sap overview for managers

SAP for Managers: An Overview

Friday, February 27, 2015 1

SAP Fundamentals


• Full name of SAP translates into English from German as “Systems, Applications and Products in Data Processing”• The full name of SAP is rarely used now

• SAP is pronounced as “ES-AYE-PEE” and not “SAP”• SAP’s architecture is based on “3-tier” client-server

technology (GUI layer, application layer and database layer)• Hence the name “R/3”• “R/3” does not stand for “Release 3”

• ABAP/4 (Advanced Business Application Programming Language Version 4) is the proprietary programming language in which the SAP product is programmed and customisation done

• SAP has categorised basic business processes in an organisation.• These “building blocks” of processes are called “modules”• SAP’s “honeycomb structure” depicts the “core R/3 modules”

• SAP upgrades to new features through version management• The latest version of SAP is mySAP ECC (Enterprise Core Component) 6.0• Previously SAP versions were named as 4.xa. The last version is this series

was SAP version 4.7. After this SAP discontinued this nomenclature and moved to ECC nomenclature

• To cater to specific country needs, SAP has various “country versions” to be bolt-on the base R/3. Now some country version is built in ECC• Country Version for India is called CIN (Country India Version)

• To cater to industry specific requirements, SAP has various Industry Solutions (IS) e.g. IS-Oil for Oil and Gas, IS-Mills for Mill Products, IS-Retail for Retail

• E-commerce based modules like CRM, SRM are added components to R/3

Sales &Sales &DistributionDistribution

SDSD

MMMM

PPPP

QMQM

PMPM

HRHR

FIFI

COCO

TRTR

PSPS

WFWF

ISIS

MaterialsMaterialsMgmt.Mgmt.

ProductProductPlanningPlanning

QualityQualityMgmt.Mgmt.

Plant MaintePlant Mainte--nancenance

HumanHumanResourcesResources

FinancialFinancialAccountingAccounting

ControllingControlling

TreasuryTreasury

ProjectProjectSystemSystem

WorkflowWorkflow

IndustryIndustrySolutionsSolutions

R/3R/3R/3Client/Server

ABAP/4

Client/ServerClient/Server

ABAP/4ABAP/4

Sales &Sales &DistributionDistribution

SDSD

MMMM

PPPP

QMQM

PMPM

HRHR

FIFI

COCO

TRTR

PSPS

WFWF

ISIS

MaterialsMaterialsMgmt.Mgmt.

ProductProductPlanningPlanning

QualityQualityMgmt.Mgmt.

Plant MaintePlant Mainte--nancenance

HumanHumanResourcesResources

FinancialFinancialAccountingAccounting

ControllingControlling

TreasuryTreasury

ProjectProjectSystemSystem

WorkflowWorkflow

IndustryIndustrySolutionsSolutions

R/3R/3R/3Client/Server

ABAP/4

Client/ServerClient/Server

ABAP/4ABAP/4

SAP’s famous “honeycomb structure” depicting the core R/3 modules

SAP Core Modules


Sales and Distribution (SD)Customer Master, Enquiry, Quotation, Sales Order Processing, Pricing, Credit Management, Transportation, etc

Materials Management (MM)Vendor Master, Enquiry, Quotation, Purchase Orders, Pricing, Inventory Management, Inventory Valuation, Stock Transfer, etc

Production Planning (PP)Planning Strategy, MRP, BOM, Routing, Work Center, Production Orders, etc

Quality Management (QM)Inspection Plan, Incoming Quality, In-process Quality, Finished Goods Quality, Quality Certificates, etc

Plant Maintenance (PM)Maintenance Orders, Breakdown Maintenance, Preventive Maintenance, Maintenance Notifications, etc

Human Resources (HR)Payroll, Training, Recruitment, Performance Management, etc

Financial Accounting (FI)Chart of Accounts, Accounts Payable, Accounts Receivables, Invoice Verification, Asset Accounting, etc

Controlling (CO)Cost Center Accounting, Profit Center Accounting, Internal Orders, Product Costing, etc

Treasury (TR)Funds Management, Cash Management, etc

Project Systems (PS)Work Breakdown Structure (WBS), Internal Projects, External Projects, Project Costing, etc

Workflow (WF)Not a separate module actually but the feature is built into most modules

SAP “New Dimension” Product Portfolio


Non R/3 modules – With the advent of e-business and various other specific business requirements, SAP added new modules around 1998-99

CRM – Customer Relationship Management intended to capture sales transactions over the net and also other features like call center activities. This product is a close competitor to Siebel.

SRM – Supplier Relationship Management intended to capture purchases over the netPLM – Product Lifecycle Management APO – Advanced Planner and Optimiser intended to provide features of rule based shop floor

scheduling and optimisation, global availability checks across multiple plants, transportation optimisation, etc. This product is a close competitor to i2.

BW – Business Warehouse intended to provide management reporting and data miningSEM – Strategic Enterprise Management intended to provide financial consolidation for group

companies, balance score card, etcDMS – Document Management SystemEHS – Environment, Health and Safety

SAP has now reorganised its module based components into process based components and included e-business components into it. But module based terminology is still popularly used in most cases.

SCM – includes erstwhile MM, PP, PM, APO and SRM modulesCRM – includes erstwhile SD and CRM modulesFinancials – includes erstwhile FI, CO, SEM and BW modulesPLM – includes erstwhile QM and PLM modules

Industry Solutions (IS)Various Industry specific solutions like IS-Oil, IS-Mills, IS-Auto, IS-Banking, IS-Retail, etc

SAP Technical Areas: ABAP and BASIS


Technical areas of SAP consist ofABAPBASIS

BASIS involvesServer sizingSAP system installationDatabase administrationPerformance tuningTransports (i.e. transporting configuration and customisation

from one system to another)User authorisations“Patch” and “Hot Pack” applications

Patches or hot packs are pieces of “correction codes” released by SAP from time to time or when there is a product problem

SAP version upgrade

SAP Technical Areas: ABAP and BASIS


SAP’s Source Code

SAP identified “user exit” at pre-defined points in source code

You can write your own code here and return to source code

You will require a special key from SAP to modify “source code”. It is strongly discouraged as SAP may consider to withdraw its warranty support if source code is modified

ABAP involves programming in ABAP language for customisation popularly called “RICEF”

Reports (customised reports)Interfaces (with other systems)Conversions (for migrating data from legacy system to SAP)Enhancements (to address unique business conditions by writing a piece of code through “user exits” or “module pool”)Forms (for document outputs like Invoice, Purchase Orders, etc.

Minimum customisation is strongly recommended for

Faster testingEasier maintenanceEasier upgrade

SAP has introduced Netweavertechnology which is an SOA (Service Oriented Architecture) in 2003


Printed MIS vs. SAP “Drilldown” Report: A Change in Mindset for Managers

Country Region State Target Sale ($) Actual Sale ($)

India North Delhi 100,000 110,000

India North Punjab 120,000 125,000

India North UP 80,000 75,000

India West Maharashtra 200,000 230,000

India West Gujarat 150,000 180,000

India East West Bengal 50,000 20,000

India East Bihar 30,000 25,000

Traditional MIS is comes in two dimensional printed format. Many managers today feel comfortable in this format as they do not have to learn to extract the report directly from the system. This comes from DYFM (Do it for me) mindset as opposed to DIY (Do it yourself) mindset. Such MIS formats can only provide static and limited information and cannot adequately highlight exceptions.


Printed MIS vs. SAP “Drilldown” Report: A Change in Mindset for Managers

Country Target Sale ($) Actual Sale ($)

India 1,000,000 850,000

USA 10,000,000 10,100,000

China 5,00,000 6,00,000

“Drill-down” MIS reports, which most standard SAP reports are, can present information in a better way enabling management by exception.

But managers need to be conversant with using the system to view and analyse MIS online and real-time, as opposed to reports printed and given to them by their assistants.

Region Target Sale ($) Actual Sale ($)

North 30,000 35,000

West 40,000 50,000

East 10,000 5,000

State Target Sale ($) Actual Sale ($)

West Bengal 5,000 4,000

Bihar 3,000 3,500

Jharkhand 2,000 2,200

City Target Sale ($) Actual Sale ($)

Kolkata 3,000 500

Durgapur 1,000 1,500

Siliguri 2,000 2,000


Interfaces: A Key Element in Customisation

Complexity of Interfaces depend on factors like whether they are one-way or two-way, real-time or batch, etc.

Core Processes including HR is in SAP

3rd Party Payroll Software

Employee Master Data

Consolidated Financial Entry


Conversion Programs: Key to Successful Data Migration

Conversion Programs assist in large volume transfer of data from legacy systems to SAP

Raw Data

Cleaned Data

Full Data

Data Upload

Data in SAP


SAP Products in ERP Space

SAP ECC is the flagship product of SAP meant for core business processes of large enterprises

SAP has various non-ERP (CRM, SRM, APO, BI, BO, etc.) and Industry Solutions (IS). Mostly Companies use them as add-ons to ECC, though some of them can be interfaced with non-SAP ERPs

SAP Business One (SAP B1) is a product purchased by SAP to cater to the requirements of small and medium enterprises

SAP Business By Design is SAP’s attempt to provide a cloud based ERP platform

SAP Business All in One (A1) is not a separate product. It is a Brand promoted by SAP in an attempt to “productise” SAP ECC for Medium Enterprises


All-in One: SAP’s Attempt to Productise ERP

Manufacturing, Financial Services, Education

Discrete, Continuous

Automobile, Electronics

Passenger Vehicle, Auto Ancillary

Steering Manufacturing

Your Company

Traditional SAP Deployment: SAP ECC configured/ customised ab-initio to

support company’s business process

SAP ECC pre-configured to “productise” for a micro-

vertical

Remnant configuration/ customisation done for a specific Company in the micro-vertical. Expected to reduce time, effort

and cost of SAP deployment

Popular Licensing Policy in ERPs


• Based on named users. E.g. SAP, Oracle

• Based on Concurrent users. E.g. Microsoft

• There are other licensing policies based on number of employees, no. of articles, etc.

Types of Licenses: Example SAP


• Developer License – Meant for developers

• Professional License – Meant for users expected to transact in multiple modules

• Semi Professional License – Meant for users expected to transact in one module

• Employee License – Meant for users expected to only view information and reports

SAP Licensing – Facts and Caution


• Price of Employee License < Semi Professional License < Professional License < Developer License

• Hence, the total licensing cost not only depends on the number of licenses and discount offered by the vendor, but also on the mix of licenses

• There are means to reduce the number of named licenses like using common user id based on role or designation, using a common user id yet capturing user information through customised tables and enhancements, using a portal to capture transactions and then programmatically pumping the data in SAP . Most of these techniques are violation of SAP’s licensing agreement and hence must be avoided unless a specific clearance is obtained from SAP

Commercial Elements in ERP License


• License Price

• Annual Maintenance Contract (AMC) as a percentage of License. To be paid annually in advance. For product bug fixes, minor upgrades, etc. Not for maintenance of configuration and customisation

• Taxes and Duties• Service Tax for AMC• Both VAT/ CST and Service Tax for License

SAP Enterprise Structure: Financial


• Company Code = Legal Entity• Profit Centre = Division below legal entity where profit and loss statement can be obtained• Business Area = Division below legal entity where balance sheet can be obtained• Controlling Area = Area where management reporting can be obtained. Can cut across multiple legal entities• Segments = Used for segmental reporting• Cost Centre = Element that captures cost and passes on to Profit Centre (where ever applicable)

Financial Enterprise Structure Relationships


• Company Code to Profit Centre = 1: n

• Company Code to Business Area = 1: n

• Company Code to Controlling Area = m : n

• Profit Centre to Cost Centre = m : n

Financial Enterprise Structure: Application


Company

FMCG Tobacco Hotel

Legal Entity, hence Company

Code

Profit Centres, if only P&L required

Business Area, Balance Sheet

required



Plant 1 –Product

1

Plant 2 –Product

1

Plant 1 –Product

2

Plant 2 –Product

2

Plant 1 Plant 2

Product 1

Product 2

Segment



Company 1 Company 2 Company 3Consolidated view of same business

run across multiple companies



Profit Centre 1

Profit Centre 1

Revenue

Cost Centre 1

Cost Centre 2

Cost Centre 3

Cost Centre 4

100%

40%

60%

100%

Cost not allocated to any Profit Centre. Gets consolidated at Balance Sheet for financial reporting

Less: Expenses

= Profit/ Loss Cost allocation based on rules

Enterprise Structure for Inventory Management


Plant

Storage Location (Raw Material)

Storage Location (WIP)

Storage Location (Finished Goods)

Storage Bin 1

Storage Bin 2

Valuation of Inventory is at Plant level

Enterprise Structure for Inventory Management: Example


Manufacturing Plant

Warehouse

Inventory valued at $100

Transportation Cost $10

Inventory may be valued differently from

manufacturing plant

Manufacturing Plant and Warehouse are defined as separate Plants in SAP as inventory may be valued differently in these two locations.

Enterprise Structure: Purchasing


Purchasing Organisation – Administrative unit responsible for certain type of purchases e.g. Central purchases for above certain value, local purchases, etc.

Purchasing Group – Groups under a Purchasing Organisation responsible for certain category of purchases, e.g. Raw material group, Spares and consumables group

Purchase Organisation to Purchasing Group = 1 : n

Purchase Organisation to Plant = 1 : n

Purchase Organisation to Company Code = n : 1

Purchasing Enterprise Structure: Example


Head OfficeCentral Purchasing Organisation for high value purchase

Manufacturing PlantsPlant Purchasing Organisation for urgent lower value plant specific purchase

Regional OfficesRO Purchasing Organisation for office supplies

Enterprise Structure: Sales and Distribution


Sales Organisation – Administrative unit responsible for sales, typically over a particular region

Distribution Channel – Supply Chains through which products are distributed e.g. Retail, wholesale, internet, etc

Division = Similar product groups

Sales Area = Combination of Sales Organisation, Distribution Channel and Division

Sales Office = Organisational units responsible for sale under a Sales Area

Sales Employee = Employees in a Sales Office

Sales and Distribution Enterprise Structure: Example


Tobacco FMCG

North

West

East

South

Wholesale Retail

Sales Organisation

Division

Distribution Channel

What is Master Data?


• Master Data refers to data that is relatively “static” compared to the other type of data i.e. Transaction data

• For example, Material Master is a Master Data, while Purchase Order is a transaction data

• In SAP Master Data does not only carry information about the data element (e.g. Material code, material description, etc. in case of Material Master, but also data that defines certain business processes, e.g. MRP type, Planning Strategy, Valuation Class, etc.

• Hence, maintaining master data with correct value is of utmost importance in SAP

Example: Material Master


“Views” of the master for an organisational element (e.g. Company code, plant, etc.) define what the master is and how the master should drive the transaction for different types of transactions e.g. Accounting transaction, costing transaction, MRP transaction, etc., for the particular organisational entity

Example: Customer Master


Customer’s Head OfficeFrom where PO was issuedSold-to Party

Customer’s PlantWhere the goods have to be shippedShip-to Party

Customer’s Regional OfficeFrom where payment is madeBill-to Party

Example: Bill of Material


• Bill of Materials (BOM) refers to a structured multilevel hierarchy depicting the components that are required to manufacture the finished products including the quantities of the components required for one unit of the finished product and then the components that are required to manufacture the components.

• In the example here, 2 units of B and 1 unit of C are required to manufacture 1 unit of A and then 3 units of X and 2 units of Y are, in turn, required to manufacture 1 unit of B

• The final product which is not further processed and sold to the customer (A, in this example) is called “finished product”. The intermediate products made out of raw materials and that go as input to the finished product are called Semi-finished product (B, in this example). The materials which are procured from outside (X and Y in this example) are called “raw materials”

A (1)

B (2) [1] C (1)

X [3] Y [2]

Example: Routing


• Routing is a set of manufacturing processes that are required to manufacture a product from its components

• In the above diagram, an oval shaped sheet is to be manufactured from a square sheet. For this, the square sheet needs to be “cut”, then the edges of the oval sheet needs to be smoothened through “chamfering” process and finally the oval shaped sheet needs to be “packaged” before sending to the customer. These manufacturing steps are called “Operations”

• These operations are executed in a machine or group of machines or by a group of people. These or they are called “Work Centers”

• Each operation takes a certain number of hours to be completed, in general. This is called “Standard Time”

Operation No. Work Centre Operation Standard Time (Hrs.)

10 Lathe Cutting 20

20 File Chamfering 10

30 Labour Packaging 5

Understanding Plant Operations with SAP: Procurement

Purchase Requisition

Purchase Order

Goods Receipt

Invoice Receipt

Payment

Basic Purchase Cycle

User Dept

Purchase Dept

Stores Dept

Accounts Dept

Stock Accounting

3 Way Invoice Verification

Accounts Dept

Impact on Accounting

Material document

Accounting document

Understanding Plant Operations with SAP: Sales Planning

• Towards the end of Month M0, you plan for M1, M2 and M3 with the requirement of Month M1 as Firm (F) and requirements of Months M2 and M3 as Tentative (T).

• When you come to end of Month M1, you revise the requirement of Month M2 and make it Firm, you also revise the requirement of Month M3, but still keep it Tentative and you forecast the requirement of Month M4 also.

• Since the plan “rolls over” at the end of each month to new set of firm and tentative plan, this type of planning is called “Rolling Plan”.

• In this particular case, it is a “3 month Rolling Plan”

M0 M1 M2 M3 M4 M5

100 (F) 120 (T) 130 (T)

110 (F) 120 (T) 150 (T)

125 (F) 140 (T) 160 (T)

Rolling Plan for Product A

At Month M0

At Month M1

At Month M2

Understanding Plant Operations with SAP: Deterministic and Consumption Based Planning

• Deterministic Planning is a type of MRP applied to components or products whose demand is determined by the demand of the final product and hence controlled by the Bill of Materials. Normally materials used for production including raw materials, semi finished products and finished products are planned based on deterministic planning

• Consumption based planning is a type of MRP applied to materials which are consumed in the organisation but whose demand is not directly determined by the demand of the products the company produces or sells. Spare parts, consumables like stationary, etc. are planned using Consumption based planning. Important determining points in Consumption based planning are

• Reorder quantity (based on Economic Order Quantity or EOQ)• Reorder point• Lead time of procurement• Safety Stock

A (1)

B (2) [1] C (1)

X [3] Y [2]

Reorder Qty (EOQ)

Reorder Point

Lead Time to Procure

Safety Stock

Understanding Plant Operations with SAP: Planning Strategies

• Planning Strategies are primarily 2 types• Make to Order – When a company procures the components and manufactures the semi-finished and finished products after receiving confirmed order from customer• Make to Stock – When a company procures the components and manufactures the semi-finished and finished products based on forecast before receiving confirmed orders from customers

• Make to Order and Make to Stock strategies optimise two counter-acting forces (a) speed of service or delivery (b) inventory carrying cost• Hence, most companies try to balance these two counter acting forces by adapting a hybrid of make to order and make to stock strategies

A

B C

X Y

Make to Stock

Make to Order

If the company forecasts at the level of finished product, it is called “Planning without Final Assembly”

If the company forecasts at the level of semi-finished product, it is called “Planning at assembly level

Fixing this “bar” depends on (a) value addition from B to A (b) variability at finished product level

At what level a company can forecast depends on (a) if B is also sold (b) variability of A

Understanding Plant Operations with SAP: MRP

• Demand Elements create demand e.g. PIR (Planned Independent Requirement), Dependent Requirement, Sales Order (if Sales Order is both a Planning AND Execution Instrument, if Sales Order is ONLY an Execution Instrument, then it is not a Demand element)• Supply Elements satisfy the demand created by Demand Elements, e.g. Stock, Planned Order, Purchase Requisition, etc.• MRP Run ATTEMPTS to balance the Demand Elements and Supply Elements i.e. after an MRP Run Demand Element <= Supply Element• Lot Size determines the quantity in which the products can be produced from an engineering perspective. In a fixed lot size scenario, products can be made only in specific lots, neither more nor less. In that case, multiple planned orders can be created and Supply Element may become greater than Demand Element after execution of MRP. In the example above, if the manufacturing process of A dictates to produce based on fixed lot size of 50, then 2 planned orders each of 50 will be created. Thus Supply Element will be greater than Demand Element by 20 after MRP Run. The Production Planner can then decide whether to produce 2 lots of total 100 (and hence have an excess inventory of 20) or 1 lot of 50 and risk loss of sale of 30 units• If there is a Sales Order of 20 units, whether it will be considered as Demand Element or not depends on whether the Planner considers this order a part of forecast (PIR) which has got converted (in which case the Sales Order is just an Execution Instrument) or this is an additional Demand Element over and above the forecast of 100 (in which case the Sales Order is both a Planning and Execution Instrument). In the former case there will be no change in the Planned Order of 80. But, in the latter case, a Planned Order of 100 will be created.

Demand (-)/ Supply (+) Elements

Value

PIR 100-

Stock 20+

Planned Order 80+

A (1)

B (2) [1] C (1)

X [3] Y [2]

MRP Run Output for A

Demand (-)/ Supply (+) Elements

Value

DReq 160-

Stock 40+

Planned Order 120+

MRP Run Output for B

Understanding Plant Operations with SAP: Shop Floor Planning

• Material Availability Check

• Capacity Planning

• Scheduling

• SAP ECC supports planning assuming “infinite capacity”. Overloaded capacity can be manually (i.e. not algorithmically) levelled

Understanding Plant Operations with SAP: Capacity Planning

Forging Machine

Lathe Machine

Packaging Machine

Input Material

Output Material

P1 (1 unit)

10H 20H 5H

P2 (1 unit)

30H 10H

0 HR 10 HR 10 HR 30 HR 30 HR 35 HR

0 HR 30 HR 30 HR 40 HR

Infinite capacity planning scenario

• Throughput time for P1 is 35 hour and that for P2 is 40 hour• No wait time• No bottleneck capacity

Understanding Plant Operations with SAP: Capacity Planning

Forging Machine

Lathe Machine

Packaging Machine

Input Material

Output Material

P1 (1 unit)

10H 20H 5H

P2 (1 unit)

30H 10H

0 HR 10 HR 30 HR 50 HR 50 HR 55 HR

0 HR 30 HR 30 HR 40 HR

Finite capacity planning scenario• Throughput time for P1 is 55 hour and that for P2 is 40 hour• Wait time of 20 hour for P1• Lathe machine is a bottleneck capacity

BOTTLENECK

Wait time = 20 HR

Understanding Plant Operations with SAP: Production Execution (Discrete)

Planned Order generated from MRP

Make or Buy?

Purchase Requisition

Buy

Procurement Process

Production Order

Check Availability of Materials (Available to Promise – ATP)

Capacity Planning

Scheduling

Goods Issue from Stores to Shop Floor (Material Requisition Note or MRN and Goods Issue Slip)

Goods Issue of input materials (copied from BOM) to Production Order

Confirmation of Operations in Production Order (copied from Routing)

Good Receipt from Production Order to Finished Goods Storage

Material in WIP (Work in Progress)

WIP gets converted to FG (Finished Goods)

Understanding Plant Operations with SAP: Costing

Fixed Variable

Indirect

Direct

Understanding Plant Operations with SAP: Product Costing

A (1)

B (1)

C (1)MAP = $10

Standard Processing Cost = $ 20

Standard Cost = $30

Standard Processing Cost = $ 50

Standard Cost = $80

Actual units issued = 2

Actual units issued = 1

Actual Cost = $10 *2 + $ 30 = $ 50Variance for process = $ 20Inventory valuation at standard = $ 30Inventory valuation at actual = $ 50

Actual Processing Cost = $ 30

Actual Processing Cost = $ 70

Actual Cost = $50 + $ 70 = $ 120Variance for process = $20Inventory valuation at standard = $ 80Inventory valuation at actual = $ 120

Understanding Plant Operations with SAP: Sales and Distribution

Sales Order

Availability Check

Credit Check

Picking and Packing

Post Goods Issue

Transportation

Types of ERP Projects

• Greenfield Implementation

• Roll-out

• Enhancement

• Upgrade (Functional and Technical)

• Maintenance

Delivery Models

In-house Outsourced

Onsite

Offshore

Near Shore

Greenfield Implementation Maintenance

Greenfield SAP Implementation Method: ASAP

Project Preparation

Business Blueprint

RealisationFinal

Preparation

Go Live and Hyper Care

Support

Project Preparation: Key Activities

• Detailed Project Plan• Detailed Project Scope• Project Governance• Hardware and Network Sizing• Implementation Strategies

• Interface Strategy• Data Migration Strategy• Reports Strategy• Authorisation Strategy• Training Strategy• Organisational Change Strategy

Business Blueprint: Key Activities

• To Be Process• Key Data Structure Design• Functional and Technical Specs for RICEF• Authorisation Matrix Definition• Organisational Impact Analysis• Training Calendar• Raw Data Collection and Cleaning

Realisation: Key Activities

• Configuration• Customisation• Unit Testing• Integration Testing• User Acceptance Testing• Authorisation Profile Setup and Testing• Full Data Preparation for Migration• Training Manual Preparation• Change Management Communication

Final Preparation: Key Activities

• Master Data Migration• End User Training• Cut-Over Strategy• Help Desk Setup

Go Live and Hyper Care Support: Key Activities

• Go Live• Hyper Care Support• Monitor SLA• Project Closure

Go Live and Cutover

Implementation StartApril 1, 2015

Go LiveApril 1, 2016

Cut OverApril 5, 2016

Black Out

Types of Commercial Arrangements

• Fixed Fee

• Time and Material

• Mixed Mode

Components of Total Cost of Ownership in ERP Projects

• License Fee

• AMC for License

• Hardware and Networking

• Consulting Fees

• Travel and Living Expenses

• Taxes and Duties

• Hidden Costs – Cost of Internal Resources, Change Management Costs

Calculating “Charge-out Rate”

Heads $

Direct Salary 100

Company Overheads 30

Non Billable Resource Cost 20

Sales and Marketing Cost 40

Bench Cost 30

Margin 80

Charge Out Rate 300

Charge Out Rate: Direct Salary = 3

Effort Estimation Template

Module Level of Resource

Charge-out Rate

PP BB BB RZ RZ FP PIS

Prj. Mgr PC 100 1 1 1 1 1 1 0.5

SD SC 80 1 1 1 1 1 1 0.5

SD AC 50 0 1 1 2 2 1 1

MM SC 80 1 1 1 1 1 1 0.5

MM AC 50 0 1 1 2 2 1 1

FI SC 100 1 1 1 1 1 1 0.5

FI AC 60 0 1 1 2 2 1 1

ABAP SC 70 1 1 1 1 1 1 0.5

ABAP AC 40 0 1 1 4 4 2 1

BASIS SC 70 1 1 0.5 0.5 0.5 0.5 0.25

BASIS AC 40 0 1 1 1 1 1 1

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