

Bond Issuance TypesSAP Treasury and Risk Management supports a wide variety of bond issuetypes.

Term BondsThe simplest bond issuance type is that of a term bond. It is not related to anyother issuances (other than having a common issuer), has a fixed or variableinterest rate, and a fixed term with a fixed maturity date.

Serial BondsSerial bonds are similar to term bonds in their individual structure, but theyconsist of at least two related CUSIP issues. For example, a school boardcould issue a serial bond with a dozen coupons, but each coupon has its owninterest rate, its own term, and own maturity date. Each CUSIP of the totalissue is an individual investment, but the dozen items are part of one serialbond issue. In the case of serial bonds, all of the CUSIP numbers must beconsidered together for evaluation purposes. Other fields such as “Evaluation”on the Class master data can be used to aide in grouping. Such bonds can carryeither fixed or variable interest rates.

Capital Appreciation BondsCapital appreciation bonds are zero bonds that do not accrue interest during aperiod, they increase in value at a prescribed rate but that growth is notrealized until maturity. Such bonds are usually of the fixed interest type withthe desired appreciation included in the last payment; this is achieved throughthe parameters of the class data.

Term, serial, and capital appreciation bonds are further sub-divided by theirinterest rate characteristics into either fixed or variable bonds:

Fixed BondsFixed bonds are those with a calculation interest rate that remains consistentthroughout the life of the bond.

Variable BondsVariable bonds carry a rate that is tied to a reference rate such as LIBOR. Theinterest rate on these bonds will fluctuate as the reference rate fluctuates. Forexample, a bond my carry a rate of Libor plus one percent; if Libor is onepercent on a particular evaluation day, this bond carries a two percent factorduring the effective period. If it were five percent, it would carry a six percentfactor.

Configuration ConsiderationsThere are a number of items that must be configured in the SAP TRMimplementation guide (IMG) to facilitate an organizations process of issuingbonds.

Product TypeProduct types are the heart of the configuration for SAP-TRM. It is at thisselection point that master data is earmarked as either debt or investmentrelated. For our purposes the delivered Product Types 04X (Issue FixedBonds) and 04Y (Issue Variable Bonds) are the starting point. If a need arisesto create a new Product Type, copy one of these to begin with. Commonly,different accounting treatments for bond issuance can lead to such a need. Onesuch circumstance is a bond issue that must be treated as a trust fund asopposed to others that are proprietary. With the former, it may be desirable notto update the organization’s General Ledger. This can be accommodated with anew Product Type that is identical in every respect to the standard SAPdelivered one, but for this one important difference: the way it integrates withthe General Ledger.

General Ledger IntegrationAn organization may have a need to update some of its Product Types to theGeneral Ledger, while others do not update the General Ledger. There areseveral ways to accomplish this in TRM configuration. One is through theProduct Type Company Code Setting. Refer to the configuration guide in thisdocument for specific information.

General Ledger Account DeterminationAnother common requirement is to have different bond issues update differentGeneral Ledger Accounts. These requirements are accommodated by usingunique Product Types with unique account determination rules. See the accountdetermination area later in this book for more information.

PrerequisitesA number of activities must take place in other modules of SAP prior to theconfiguration of SAP Treasury and Risk Management. The following is asample of what must be configured in other modules:

Company CodeControlling AreaFunds Management Area (If FM is in scope)Business Area (if used)The Chart of AccountsCost elementsFiscal Year Variant

ConfigurationNumerous settings must be made in the SAP Treasury and Risk Managementmodule to support the bond issuance process. The following is a sample.

Enterprise Extensions ConfigurationThe Enterprise Extensions add the tables and programs necessary for industrysolutions to the base SAP ERP system. They need to be activated in the SAPSwitch Framework. This activity must be repeated in all clients and systemsfor any additional switches to be activated. This activity is performed typicallyby the (NetWeaver Basis) System Administrator.

Configuration Summary

IMG Path: SAP Switch Framework

TransactionCode

SFW5

Access the activity using one of the above navigation options. Choose theENTERPRISE_EXTENSIONS menu

Verify the following entries are activated. (They are activated by selecting thePlanned Status box next to an extension and clicking the Activate button):

EnterpriseExtension

Description UserAction

Comment

EA-FS FinancialServices

Activate Necessary for Treasuryfunctions

After activating, save your entries.

Activate Business FunctionsThe activation of business functions adds functionality delivered byEnhancement Packages to the base SAP ERP system. A system backup shouldbe performed prior to making these settings, as they cannot be reversed. Thisactivity must be repeated in all clients and systems for any additional switchesto be activated. This activity is performed typically by the (NetWeaver Basis)System Administrator.

Prerequisite Activities: Enterprise Extensions required by the businessfunctions must have been activated.

Configuration Summary:

IMG Path: SAP Switch Framework

TransactionCode

SFW5

RepeatedAnnually(Y/N)

N

Access the Business Functions menu.

Activate the following entries by selecting the Planned Status box next to anextension and clicking the Activate button:

Enterprise BusinessFunctions

Description UserAction

Comment

FIN_FSCM_INTEGRATION FSCMIntegration

Activate Required forBankRelationshipManagement,Treasury andCash

ManagementFIN_GL_CI_2 New

GeneralLedgerAccounting 2

Activate Required forCash FlowReporting byDirect Method

FIN_TRM_CM_DIMENSIONS CLM-CM,AdditionalAccountAssignments

Activate Required forintegration ofCash andLiquidityManagementwith FundsManagement

FIN_TRM_LR_FI_AN TRM: HedgeManagement,NewInstruments,New KeyFigures

Activate Required forFIN_TRM_PSMINTEGRATION

FIN_TRM_PSM_INTEGRATION TM,Integrationinto FundsManagement

Activate Required forintegration ofFM accountassignments inTRMTransactionManager

PSM_FA_CASH PSM, Cash-BasisAccountingand CashFlowReporting

Activate Required forCash FlowReporting byDirect Method

PSM_FM_CI_2 to CL_4 PSM, FundsManagement2

Activate Required forCash FlowReporting

After activating, save your entries.

Business Partner SwitchThe business partner switch activates functionality such as time dependencyand roles.

Configuration SummaryIMG Path: Financial Supply Chain Management � Treasury and Risk

Management � Basic Functions � SAP Business Partner forFinancial Services � General Settings � Activation Switchfor Functions

TransactionCode

SPRO


N

ProcedureAccess the activity using one of the above navigation options and click .

Verify the following entries are activated:

Ignore the following message if it appears:

After activating, save your entries. Create a new transport if necessary.

Business Partner Number RangeIn this activity, you determine the internal number range to be used for thecreation of Business Partners.


Management � Basic Functions � SAP Business Partner forFinancial Services � General Settings � Business PartnerRelationships � Basic Settings � Define Number Ranges

TransactionCode

BUB9


N

ProcedureAccess the activity using one of the above navigation options and click Then click on the interval change mode icon:

Enter the desired range:

After setting the clearing account, save your entries. DO NOT TRANSPORT,this setting will be validated in each client

Define Grouping Characteristics (for BusinessPartners)In this activity, you set up characteristics to group Business Partners. These canbe used later in authorizations.


Management � Basic Functions � SAP Business Partner forFinancial Services � Settings for FinancialServices � General Settings � Basic Settings � DefineGrouping Characteristic

TransactionCode

SPRO


N

Table 5: Define Grouping Characteristics

ProcedureAccess the activity using one of the above navigation options and click .Then click on New Entries. Configure the table as below:

After setting up the grouping characteristics, save your entries. Create a newtransport if necessary.

Treasury: Additional Company Code DataIn this activity the chart of accounts, fiscal year, fiscal variant, and severalother settings are made at a company code level.

Prerequisite ActivitiesThe fiscal year variant and chart of account must already be set up in theGeneral Ledger configuration.


Management � Transaction Manager � GeneralSettings � Organization � Define Company Code AdditionalData (for Treasury)

TransactionCode

SPRO


N

ProcedureAccess the activity using one of the above navigation options and click

Click on New Entries:

Enter the Company Code and validate the information that automaticallypopulates:


Define the Treasury PortfolioIn this activity, the portfolio name is defined.


Management � Transaction Manager � GeneralSettings � Organization � Define Portfolio

TransactionCode

SPRO


N


Select New Entries:


Define Reference Interest RateIn this activity, you set up the reference interest rate for use in various areas ofTRM.

Prerequisite ActivitiesNone.


Management � Basic Functions � Market DataManagement � Master Data � Check Reference Interest Rates

TransactionCode

SPRO


N

Table: Check Reference Interest Rates (Libor)


Click on New Entries and fill out the table as appropriate:

Back out to the main configuration screen to review your changes:

After the change, save your entries. Create a new transport if necessary.

Settings for Reference Interest RatesIn this activity, you adjust the settings for the reference interest rates.

Prerequisite ActivitiesReference interest rates are set up.


Management � Basic Functions � Market DataManagement � Master Data � Settings for Reference InterestRates and Yield Curves � Define Reference Interest Rate

TransactionCode

SPRO


N

Table: Setup Reference Interest Rate



Back up to the main table to review your changes.

Save your entries. Create a new transport if necessary.

Define IndexIn this activity, you define the various indices to be used at CLIENT.



Management � Basic Functions � Market DataManagement � Master Data � Indexes � Define Index

TransactionCode

SPRO


N

Table: Define Index



Set Primary CurrencyIn this IMG activity, you set the primary currency to be used in the TRMmodule.



Management � Basic Functions � Market DataManagement � Master Data � Currencies � Check CurrencyCodes

TransactionCode

SPRO


N

Table: Set Primary Currency


Uncheck all currencies other than USD:

Ensure that USD is checked. Do not check USDN:


Rounding Rules for CurrencyIn this activity, you determine to what decimal place a currency’s rounding willtake place at.

Prerequisite ActivitiesPrimary currency must be defined.


Management � Basic Functions � Market DataManagement � Master Data � Currencies � Check RoundingRules for Currencies

TransactionCode

SPRO


N

Table: Rounding Rules for Currency

Procedure

Access the activity using one of the above navigation options and click .Then click on New Entries:

Enter the rounding unit for currency USD:

After making the setting, save your entries. Create a new transport if necessary.

Define ExchangeIn this activity, you set up stock exchanges for use in SAP.



Management � Basic Functions � Market DataManagement � Master Data � Securities � Define Exchange

TransactionCode

SPRO


N

Table: Define Exchange

ProcedureAccess the activity using one of the above navigation options and click .Then click on New Entries:

If the exchange is in the United States, create it with the same parameters as

shown below.


Define TradersIn this step, each trader is entered into a table for use in TRM investmentaccounting.



Management � Basic Functions � TransactionManager � General Settings � Organization � Define Traders

TransactionCode

SPRO


N

Table: Define TradersProcedure

Access the activity using one of the above navigation options and click .Enter Company Code 1000 and press enter. Then click on “New Entries”

Enter the trader’s name. After activating, save your entries. Create a newtransport if necessary.

Define Number Ranges for TransactionsIn this activity, you determine the internal number range to be used fortransactions related to Money Market product types.



Management � Transaction Manager � MoneyMarket � Transaction Management � Transaction Types �Define Number Ranges

TransactionCode

TAC1


N

Table: Product Type Transaction Number Range

ProcedureAccess the activity using one of the above navigation options and click .Then click on the interval change mode icon:

Enter the desired range:

After setting the ranges, save your entries. DO NOT TRANSPORT, this settingwill be validated in each client !

Assign Number Range Interval to Transaction TypeIn this activity you assign the number ranges previously set up to thetransaction types.

Prerequisite ActivitiesNumber ranges must be set up.


Management � Transaction Manager � MoneyMarket � Transaction Management � Transaction Types �Define Transaction Types

TransactionCode

SPRO


N

Table: Assign Number Range to Transaction Type

ProcedureAccess the activity using one of the above navigation options and click . :

Enter the desired number ranges:

After setting the number ranges, save your entries. Create a new transport ifnecessary.

Define Manual Reversal TypesIn this activity, you define the types for document reversals.



Management � Transaction Manager � GeneralSettings � Transaction Management � Define ManualReversal Types

TransactionCode

SPRO


N

Table: Manual Reversal Type



Define Reasons for ReversalIn this activity, you define the reasons for a document reversal.



Management � Transaction Manager � GeneralSettings � Transaction Management � Accounting � DefineReasons for Reversal

TransactionCode

SPRO


N

Table: Define Reasons for Reversal



Back up to the main table to see all entries:


Define Global Settings (for Payments)In this activity, you define the global settings for payments.



Management � Transaction Manager � GeneralSettings � Payment Management � PaymentHandling � Define Global Settings

TransactionCode

F8BG


N

Table: Define Global Settings

ProcedureAccess the activity using one of the above navigation options and click .Ensure the flags as shown below are checked.

After setting the flags, save your entries. Create a new transport if necessary.

Payment RequestsPayment requests are documents for generating payment media. As a rule,payment requests are generated automatically when you post due flows. Theseare then paid individually or jointly via the payment program for paymentrequests.

If Due Flow is set up for payments, then these IMG Settings need to be made:

Define Accounting CodesIn this activity, you create an accounting code for the Company Code for laterassignment to a valuation area.

Prerequisite ActivitiesCompany Code must be set up.


Management � Transaction Manager � General Settings �Accounting � Organization � Define Accounting Codes

TransactionCode

SPRO


N

Table: Define Accounting Codes


Create the desired entry:

After making the change, save your entries. Create a new transport ifnecessary.

Define Valuation AreaIn this activity, you assign the accounting code created previously to avaluation area.



Management � Transaction Manager � GeneralSettings � Accounting � Organization � Define ValuationArea

TransactionCode

SPRO

Table: Define Valuation Area


After setting up the valuation area, save your entries. Create a new transport ifnecessary.

Assign Accounting Codes and Valuation AreasIn this activity you assign the previously create Accounting Code to thepreviously create Valuation Area. This is also the configuration panel wherethe link to the General Ledger is established.

Prerequisite ActivitiesThe Accounting Codes and Valuation Areas must already be set up.


Management � Transaction Manager � GeneralSettings � Accounting � Organization � Assign

TransactionCode

SPRO


N

Table: Set Update to GL and Assign Acctng Code and Valuat.


After setting up the valuation area, drill into the screen to make further settings.

After making the appropriate changes, save your entries. Create a newtransport if necessary.

Define Update Types and Assign UsagesIn this activity, you define the Update Type for investment accruals.



Management � Transaction Manager � GeneralSettings � Transaction Management � Accounting � Accrual/Deferral � Update Types � Define Update Types and AssignUsages

TransactionCode

SPRO


N

Table: Define Update Types and Assign Usages


Click on New Entries and fill out the table and add AD1000, the other typesare standard SAP, adjust as appropriate:

Backup to the main screen to check your entries:

This is what ED1 210 looks like:

Assign Update Types for Accrual/DeferralIn this activity, you assign the update types to CLIENT and the flow tosecurities.

Prerequisite ActivitiesUpdate types must already exist.


Management � Transaction Manager � GeneralSettings � Transaction Management � Accounting � Accrual/Deferral � Update Types � Define Update Types forAccrual/Deferral

TransactionCode

SPRO


N

Table: Assign Update Types for Accrual/Deferral


Click on “Copy” or “New Entries” and fill out the table as appropriate:


Assign Update Type to UsagesIn this activity, you assign Use Types to previously created Update Types.



Management � Transaction Manager � GeneralSettings � Transaction Management � Accounting � Accrual/Deferral � Update Types � Define Update Types and AssignUsages

TransactionCode

SPRO


N

Table: Assign Update Types to Usage



Assign a Use Type for the Update Type:


Indicate Update Type as Relevant to PostingIn this activity you set update Types to either relevant to posting (i.e. update theG/L), or not relevant to posting (no update to the GL).

Prerequisite ActivitiesUpdate Types are configured.


Management � Transaction Manager � GeneralSettings � Transaction Management � Accounting � Link toOther Accounting Components � Indicate Update Types asRelevant to Posting

TransactionCode

SPRO


N

Table: Indicate Update Types as Relevant to Posting

ProcedureAccess the activity using one of the above navigation options and click . :


Return to the main screen and review your entry for accuracy:


Define Product Types (Money Market)In this activity you define or change product types related to money marketinvestments.



Management � Transaction Manager � MoneyMarket � Transaction Management � Product Types � DefineProduct Types

TransactionCode

SPRO


N

Table: Define Product Types (Money Market)



Return to the main configuration screen to revisit the requirements:


General Valuation Class for Money Market ProductTypesIn this activity you set up the valuation class for Money Market product typesrelated to money market investments (such as commercial paper).



Management � Transaction Manager � MoneyMarket � Transaction Management � Assign general ValuationClass

TransactionCode

SPRO


N

Table: Define Product Types (Money Market)


Define Product Types (Securities)In this activity you define or change product types related to Securities.

Prerequisite ActivitiesProduct Types must exist (or be created in this step)


Management � Transaction Manager � Securities � MasterData � Product Types � Define Product Types

TransactionCode

SPRO


N

Table: Define Product Types (Securities)


Drill down into the target area to change the parameters of the 04I producttype (or if necessary create new). All other Product Types will remain SAPstandard:

Return to the main configuration screen to review your changes:


Assign Repayment Types to Product TypesIn this activity you assign repayment types to Product Types.

Prerequisite ActivitiesBoth the Product Type and the Repayment Type must already exist.


Management � Transaction Manager � Securities � MasterData � Product Types � Assign Repayment Types to ProductTypes

TransactionCode

SPRO


N

Table: Assign Repayment Types to Product Types



Back up to the main configuration screen to view the change:


Define Company Code Dependent Settings for theProduct TypeIn this activity you set up certain parameters related to product types such asBonds. Parameters include the update to the General Ledger.



Management � Transaction Manager � GeneralSettings � Accounting � Organization � Define AccountingCodes

TransactionCode

SPRO


N

Table: Company Code Dependent Settings for Product Type


Enter information as required. “Settings for Accounting” determine whether ornot the General Ledger will be updated. Return to the main screen to checkyour entries. After making the appropriate settings, save your entries. Create anew transport if necessary.

Define General Classification for SecuritiesIn this activity you set up securities classifications for the purposes ofevaluation and reporting.



Management � Transaction Manager � Securities � MasterData � Product Types � Define General Classifications forSecurities

TransactionCode

SPRO


N

Table: Define General Classifications for Securities



Return to the Main Menu to review the change prior to saving:


Define Securities Account CategoriesIn this activity you determine how investments and debts will be handled onthe balance sheet.



Management � Transaction Manager � Securities � MasterData � Securities Account Management � Define SecuritiesAccount Categories

TransactionCode

SPRO


N

Table: Define Securities Account Categories


Make changes in the table as appropriate:

Define Transaction Types for Product TypesIn this activity you define the transaction types for each Product Type.



Management � TransactionManager � Securities � TransactionManagement � Transaction Types � Define Transaction Types

TransactionCode

SPRO


N

Table: Define Transaction Types



Return to the main menu to review your changes prior to saving:


Assign Flow Types to Transaction TypesIn this activity you assign flow types to transaction types.



Management � TransactionManager � Securities � Transaction Management � FlowTypes � Assign Flow Types to Transaction Types

TransactionCode

SPRO


N

Table: Assign Flow Types to Transaction Types



Assign Position Management ProcedureIn this activity you assign a Position Management Procedure.



Management � Transaction Manager � GeneralSettings � Accounting � Settings for Position Management �Assign Position Management Procedure

TransactionCode

SPRO


N

Table: Assign Position Management Procedure



Maintain Field Selection for Security Account MasterDataIn this activity you determine which fields are available for use in the SecurityAccount.



Management � Transaction Manager � Securities � MasterData � Securities Account Management � Maintain FieldSelection for Security Account Master Data

TransactionCode

SPRO


N

Table: Maintain Field Selection for Security Account

ProcedureAccess the activity using one of the above navigation options and click :


Return to the main menu to review your changes.

Delete other Company Codes using at the top of the menu.

Review your changes:

Click on “Field Selection” in the bottom left hand corner of the screen and thenon “General Data”. Make Changes as required. Return to the previous screenand repeat the last action for Bank Data. Note that there are two pages offields. Return to the previous screen and repeat the last action for AdditionalData. Return to the main screen.


Define Blocking FlagsIn this activity you defined flags for blocking purposes.



Management � Transaction Manager � Securities � MasterData � Securities Account Management � Define BlockingFlags

TransactionCode

SPRO


N

Table: Define Blocking Flags

ProcedureAccess the activity using one of the above navigation options and click :

Change as required or click on New Entries and fill out the table asappropriate:

Define Clearing Account for Payment RequestsIn this activity you assign the General Ledger Account to be used for paymentrequests.

Prerequisite ActivitiesGeneral Ledger accounts must be loaded.


Management � Transaction Manager � GeneralSettings � Payment Management � Payment Requests �Define Clearing Accounts for Payment Requests

TransactionCode

SPRO


N

Table: Define Clearing Account for Payment Requests


Enter the clearing account for Company Code:

After setting the clearing account, save your entries. Create a new transport ifnecessary.

Assign Accounting Principle to Ledger GroupsIn this activity you assign the accounting principle to the GL ledger.


Configuration SummaryIMG Path: Financial A � Financial Accounting (New) � Financial

Accounting Global Settings (New) � Ledger � ParallelAccounting � Assign Accounting Principle to Ledger Groups

TransactionCode

SPRO


N

Table: Assign Accounting Principle to Ledger Group


Fill out the table as appropriate:

Define Account DeterminationIn this activity you link General Ledger Accounts with processes within theTreasury Risk Management Module.

Prerequisite ActivitiesGeneral Ledger Accounts must be loaded into SAP and Account Symbols mustalready be set up.


Management � Transaction Manager � GeneralSettings � Accounting � Link to Other AccountingComponents � Define Account Determination

TransactionCode

SPRO


N

Table: Define Account Determination

ProcedureAccess the activity using one of the above navigation options and click .Highlight “Assignment of G/L Accounts to Account Symbols, Then click onNew Entries:

Enter the appropriate G/L accounts for each business process:

After setting up the G/L accounts, save your entries. Create a new transport ifnecessary.

Specify Update Types for Securities AccountManagement



Management � Transaction Manager � Securities � MasterData � Securities Account Management � Specify UpdateTypes for Securities Account Management

TransactionCode

SPRO


N

Table: Specify Update Types for Securities Account Management



Assign Update Type to Condition TypeIn this activity you assign Update Types to Condition Types.



Management � Transaction Manager � Securities � PositionManagement � Securities Account Management � UpdateTypes � Assign Update Types To Condition Types

TransactionCode

SPRO


N

Table: Assign Update Types to Condition Types



Assign Repayment TypeIn this activity you assign repayment types to product types.





Create and Assign DifferentiationIn this activity you differentiation that is required by the certain SAP IndustrySolutions such as Public Sector Management (SAP PSM).


ProcedureAccess the activity:


Return to the main menu and assign terms:

Additional Account AssignmentsIn this activity you assign any additional account assignments as needed.


Procedure

Access the activity:




Define Condition GroupsIn this activity you define any additional condition groups that may benecessary.


ProcedureAccess the activity .



Assign Condition Types to Condition GroupsIn this activity you assign the condition types to the condition groups.


ProcedureAccess the activity:



Data ConversionThere are several nuances involved in loading legacy data into the Treasuryand Risk Management module. A sample of them is discussed in the followingchapter. Also refer to the chapter on LSMW program creation.

Loading Data Treasury Risk Management – BondIssuesThe Treasury and Risk Management module (TRM) is different from true SAPsubledgers such as SAP Accounts Payable and SAP Asset Accounting. Forexample, it does not tie to a General Ledger (GL) Control account with thesetting of “Recon account for acct type” in the Chart of Accounts. Therefore theGL accounts for investment accounting and debt accounting can be posted todirectly, and standard SAP does not enforce the integrity between the GL andTRM like it does for true subledgers. Furthermore, the balance in the GL doesnot derive directly from the legacy load of the TRM module as it does for A/Pand other true subledgers. i.e. The GL load of investment and debt balances isindependent of the TRM load. This section will focus on loading data toTRM.

Source of the Conversion ObjectsOpen items that reconcile back to the General Ledger will be loaded into theSAP Treasury and Risk Management System from the legacy TreasuryManagement System.

Conversion DependenciesAll of the master data relevant to the data load must already be in the SAPsystem.

Input StructureSome of the legacy data may be manually input into the system since thequantity of data in some cases is quite low. In cases where an upload programis appropriate the upload file format must be tab-delimited text.

CrosswalkThe legacy to SAP crosswalk for TRM objects will be stored on the clientnetwork.

Accounting EntryThe General Ledger accounts utilized by TRM cannot be altered in theapplication. These accounts are “hard coded” into account determination andare only realized when the posting from TRM to GL is executed. Furthermore,some aspects of TRM never post to the GL and therefore have no associatedGL accounts. As outlined previously, for the purposes of the conversion thereis no integration between TRM and the GL. Flows related to the instrumentsloaded to TRM that occurred prior to go-live will never be posted to the GL.This is accomplished through the use of the TBB1_LC transaction (see screenprint below) which will be run after all of the data has been loaded to TRM.This transaction flags all of these legacy entries so that they will not post aspart of the normal TBB1 transaction. Note: TRM itself does not use any of theFinance Document Types

File Format/Field MappingsIn cases where an upload program is appropriate, the upload file format mustbe tab-delimited text.

Conversion Tool to be UsedManual and LSMW

SAP Table/Transactions to Support the Data ValidationEffortBalances in the TRM module must be validated using the TP13 report.

Creating and Running an LSMW forTRMIn this section you will learn how to use Legacy System Migration Workbench(LSMW) to assist your data conversion.

Preface and BackgroundThis section is an excerpt of a booklet that I published called “Easily CreateYour Own LSMW Data Load Program in SAP II”. As always I welcome yourcomments and input on improving this section on my Facebook page devoted tothe subject and titled “SAP LSMW”. It is assumed that the reader has access toan SAP test system so as to follow along with the instructions shown and hasthe authorization to use a tool like the Legacy System Migration Workbench,also known as LSMW.

Caution: do not practice LSMW techniques in a productive system.

IntroductionIf you’ve ever been involved with SAP, either as a consultant or as a user,you’ve inevitably encountered the need to load large amounts of data to thesystem. By large, I mean hundreds or thousands of records. The numbers are solarge that manually keying them in is impractical unless you have a staff of dataentry clerks. Even if you had such a staff, wouldn’t it be nice to simply have atool to load the records yourself?

That’s what LSMW is. The Legacy System Migration Workbench is a tool thatallows a non-programmer to load large amounts of data into the system.Hundreds, thousands, or even tens of thousands of records can be loaded intoSAP at a rate on the order of 5,000 per hour.

The tool itself is relatively simple to use, with no coding required. As we shallsee creating an LSMW is tantamount to recording a macro using a front endtransaction. The starting point is to decide on the actual transaction code thatyou intend to base your program on. For example, if you intend to create aprogram to load general ledger account master data record base your programon a transaction such as FS00.

Target AudienceThe instructions in this section are meant for functional people (consultants andsuper-users) as opposed to developers. Developers have their own toolboxthat includes LSMW and other resources that require coding. Functionalpeople are people who tend to be “from the business” side, with MBA’s,CPA’s, and other business type degrees prevalent. Developers will tend tohave degrees in computing science.

As mentioned earlier, functional people will be either consultants from animplementation partner, or “super-users” from the business. In a liveenvironment it is likely that the use of LSMW will entail special securityprivileges that only a super user would be given.

PurposeThe purpose of this section is to give functional people – consultants and superusers - a tool to load large amounts of data into SAP without the involvementof a developer. By large I mean up to 100,000 records. Anything larger thanthat may exceed the capabilities of this macro type of LSMW and may requirethe involvement of a developer.

Create Your LSMW ProgramNote: the following assumes that you have decided on the SAP transactioncode upon which you intend to base your program.

The ProcessIn an SAP test system access the Legacy System Migration Workbench bytyping in the transaction code LSMW.

Next, create your new LSMW program using the blank paper icon by creating aproject, sub ,etc.

After creating it click on the execute icon . (Note: to reenter a savedprogram just execute it). Your screen will look similar to the one shownbelow. You’ll need to give your program a name. It’s a good practice to prefixyour program with either a Z or a Y as that denotes that it was not created bySAP itself.

Double Click on the first step “Maintain Object Attributes” and switch to

change mode:

In change mode click on Batch input recording and click on overview

next to recording:

Click on the blank page icon and give it a name and description (at leastfour characters required).

In the next screen enter the transaction code which will be used to record yourmacro.

Click on the green check mark or hit enter to begin recording. The screen willlook familiar to you as it is simply the native transaction code and looks nodifferent than it does in normal circumstances. Enter the values you want toupload. If a field is populated, but you want to ensure it as part of the loadprogram you are building, then click on it (you don’t need to change it).

After saving the transaction you get the screen shown below. Click on each ofthe highlighted fields and add a name and description. If it is not part of theprogram delete it using delete screen field (for example I deletedRa02s_nassets because it was just “number of assets” to create and it was notrelevant to my situation). If you don’t want a default, clear that field.

Save and exit until you get back to the screen where the recording was kickedoff and enter the new recording name that you created earlier into the field for“recording” and save.

After saving you get back to the screen below. Click on Source structures,switch to change mode, and click on the blank piece of paper to create anobject. Give it any name.

Save and backup. Click on the next item (you will be moved thereautomatically by SAP). Switch to change mode and then click on tablemaintenance in the screen below:

The next thing that you will see is the table that designates how your load filewill appear. If it exists already use it to create the table; if it does not you arefree to design it however you want but the load file must match it. The tableitself is free form (i.e. nothing is auto populated). This represents the layout ofthe text tab delimited flat file that you will upload (which usually derives froma Microsoft Excel spreadsheet). Note that no special characters or blanks areallowed in the first column.

Save and exit. This will move you automatically to the next step in the LSMWbuild process (Maintain Structure Functions).

Do not fill in this object. Instead, move to the activity Maintain Field Mapping

and Conversion Rules. In this screen click the change icon :

Highlight the field you want to map and click assign Source Field by clickingon the blank page icon .

Attach each field from the load file to the above items as below. Ignore amessage that the source field is longer than the target field. The screen belowrepresents the view after everything has been assigned. Don’t forget to saveyour work.

Assignment of Fixed ValuesMost objects will be derived from your load file. For fixed values go intoMaintain Field mapping and switch to change mode.

Click on the field that requires a fixed value and click on “Rule”.

Choose “Constant”.

The screen looks like this after:

Save your work and return to the main LSMW creation panel.

Source SpecificationIn the main LSMW creation panel, click on “Specify Files” and then on thefirst item below to access the file from your hard drive and switch to change

mode :

Assign your text tab delimitedtest file. After that is done enter any name in the second field.

Change the settings to match those shown below (Tabulator, Field Names atStart of File, Record End Marker and ASCII):

Click on Save . If the system issues an error message that you exceeded themaximum length for either Imported or Converted Data, shorten the length asrequired. Exit to the main screen where you will automatically be positioned inthe next activity. You don’t have to assign a file because you only have one.Therefore, ignore “Assign Files.”

Your LSMW is complete and ready for use.

Run Your LSMW ProgramThe remainder of the steps in the LSMW panel relate to the process ofperforming the load. At this point we will assume that you’ve tested yourprogram and that if functions correctly. Regardless, the mechanics of testing forrunning a “live” LSMW program are identical. It begins with reading the datainto your program, proceeds to converting so that it can be read by SAP, andthe final step is executing the batch program to perform the data load. The laststep moves you to the embedded transaction SM35.

Step One: Read Your Data

Note: This is a mandatory activity.

In this first step your text tab delimited file is read into the program. The nameand location of the file was determined in the preceding section called “SourceSpecification”, as was the format. Typically the file was first created inMicrosoft Excel and saved in the new format without headers in the first row.Begin the step by clicking .

Your results should look similar to this:

Back up and return to the main screen to continue.

Step Two: Display Read Data

Note: this step is optional.

If you have problems in step one, go to this step to assist in troubleshooting. Ifno issues arose in Step one skip this step and proceed to Step three.

Step Three – Convert DataNote: This is a mandatory step is mandatory.

In this step you’ll convert the data that you imported in step one, into code thatSAP can read. Click on execute .

Your results should look similar to this:

Step Four – Display Converted DataNote: This is an optional step.

In this next step you’ll display the data after it is converted into a form thatSAP can upload. This step should only be executed if problems arose in theprior steps.

Step Five – Create Batch Input SessionNote: This is a mandatory step.

In this step a batch input session is created that will be executed in the nextstep. Click on the activity.

After entering the activity your screen will look similar to that shown below.Click on execute .

If you are successful you will receive a message like this:

This message indicated that the batch input was created and is now resident inthe SM35 screen. Proceed to Step Six.

Step Six- Initiate LoadThe final LSMW step is to initiate the batch input session. After completing thepreceding step you’ll be move to the next activity.

Click on the activity . Advanced users of SAP will recognize the screen thatyou are in. It is transaction code SM35, used by many other activities in SAPaside from LSMW.

Highlight the row that represents your batch input session. Since it has neverbeen processed it will have a blank page icon in it. The number of items in

your load are indicated in the column shown with a above it. With the rowstill highlighted execute the process by clicking .

The following screen will pop up.

Click on the radio button for “Background” so that the process runs “behind thescenes” rather than in the foreground. Running in the foreground tends to beextremely time consuming. Error mode is less time consuming, and a usefulanalysis tool should your background job fail. Accept all other defaults. Oncethe settings are made, click on Process. The following message will pop up:

Unfortunately there is no refresh button, but you can simply hit “Enter” torefresh or back up to the main screen and re-enter. After an appropriate amountof time (depending on how much data was in your batch), reenter the SM35screen.

If your job was successful it will no longer be in the queue (i.e. it willdisappear from the SM35 screen) as shown in the following screen print:

To view the log file click on . The log will look similar to this:

This log indicates success and the process is complete. If upon reentering theSM35 you find that your job is still there with records in the error column,you’ll either have to repair the load file or fix the program. After fixing theissue, return to step one and repeat the process. If the job is still there with a indicator it is not finished processing. Exit the screen and return when the jobis finished.

If your job completed successfully, congratulations! You are now an LSMWexpert.

Tips and TricksHere are a few tips and tricks to help you create your own LSMW’s:

Remember to save frequently as you do steps! Keep your load file name short.Do a screen print of the file layout you create to help you prepare theload file.You can view all of your batch jobs in transaction code SM35. Youcan also view job logs for successful loads.Run the LSMW in background except to process errors.To prevent your LSMW program from overwriting fields that arealready populated mark it as “only if Source Field Not initial” in theChange Field Mapping and Conversion Rules Screen as shown

below: Most data loads will not require any complex translation rules. If someare required the screen above is the tool to assist you.A constant can be inserted using the Field Mapping and Conversion rules

as shown below:

The BenefitsMy hope is that by providing this tool to functional consultants and super usersseveral benefits will be realized:

Faster ability to react to situations that require the quick load of data.Eliminate the need to do a functional specification document (whichis a communication tool between the functional resource and thetechnical resource).Reduce work by reducing direct data entry.

Conclusion The Legacy System Migration Workbench is a great tool for loading data intoSAP. It does not require any direct coding to be effective and, with training,can be used by any functional person or super-user involved with SAP.

Appendix: A Summary of SAP BestPracticesThis is a summary of the best practices described in “SAP Best Practices” byLawrence Compagna, CPA:

1. Do not allow any core modifications to SAP code.2. Any development in SAP should be prefixed with either a “Z” or a

“Y” to place it in the customer name space.3. Standard SAP should be an 80% fit for your business processes.4. A technical upgrade should precede a functional one.5. The phased project approach is the best practice (versus a “big

bang”).6. An SAP project must never exceed one year in duration.7. Observe the one to one rule: every external consulting staff member

is matched to one from the business.8. The as-is state must be studied to derive the true business

requirements.9. Integration and user acceptance testing must be scenario based.

10. A string test should precede the integration test.11. The financial data conversion should be based on loading the trial

balance after it has been closed to retained earnings.12. When financial data is involved go-live must be the first day of the

fiscal year.13. Training, security, and user acceptance testing should be linked.14. Configuration should be performed by the business, not its

consultants.15. Financial reconciliations by qualified accountants must be part of

testing.16. Configuration should only be possible in development clients.

Production, test, and quality assurance clients must always belocked.

17. Observe the “vanilla” SAP philosophy. Business processes must bechanged to fit into those supported in standard SAP.

18. “As at” balances should be loaded into SAP. Transactional datashould not be.

19. Functional people must do their own data conversions using LSMW(see Appendix for “how to guide”).

20. Custom applications should not be in sap (i.e. those with containingdata entry points and multiple tables).

21. Custom reports should not be in the first phase of an SAP project.They should be in later ones.

22. The first phase rolls out established sap modules that are a good fitfor the business.

23. Four best practices for go live date: - In a live SAP system non-fiscal year dependent changes shouldnot go-live at the end of the fiscal year.- Fiscal year dependent changes should go live at the beginning ofa fiscal year.- For payroll related changes go live on a non-pay week betweenApril and November.- Go live on a holiday weekend (if possible).

24. Historical data must not be loaded.25. Cut an interface from scope if it won't cause an additional SAP

module to be implemented.26. Cut and SAP module from scope if it won't necessitate the build of an

interface.27. If financial processes are involved the SAP General Ledger must

always be in scope.28. Payroll projects should be done on their own.29. Keep the team size lean.30. For projects extending over multiple jurisdictions (country or county

for example) use a template approach. Roll the template out overtime.

31. Perform due diligence early in the project to determine the degree offit between as-is business processes and those in SAP.

32. When a process is a bad fit for SAP either build an interface to aprogram that better satisfies he requirements or push it out of scope.

33. Mini-modifications, Z-programs, and Z-tables should not be includedin the initial scope of a project. Core modifications should never bepart of it.

34. Each module has an expert advising on its implementation.35. Create a resource loaded project plan early in the first phase of the

project.36. The Project plan is initially created top-down, refined with bottom

up participation, and controlled centrally.37. Project managers must vigilantly reduce scope.38. Blueprint documents must show a clear relationship between the as-

is and the requirements.39. A “c level” project sponsor must adamantly demand only standard

configurable SAP processes be employed.40. Prototyping should begin in the blueprint phase.41. All large SAP projects must have a change management team.42. All development requires senior management approval.43. Halt the project until Blue Prints are signed off.44. Use a requirements traceability matrix to track business requirements

to their finish.45. Use on-site resources, not offshore.46. Safeguard the integrity of the golden client. No transactional data is

allowed.47. Unit testing must be informal.48. Configuration must be done by a member of the organization

implementing SAP with their expert advisor looking over theirshoulder.

49. Use transaction code SCC1 to support the unit test process.50. All transaction codes must be contained within both integration and

user acceptance tests.51. Signatures on the user acceptance test are required for every script

before the project can progress from the realization phase to theproject preparation phase

52. The realization phase should have the longest duration.53. Do not go live if there are significant "show-stopper" issues.54. When possible close all financial open items, for example payables.55. At the end of the project set the SAP productive indicators

56. Have plans for the following: risk management, change management,and training.

57. Have published policies for key items like core modifications.58. The security team must piggy back on the work of the training team to

ensure that only those who have been trained have access to that partof the SAP system

59. Four day onsite schedule for travelers, ideally Tuesday to Friday.60. Subject all functional and technical specification documents to a peer

review.61. Consulting module leads must fit this profile: they are certified by

SAP, have participated in multiple go-lives, have ten or more yearsof experience, have the right academic background, and were expertsin the subject area prior to SAP. They are also fluent in the languageof the project.

62. The business must have the right to interview and refuse theresources the consulting firm wishes to place on the project.

63. Organizations implementing SAP must engage an SAP qualityassurance consultant to assess the consulting firm’s quality of work.

64. Use Dice.com to supplement your staff.65. Incubate new talent as you implement.66. The authors of configuration meant for production must be from the

business. They must also document the configuration as they performit.

67. Only consulting leads have the ability to release transports.68. Maintain a skill set risk profile and plan.69. The best practices for project location and conditions:

- The setting should be a “war room” environment consisting of a bigopen area suitable for the entire team at its maximum size.

- The entire on site team must be housed there, and it should be near theproject sponsor and other key external people.

- The environment should be healthy, with access to flu shots, fitnessfacilities, coffee, and food.

70. Because it lowers travel costs and benefits staff retention every SAP

project must have a limited work from home policy.71. Use Skype and other video conferencing technologies to aid the

offsite worker.72. The project must consist of the right mix of expert, senior, junior,

administrative, and clerical personnel. Senior people costing theproject hundreds of dollars per hour shouldn’t be doing clericalwork.

73. In project preparation everyone on the team should have a functionalbackground. A Basis person is the first technical member on-boarded.

74. Development people are not required on the project team untilsometime during the second phase (blueprinting).

75. The time and materials type of contract is best for both the businessand the consulting firm.

76. For external consulting companies susceptible to litigation: lessonslearned workshops are a bad practice, not a best practice.

77. For external consulting companies susceptible to litigation: if thereare major issues do not communicate about them in writing and avoidtaking notes.

78. For external consulting companies susceptible to litigation:incorporate “litigation proofing” sessions into your routine teammeetings.

79. Deviations from standard configurable SAP settings must requiresign-off from both the project sponsor and the senior manager of theimplementation partner.

80. Contract stipulates that only "vanilla" SAP will be implemented.81. Contract stipulates that network and data center environments are

stable during the SAP project. Events such as data center moves arenot permitted.

82. The best practice for SAP reports or programs that you wish tomodify is to copy the standard into a "Z" version and attach a "Z"transaction code to it

83. Transactional data is not permitted in the golden configuration client.84. To prevent the posting of transactions in the golden client close all

periods in the Finance module (transaction code OB52), Controlling(transaction OKP1), and Materials Management (MMPV).

85. Transaction code SCC1 must be used to keep the unit test client insync with the golden client; have team leads sign off that alltransports have been “SCC1’d” into the unit test client: have theBasis team report monthly on transports that are in the golden clientbut not in the unit test client; perform a scheduled year-end annuallyin the unit test client.

86. The user acceptance test (UAT) is the key risk control device for theexternal consulting firm.

87. Each defect uncovered during integration or user acceptance testingmust have a regression test plan. The plan must carry an assessmentof the materiality of the change (high, medium, low), as well as oneconcerning its impact on other downstream modules.

88. Smart numbering should not be used in SAP.89. Only security by transaction code is encompassed in the plan.

Explicitly spell out in the contract and other formal projectdocuments that no other types of SAP security will be employed.(E.g. There will be no security by document type, cost center, orgeneral ledger account.)

90. The project team must not be burdened with undue security restraints.91. Have a documented contingency plan to handle unforeseen issues. It

should demonstrate that the initiative has sufficient budget, slack,redundant resources in key positions, and a plan to handle turnover.

*****

Glossary of Terms

ABAP

ABAP is the programming language that the SAP Enterprise CentralComponent is written in. Those who code it are often called "ABAP'ers".Though SAP is an off the shelf system, there are still valid times when ABAPcode must be added to the system by your own programmers. These includecorrections that are sent by SAP, or available in through OSS notes (seeglossary), and user exits.

Account Assignment Element

An account assignment element refers to the individual accounting assignmentsmade on a given document. The elements may support financial, management,cost, fund, project, or any other type of accounting.

ASAP

ASAP, short for "accelerated SAP", is the traditional term for the SAPmethodology project management methodology promoted by SAP since at leastthe mid 1990's. It has gone through variations and name changes over the years(e.g. "Value SAP"), but the term ASAP has been persistent among SAPprofessionals for many years.

Authorizations

Authorizations refer to the security profiles set up for each user that control

what the users can create, modify and change. At their basic levelauthorizations control access to transaction codes. These transactions codesare then grouped into user roles which are then assigned to users.

Basis

Basis refers to the technical infrastructure of the SAP system. It includes thehardware, the software, and the connectivity of the system. It also refers to thetechnical settings of the system.

Basis Team

The Basis Team is responsible for the setup and maintenance of the hardwarethat the SAP software resides on, the application of the software to thoseboxes, and maintenance of those boxes. They are also responsible for the highlevel technical settings of the system.

Best Practice

The term best practice is term used quite broadly and often with no supportingevidence to show that a practice is in fact "best". Standard configurable SAPprocesses themselves are based on best practices. Methods considered "best"practices in this book (such as the prohibition against core modifications) arebased on experience.

Big Bang

A big bang implementation is one where the full breadth of desiredfunctionality is deployed. For example, it could include modules from thehuman resources, financials, and logistics areas, in addition to CustomerRelationship Management and Business Intelligence. Aside from functionality,the term big bang could also be used to refer to the deployment of SAP to everybusiness unit, and every geographic area (including all countries where theorganization operates). See also "Phased".

Blueprint

A blue print is the primary design document for the "to-be" vision of the SAPsystem. Best practice is that it is based on requirements gleaned from a study

of the subject organization's "as-is" process. It usually includes a discussionof gaps between requirements and SAP functionality and how they will beovercome.

Bolt-on

A "bolt-on" refers to a software package that is used to perform functionswithin SAP, but that is not part of the integrated SAP Enterprise CentralComponent system. Most often they are made by firms other than SAP, forexample by one of the many sales and use tax package vendors (Vertex forexample).

Bolt-ons can further be differentiated into those that were made by SAP, thosethat are certified by SAP, and those that are not certified by SAP. Obviously thenon-certified software packages carry the most risk.

Box

A "Box" refers to a physical computer processing unit (CPU). From aconfiguration perspective the key consideration is that cross clientconfiguration cannot jump from box to box, but this type of configuration canaffect all of the clients within the box that it is housed in. Most configurationitems are not cross client, so they only affect one particular client within thebox.

Break Fix

After an SAP system has "gone live" and entered the support phase, a break-fixis any defect which is contrary to what the approved business blueprint and thefunctional specification documents say.

Business Process

A business process is a series of activities and SAP transaction codes thataccomplish a business task. An end-to-end business practice, or a "cradle-to-grave" business process is one that traces the activities back to a trigger pointand then carries the activities through a number of steps and a number of

transaction codes (that often cross SAP modules), until it reaches a pointwhere no further action is possible.

Certified

The term "Certified" can be used with reference to a person who has gonethrough one of the SAP academies for disciplines such as financials andcontrolling, human capital management, or public sector integration. It can alsorefer to complimentary third party software that has been "certified" for usewith SAP.

Client

A client is an organizational unit where multiple company codes (an SAPorganizational structure representing a distinct legal entity) are contained. Mostconfiguration items do not cross clients, but there are some configurationactivities that are cross client. As the name suggests, these are configurationchanges that will affect all of the clients within a box.

Company Code

A company code is an SAP organizational structure representing a distinctlegal entity. In the private sector these are usually incorporated entities thatrequire a separate profit and loss statement and a separate balance sheet forstatutory financial reporting.

Configuration

Configuration refers to the setting of flags, switches, and calculations in theSAP Implementation Guide (also called the IMG). These activities turn off andon standard SAP code. The processes that result are built on best industrypractices.

See the Glossary entry for "Implementation Guide" to see a screen shot of it.

Controlling Module

The Controlling Module is the name given by SAP to the area that contains thefunctionality for management and cost accounting. It is abbreviated as CO, andcontains its own ledger that operates parallel to the General Ledger of theFinancial (FI) module.

Conversion

For our purposes this refers to the conversion of data from the legacy system tothe New SAP system. The data could be master data, table data (for examplechoices in a configured list of responsible managers), and occasionallytransaction data.

Core Modification (also known as a "Core Mod")

A core modification involves the insertion of ABAP code into a standarddelivered SAP program, where no provision by SAP has been made to do so. For example, if transaction code FB01 is not a perfect fit for a businessprocess, the insertion of code that enhances the functionality so that it moreclosely fits the business process is a called a core modification (assuming thatSAP did not provide something like a user exit to facilitate this action). Theinclusion of code in such a manner voids SAP's warranty and support for thisspecific transaction, so if there are problems with it you cannot rely on SAPfor a fix.

Furthermore, future upgrades will overwrite your code with the original code,essentially breaking your process. When you upgrade, you will also besusceptible to changes that SAP has made to the process and the transactioncode that may no longer be compatible with the enhancement your team made.

There are also changes that you can make in the configuration panel (i.e. theImplementation Guide or the IMG) that require a developer key. For ourpurposes we will call these "mini" core modifications. The fact that adeveloper key is required serves as a warning that a core modification may bein process.

The concept of a core modification does not include changes where SAP hasdesigned a break point in their code where you can insert your own script. This is called a user exit, and it is not considered a core mod. The importantdistinction is that SAP has designed it so that you can include your own code ina user exit, and an upgrade will not over write this change.

In addition, the concept of a core mod does not encompass Z programs, Ztables, or Z transactions. The use of the "Z" prefix places the objects in thecustomer name space. By placing a Z object in the customer name space it

will not be overwritten by an upgrade (as opposed to core modifications thatwill be overwritten). Thus if you have a developer copy the transaction codeFB01 into a new transaction code ZFB01, and then copy the underlyingprogram of this transaction SAPMF05A to ZSAPMF05A, any modificationsyou do to this Z program are not a core mod. Consequently the best practiceshould you absolutely need to make changes is to copy native SAP code andprefix it with a Z before you make your alterations. However, the new Zprogram is still susceptible to future changes to SAP and will not be supportedby them. In this scenario you still have the original code of the originalprogram intact and you can revert back to it at any time in the future.

Customer Message

A customer message denotes a message created by an SAP customer relating apossible product error in the software. Customer messages are created in theSAP online support system (which is referred to by the unofficial acronymOSS).

Cut-over

Cut-over refers to the time period when a number of steps, defined by the cut-over plan are initiated and carried out, eventually culminating in the officialgo-live day. The cut-over period usually extends for as long as a month beforeand a month after the go-live date.

Development (activity)

In SAP, the concept of development means any activity other than configuration(see definition earlier) that adds ABAP code to the SAP Enterprise CentralComponent system functions or creates code for the purposes of interfacingwith the SAP Enterprise Central Component system.

Development (client)

Development in the context of the system landscape refers to the client wherethe initial configuration or ABAP development work is done. These clientsreside on physical boxes that are different than those used for quality assuranceor production purposes.

End-user

An end-user is a member of the business who uses SAP to conduct the day-to-day business of the organization.

End-user documentation

End-user documentation is an instruction manual intended to help the peoplewho conduct the day-to-day business of the organization on the live SAPsystem.

Enhancement

The term enhancement is very general in nature and can refer to one of manypossible changes to a live SAP system. The enhancement could beaccomplished by making changes exclusively in the SAP ImplementationGuide, through the use of ABAP programming, or by some other form ofprogramming. Enhancements are very controlled, with their movement throughthe SAP landscape accomplished via transports that are moved by the Basisteam.

Enterprise Central Component (ECC)

The Enterprise Central Component is the core of SAP's product offerings. It isthe system SAP has built to handle most business processes within anorganization. It comprises a multitude of modules in a highly integrated real-time system that can handle logistics, financials, and human resources. The"hallmark" of the SAP Enterprise Central Component is the real-timeintegration between the modules within it.

Enterprise Resource Planning (ERP)

Enterprise resource planning, also known as ERP, is a blanket term for manydifferent software packages that can run a wide variety of business processes.SAP is the leading vendor of ERP packages.

Functional

Functional refers to the business aspect of data flow within SAP. For example,

the function of the system is to post vendor invoices. See also "technical".

Functional Specification

A functional specification documents the way a certain report, interface,conversion program, enhancement, form, or workflow is meant to work from abusiness perspective. Specifically it lists the business requirements. See alsotechnical specification.

Functional Team

The term "functional team" refers to those people who are involved in how thestandard SAP system functions from a business perspective. These people tendto be business people: people who were managers, business analysts,accountants, and engineers prior to working with SAP. They will usually havedegrees in business, MBA's, degrees in disciplines like mechanical or civilengineering, or CPA's. Configuration of the standard SAP processes isundertaken by members of this team. This group works with the technical teamby providing them functional expertise as they develop objects like interfaces.

Gap (functional)

In the world of SAP a functional gap indicates a functional deficit betweenwhat SAP standard configuration can support, and what the business requiresin a certain business process. There are also other gaps within the frameworkof an SAP project such a technical and performance, but it is most commonlyused with reference to business functionality.

General Ledger (GL)

General ledger is a common accounting term denoting the main ledger thatstatutory financial reports are derived from. In SAP this module is part of thefinancials module (SAP FI).

Golden Client

The golden client is the starting point for all system configuration that is meantto be migrated to the production client. It is located in a development box andcontains only configuration and master data. Transaction data is not allowed inthis client because it precludes certain kinds of configuration from beingchanged in the future (for example: the Funds Management Update Profile).

Go-live

The term go-live is the prevalent term in the world of SAP for the formal daythat the system is viewed as being activated for general use in the business. Usually this means the first day that most end-users are able to log in and carryout their day-to-day duties. See also "cut-over".

Industry Solution

The SAP Enterprise Central Component is available in different industrysolutions, for example: SAP Insurance, SAP Banking, SAP Public SectorManagement, and SAP Utilities. Each industry solution has slight variations tomake SAP more applicable to the industry. For example: the utilities versionhas a different nomenclature for SAP Plant Maintenance (PM) objects and usesa unique billing and invoicing solution (ISU Billing and ISU invoicing),whereas the public sector solution has a unique tool called FMDerive to aid in

its unique fund accounting and budget requirements.

Below is a partial list of SAP Industry Solutions:

Implementation

For our purposes, an implementation refers to the initial installation of SAP, orpart of SAP. A Greenfield implementation refers to an implementation whereno SAP system has previously existed.

Implementation Guide (IMG)

The Implementation Guide (abbreviated to IMG) is the part of SAP whereconfiguration is performed. In the IMG, all of the standard SAP functionalitycan be turned on, turned off, and modified to the extent that standard SAPallows. Tables used for drop down menus can also be populated, as cancalculations. The IMG can be accessed through the transaction code SPRO.

Because of the power of the IMG, it is carefully controlled. It cannot beaccessed at all in any client by most users. Configuration personnel haveaccess to it the development client, but have read-only access in the qualityassurance and production environments.

This is what the implementation guide looks like:

Implementation Partner

An organization that is intent on implementing SAP, or any other large projectinvolving SAP, will usually hire an implementation partner. The"implementation partner" refers to a firm that has expertise in SAP (and

business transformation in general) that will help the business achieve theobjectives of the project. Generally speaking the implementation partner willalso assist the business in avoiding unnecessary risk when implementing thesoftware. Another term for implementation partner is software integrator orsystems integrator.

Instance

Sometimes different SAP landscapes (see definition) are required to supportdifferent geographic regions (for example one in Asia, one in North America)or when multiple industry solutions are required for one organization (forexample: an organization that needs to run the SAP utilities solution and theSAP public sector management version for different aspects of their business.

Integration

Integration refers to data flow between modules. SAP is referred to asintegrated because data entered once into the system flows seamlessly betweenmodules in real-time.

Integration Test

Integration testing refers to the testing of an end to end business process (alsoknown as cradle to grave testing). The trigger for the beginning of a process isidentified and that is where the test starts. The process continues from SAPmodule to SAP module until it is complete. The process tends to be quiteformal with a script that is usually based on real life scenarios in theorganization.

Interface

A program built to handle the data flow between the core SAP EnterpriseCentral Component program and external programs. Usually these externalprograms are not manufactured by SAP.

Landscape

In the world of SAP, a landscape refers to a complete infrastructure thatsupports separate development, testing (staging), and production boxes (see"box"). This three tiered landscape is considered a minimum, there are often

more environments than this at an SAP installation site.

Legacy Systems Migration Workbench (LSMW)

The Legacy Systems Migration Workbench is a tool provided in the standardSAP Enterprise Central Component for converting data into SAP.

Lessons Learned Session

"Lessons Learned" workshops are a series of meetings conducted in theinterest of continuous improvement to improve the implementation process byexamining what worked and what did not work. From a legal perspective, sucha session will be closely examined should litigation arise down the road (referto the section on litigation proofing for more information).

Live

In the SAP world, a “Live” system is one where the productive system is ingeneral business use. Such a state follows the day of “Go-live”.

"Mini" Mods

For our purposes a modification to SAP code that is facilitated by SAP itself iswhat some professionals in the industry call a mini modification, or a "mini-mod" for short.

Included in this definition of mini mods are user exits, customer includes, s-mods, and c-mods. An example of such a change to SAP is the change of thelabel for the field "Cost Center" to "Department".

There are also changes that you can make in the configuration panel (i.e. theIMG) that require a developer key. For our purposes we will call these "mini"core mods as well.

Extending our definition, there are items in the configuration panel (i.e. IMG)that SAP strongly recommends that you do not change, however these items donot require a developer key to alter. Unfortunately, there are no system controlsto prevent such changes by your configuration personnel.

Mini mods, like core mods, are susceptible to being overwritten in an upgrade(though much less so). The Basis team can run job prior to an upgrade whichshows all such objects contained in your SAP system.

Though these changes are minor compared to a true core mod, it is stillrecommended that they be avoided because they tend to cause problems lateron during the support phase of the project, especially during upgrades.

Module

The SAP Enterprise Central Component is divided into a series of modulesthat are specifically designed for a general function. For example, managementand cost accounting are handled by the Controlling module, also abbreviated toCO. The Materials Management module, also called MM, is designed tohandle the logistics of physical materials processing.

When a company buys the SAP Enterprise Central Component, they receivesoftware that has all of these modules in it. None of them are active until theconfiguration teams activates them, but they are all present Thus, anorganization may be running on SAP, but they do not realize the code for an outof scope module like Quality Management (QM) is already in their productivesystem lying dormant.

Also, generally speaking, all of these modules are seamlessly integrated in realtime. If you enter data in one module, it is passed on to all subsequent modulesand never needs to be entered again. This powerful integration is the hallmarkof SAP.

There are a few modules that are not integrated real time to the general ledger,such as contract accounting (FICA), but they are by far in the minority.

OSS (Online Support System)

The term "OSS" is the informal term used by people involved withimplementing and supporting SAP to refer to the system provided by SAP toresearch issues that often cannot be resolved through configuration or usertraining. The acronym OSS has survived from a time when SAP's help systemwas called the "online support system". The same system has since gonethrough several name changes.

Often the OSS system provides corrections that can be applied to your systemto resolve the issue. In order to access the OSS system your BASISadministrator must create an ID for you to use that requires a password.

Using the OSS system you can also set up access for SAP to review the issuein your system and give you an opinion. This will sometimes result in SAPlogging into your system and directly fixing the problem, or developing a fixspecifically to resolve the situation.

OSS Note

An OSS note is a document found in SAP`s online support system repositorythat contains information that can be used to resolve a problem in its software. Many OSS notes contain Corrections, which contain code that can be used topatch the system, while other notes contain programs that can fix the problem.Some OSS notes contain recommendations on how to solve the problemwithout the use of additional code or programs.

Below is a sample of what the SAP OSS database looks like as at the time ofwriting. (Courtesy of SAP AG)

Package Slam

A package slam is a somewhat derogatory term used by SAP professionals todenote an SAP implementation where short cuts from best practice are used tocompress the timeline of the project. Short cuts can include: no blueprint or ablue print without a review of the as-is, functional or technical specificationdocuments are skipped, or less (or no) integration and or user acceptancetesting cycles. Package slams are extremely risky for both the business and theimplementation partner. A package slam is often motivated by onerous

obligations in a contract.

Phased Approach

A phased approach attempts to break up what would be much larger SAPproject (with a much bigger scope) into a series of smaller projects with atighter scope. Such an approach presents less risk to the business.

Production

Production refers to the actual client that the organization performs its day-to-day business on. It is a carefully controlled environment and one whereconfiguration is not possible.

Project Management Office (PMO)

The project management office is as general term for the team in charge of thegeneral management of an SAP project. It includes the project directors,project managers, and administrative staff.

Prototype

A prototype is a configured SAP demonstration system usually created in asandbox environment for the purposes of presenting the business with apreliminary view of the proposed SAP solution. It is sometimes called a"straw man".

Quality Assurance Client

The quality assurance client (also known as QA) is the client where integrationtesting and user acceptance testing are performed. This client always resideson a physical box different than the boxes where the development andproductive instances occur.

Real Time

In system integration the term “real time” refers to integration betweenmodules that does not require a batch program to be run. In real timeintegration, data passes from one module to another immediately. In particular,accounting data from sub-ledgers like accounts payable are summarized andsent over to the general ledger immediately. For example, if you post a

document in the accounts payable module and look at the general ledger for theaccount that was credited you will immediately see the impact.

Realization

The aspect of an SAP project concerned with actually building the SAPsolution, either through the use of the configuration panel (the IMG), or throughdevelopment.

Reconciliation

The term reconciliation is a general accounting term. It refers to the activity ofproving that a financial balance is correct using various accounting methods. One of the best known reconciliation is that of the bank account. The generalledger bank account balance is simply compared to the statement produced bythe bank. An itemized statement accounting for differences between the twobalances is used to prove the integrity of the general ledger account.

Refresh

A refresh refers to the copying of data and configuration usually from theProduction client to another client, often the quality assurance client or asandbox.

Regression Test

A test performed to assure that functionality that had previously performedsatisfactorily still functions correctly after a change has been put through thatcould have negatively affected it.

Re-implementation

Occasionally a new SAP implementation replaces a preexisting SAPimplementation in its entirety. In such an implementation the old SAP system istreated like a legacy system and all other phases of a normal SAP green fieldimplementation are carried out. There are several reasons to do a re-implementation: the prior implementation may have been a poor one with themodules not being used in the way they were meant. Another reason is thatthere may have been a number of core modifications done to the old system thathave made upgrading to the latest version of SAP impossible.

The term can also be used for the re-deployment of a module or severalmodules to replace the exact same modules in an existing SAP system. In thiscase the module or modules are “re-imagined” in a new business blueprintingphase and the system is reconfigured according to the new design. There aremany situations where a reimplementation of a module(s) may be required: itmay have been a bad implementation with the modules not being used in theway they were intended, or a new factor may have emerged that may havenecessitated a complete overhaul of the way the module is used (for example achange to International Financial Reporting Standards).

Release Notes

SAP's Release Notes highlight the differences between a previous version andthe one that these notes document. They can be found in SAP's service portal.

Request for Proposal (RFP)

An invitation sent by an organization to a select group of vendors inviting themto put forth a proposal (for SAP integration services for example).

Requirements

The term “requirements” refers to the business needs of an organization thatunderlie certain functions and processes. For example, if an organization isutilizing International Financial Reporting Standards then one of the businessrequirements of the SAP Asset Accounting module is that it carries a book ofdepreciation that is in accordance with those standards.

Requirements Traceability Matrix

A requirements traceability matrix is a document that lists every businessrequirement discussed in the business blueprint and then traces therequirements through each configuration and testing phase so that there isvisibility as to the status of the requirements being satisfied. The requirementstraceability matrix can also be used to indicate the status of the project as awhole.

RICEFW

The acronym RICEFW refers to the combined development objects of Reports,

Interfaces, Enhancements, Forms, and Workflow.

Sandbox

A sandbox is an actual computer processing unit loaded with a copy of SAPthat is not attached to the transport landscape. It is wide open to configurationand has little if any security to impair the free experimentation with differentImplementation Guide (IMG) set ups.

Scope

The scope of an SAP project refers to the breadth of functionality to bedeployed, the modules to be deployed, the interfaces to be deployed, andsometimes the custom development that will be generated from a project.

Scope Creep

Scope creep refers to an increase in scope such that the scope is now biggerthan it was originally envisioned.

Script

A script is a testing document that is used in various tests, especiallyintegration and user acceptance. It is usually scenario based in that itincorporates a real life trigger to a chain of business transactions andprocesses, and follows them right through to the last possible event in thechain.

Security

The term “security”, when used in an SAP context, has a different meaning thanthe usual information technology definition. Security for SAP refers to theauthorization schemes that are managed by the security team. Theauthorizations determine who can do what in the SAP system. It does not referto security against threats such as that posed by a virus.

Solution

Out of a list of alternatives, a solution is the recommended course of action tosolve an issue.

Solution Manager

The Solution Manager system is a stand-alone product that SAP has designedfor use with its software offerings. Solution Manager can be used manydifferent ways. Often it is used as a document repository for things such asblueprints, functional specification documents, technical documents, landscapediagrams, and any other document pertaining to SAP. It can also be used as awork management system (with tickets).

Scope

Scope refers to the list of functionality and changes that are within the mandateof the team to work on and transform.

Standard SAP

The term “standard SAP” refers to functionality in the SAP Enterprise CentralComponent that can be achieved through configuration alone. The term can beloosely applied to SAP functionality that required user exits to achieve aswell. The term does not include functionality achieved by means of coremodifications to SAP’s code, solutions that use Z-programs, or solutions thatuse Z-tables.

Statement of Work

A statement of work is a document that lists the details of an engagementincluding the deliverables, timeline, and scope. It is often a bindingcontractual agreement that can be appended to a general contract.

Steering Committee

A steering committee is a group composed of senior executives from thebusiness and its implementation partner, as well as the leaders of the projectitself. The project sponsor must always be part of the committee.

Stress Test

A stress test is one that is designed to emulate the actions of many processesbeing run simultaneously by many users. It is usually conducted by the Basisteam.

String Test

A string test refers to a string of transaction codes involved in a process thatare used in sequence to test a process. It is more comprehensive than a unittest, but less comprehensive than an integration test. During an implementationthe integration test will encompass all transaction codes, and thus they alsoconstitute a string test.

Support

Support refers to a period after the SAP system or change has gone live whenthe team is in "break/fix" mode addressing any reported defects in the system.Many of the perceived defects tend to be training issues.

Support Pack

A support pack consists of multiple OSS bug fixes that are applied all at onceto an SAP system. It is likened to a mini-upgrade, but does not encompass anynew functionality.

System Integration – see Integration

System Integrator – see Implementation partner

Technical

In general terms the word “technical” in an SAP context means anyfunctionality attained by a means other than configuration via theImplementation Guide.

Technical Specification Document

Usually called a tech spec, the technical specification document outlines theprogramming logic necessary for the requirements of a functional specificationdocument to be realized.

Technical Team

The technical team consists mostly of programmers who take care of the actualcoding of ABAP programs and other types of programs. They build interfaces,code ABAP enhancements, and carry out things like user exits. They workclosely with the members of the functional team.

Technical Upgrade

A technical upgrade refers to the movement of an SAP system to a higherversion without activating any of the new functionality available in thatversion.

Testing Team

A team charged with carrying out integration testing, string, and regressiontesting. If the team is composed of end-users they will be charged withcarrying out user acceptance testing (UAT) as well. However, the team thatperforms UAT should not be the same as the team that carries out any otherform of testing. Unit testing is outside the scope of testing for either team as itis performed by the people who made the change.

Timeline

A timeline refers to the duration of a project. A typical timeline of a large SAPproject using the ASAP methodology is nine to 12 months.

Transaction Code

A transaction code is a short cut for executing a function in SAP. For example,typing in transaction code FB01 will lead you to the screen for entering ageneral journal entry into the general ledger without having to go through themenu system.

Transport

Transports are the mechanism, administrated by the Basis members of yourSAP team, by which configuration and development changes are movedbetween the development clients and the quality assurance clients (also knownas staging) , and once they are successfully tested to the live production client.

Unit Testing

A "unit test" refers to testing within a module, often within a single transactionof that module. This type of testing tends to be informal and conducted by theperson who configured or developed the change.

Upgrade

An upgrade refers to the process of elevating the version level of an SAPsystem to a version higher than the existing one. Upgrades do not have to besequential. For example, an organization currently on version 4.7 can upgradedirectly to the latest version of SAP without having to upgrade to the versionsbetween it and the latest version.

An upgrade involves taking an SAP system from a lower level of SAP to ahigher level. For example, taking SAP from Enterprise Central ComponentEnhancement Pack 5, to Enhancement Pack 6. An upgrade can be technicalonly, or both technical and functional (where new functionality available in thenew version is deployed as part of the upgrade project)

User Acceptance Test (UAT)

A user acceptance test is a test performed by the users to give them anopportunity to approve a change prior to it being moved to the productionclient. It is usually performed in a quality assurance client (sometimes called astaging client). In an implementation the user acceptance test usually followsthe same scripts as those used for integration testing. After the system is livethe user acceptance test will resemble more of a unit test or a string test. Thebigger the impact of change, the more comprehensive the testing and the closerit gets to an end-to-end integration test.

User Exit

A user exit refers to a change to a standard SAP program's code where SAPhas provided an insertion point so that an ABAP developer from the business

can insert their own code. This is called a user exit, and it is not considered acore modification to the system. The important distinction is that SAP hasdesigned it so that your team to include its own programming logic. Anupgrade will not overwrite this work.

Despite this type of change being specifically designed for your team to insertits own code it is still ABAP development that will require a FunctionalSpecification document as well as a Technical Specification document. Itrequires a considerable amount of work (relative to configuration) and shouldbe avoided if possible.

Vanilla SAP

A "vanilla SAP" project refers to the implementation of an SAP system withoutthe use of any core modifications to its code. A more extreme definition of thiswould also include that a vanilla SAP system has no Z-tables and no Z-programs.

Volume Test

A volume test is one that is designed to emulate the actions of many processesbeing run simultaneously by many users. It is usually conducted by the Basisteam.

War Room

In SAP project terms a "war room" refers to a large space housing the majorityof the SAP project team. Such a room has no walls. This open environmentpromotes quick communication between team members, and allows others onthe team to hear conversations that the speakers may not think are relevant tothem, but are.

Work Breakdown Structure Element

A work breakdown structure element in the SAP Project Systems module is acost collector that reflects a logical piece of work on a project. It is also acommon term utilized in project management outside of SAP circles.

Z-Objects

In SAP a "Z object" is any programming that has a Z prefix. It can be a

program, table, or transaction. The significance of the Z is that it places theprogramming in the SAP customer name space protecting it from beingoverwritten by upgrades.

Z-Programs, Z-Tables, and Z-Transactions

The use of the "Z" prefix places the objects in the customer name space. Suchobjects will not be overwritten by an upgrade. Thus if you have a developercopy the transaction code FB01 into a new transaction code ZFB01, and thencopy the underlying program of this transaction SAPMF05A to ZSAPMF05A,any modifications you do to this Z program are not a core modification.Consequently the best practice should you absolutely need to make changes isto copy native SAP code and prefix it with a Z before you make youralterations. However, the new Z program is still susceptible to future changesto SAP and will not be supported by them. In this scenario you still have theoriginal code of the original program intact and you can revert back to it at anytime in the future.

Of these objects the Z transaction is the lowest risk and requires the leastamount of labor to develop. On the other hand Z-programs and Z-tablesinvolve considerable time to develop and can materially change theperformance of SAP.

In an extreme example of the use Z programs, I once had a client that hadessentially designed their own module for management accounting purposesthrough the extensive use of Z programs and Z tables. These Z program andtables were extremely buggy. They also ignored the fact that SAP already had awell established module for management accounting called the Controllingmodule (CO) that incorporates best practices. The poorly performing custommodule based on Z programs and tables had to be deactivated, and the COmodule implemented in its place.

Because of examples such as the above I recommend that Z programs and Ztables be avoided in your SAP project, and be considered comparable to coremodifications.

About the AuthorLawrence Compagna has provided SAP consulting services for over twodecades. He is a CPA who was SAP Academy Certified as an SAP Consultantin 1998 and received a certificate in SAP's ASAP Project Managementmethodology in 2001. In the SAP ERP sphere, he has been a managementconsultant, a systems integrator, an advisor, a solution architect, an expertwitness in SAP related litigation, and a project manager. He has also served asthe advisor to the chief operating officer of one of the world's largest SAPintegrators performing "best practice" audits of their implementations. He hasconsulted to a variety of industries including manufacturing,telecommunications, utilities, professional services, and public sector. Hispast clients include Mercedes Benz, the US Army, Compaq Computers (nowHP), Deloitte Consulting, the State of California (Judicial), and the UnitedNations. Mr. Compagna's successful leadership over the merger of twoNASDAQ traded telecommunications companies on the SAP platform isamong his career highlights. Visit the author’s Facebook page atfb.me/LawrenceCompagna. Send a message to the author via Facebook atm.me/LawrenceCompagna

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