Americas' SAP Users' Group

Best Practices for

Year-end Closing
with SAPs
Project Portfolio
Management
(PPM and/or IM)
and Project
Systems (PS)
Kent Bettisworth, ASUG PME SIG Chair, BETTISWORTH & ASSOCIATES
Tom Martin, PPM Solution Architect, ProPPM Corporation
December 18, 2013
11AM Eastern/10AM Central/9AM Mountain/8AM Pacific

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Webcast Notes
This webcast is being recorded
The recording and slides will be posted to the ASUG
website
Hosted in Discussions in the workspace for host community
Link can also be found on the Event Page
All participants will be emailed the link to the recording and slides

Use the

for questions throughout the webcast

Panelists will answer questions in this forum

Well take questions from here at the end of the presentation

Introduction
Managing projects and portfolios is much easier
when you successfully close the prior year in SAP
Walk with us through the best practices required for
a proper and successful year-end close
Compare Investment Management (IM) to Project
Portfolio Management (PPM) year-end budgeting
processes
Learn to avoid the mistakes that break next years
budget reporting
This session will challenge what you know about
year-end closing in the Portfolio and Project modules
5

Learning Points
Learn the best practices for a successful year-end
close for portfolios and projects
Comprehend Portfolio and Project Management and
(PPM) Investment Management (IM) differences
Avoid year-end mistakes that break next years
budget reporting
Audience: Technical and Business
Level : Intermediate

Lets Discuss
Portfolio and Project Lifecycle Processes
PPM and IM differences
Portfolio Item versus Appropriation Request
Financial Views versus Plan Versions / Budget
Custom PPM & IM Integration

Year-end close best practices

Strategic portfolio planning
Annual portfolio planning/budgeting
Project planning/budgeting

Mistakes to avoid
Summary
7

Project Portfolio Management (PPM) Overview

Where are the Pain
Points?

Strategic

Lack of portfolio
visibility

Portfolio
Management

AFE Approval

Tactical

Gated Project
Management

Resource
Management

Cost Planning

Collaboration

Tool for gated

approval
Time to Market
Resource optimization

Project cost

Functional

Timesheet
and Actual
Costs

Detailed Activity
Management

Task Management
AFE
Approval

Compliance

Portfolio and Project Lifecyle Processes

Financial
Controller
Corporate
Budgeting

Facilities
Management

Capital
Accountant

Planning
Manager

Program
Managers

Team
Members

Strategic Planning
Financial Planning
Proposals: Projects,
Initiatives

Resource
Analysis

Charter: Definition,
Evaluation
AFE Analysis
& Prioritization

Resource Leveling
Planning: Roles
Schedule, Budget

AFE Approval,
Initiation

Resource
Allocation

AFE Budgeting,
Reconciliation

Assign Tasks
Work
Submission

Budget
Supplements
Manage Costs

Time Allocation
Confirm
Chargebacks

Capex Portfolio Review

Review Work

Intelligence Across the Lifecycle

Planning and Budgeting

Actual Values

Settlement

Maintenance

Portfolio
Optimization
Tools

Project Execution
Decision-making

Portfolio
Analytics Suite

10

Lets Discuss
Portfolio and Project Lifecycle Processes
PPM and IM differences
Portfolio Item versus Appropriation Request
Financial Views versus Plan Versions / Budget
Custom PPM & IM Integration

Year-end close best practices

Strategic portfolio planning
Annual portfolio planning/budgeting
Project planning/budgeting

Mistakes to avoid
Summary
11

When to Use SAP PPM (in relation to IM)

Where IM is deeply embedded, used by accounting:
Objective: Compliment IM, Integrate, Improve AOP Process
Benefits: Long/medium term planning, web user interface,
portfolio optimization via scoring models, questionnaires

Where IM is used lightly:

Objective: Introduce core processes like closed-loop AOP,
portfolio optimization, top-down integration to PS, CO
Benefits: Major effectiveness gains via portfolio optimization

Where IM is not in use:

Objective: Introduce life-cycle AOP in SAP
Benefits: Effectiveness (20% improvement in ROCI), Efficiency
gains (eliminated manual steps, integration)
12

PPM versus IM - Structures

Structures
IM Uses Appropriation Requests for planning future
projects
High-level, annual based
Limited Decision-making capability (financial only)
Auto Convert to PS Project
PPM Uses Portfolio Items
Customizable according to client
Can roll-up values from Items or be entered as
standalone
Plan Value Transfer to PS at the Portfolio Item
Auto-create PS Project
13

PPM versus IM - Budgets

Budgeting
IM Uses Original, Current Budgets for Overall and Annual
Supplements and Returns to change values
Budget Distribution to PS module project budgets
Annualized
PPM Uses Financial Views
Customizable according to client
Can roll-up values from Items or be entered as
standalone
Budget Transfer to Project Systems at the Portfolio Item
Monthly, Quarterly, Annual Periods
14

PPM versus IM - Planning

Planning
IM Uses Cost Plan Versions for Overall and Annual Planning
Similar to other modules cost planning functionality (PS,
CO)
Can copy Plan to Budget to Plan
Annualized
PPM Uses Financial Views (same as Budget)
Customizable according to client
Can roll-up values from Items or be entered as standalone
Plan Value Transfer to Project Systems at the Portfolio Item
Monthly, Quarterly, Annual Periods
15

IM versus PPM versus Custom Integration

16

Lets Discuss
Portfolio and Project Lifecycle Processes
PPM and IM differences
Portfolio Item versus Appropriation Request
Financial Views versus Plan Versions / Budget
Custom PPM & IM Integration

Year-end close best practices

Strategic portfolio planning
Annual portfolio planning/budgeting
Project planning/budgeting

Mistakes to avoid
Summary
17

A Successful Year-end Close is

New year budget reflects managements top-down
direction (for next year and future years)
Program funding structures and allocations are up-to-date

Top-down and bottom-up gap is measurable

Portfolio wish list is refreshed and plans and status current

New projects approved and funded, if 1st quarter start
Active project plans, budgets, and status are up-to-date
Project commitment delivery dates are up-to-date

Advance Commitments funded for Future Years

Future years are budgeted and funded

Depreciation forecast is current

Projects are closed and placed in-service
Forecast in-service date updated for on-going and new projects
18

Best Practice 1 - Strategic Planning

Strategic
Planning

Annual
Business
Planning

Project
Selection

Project
Creation

Project
Execution

Month-End
Processing

Closing

Long-term strategic
planning is entered into
Portfolio Items

19

Portfolio Structure versus IM Structure

PPM and IM both use hierarchical structures
IM = one structure
PPM = unlimited structures (one primary and many
classifications)

20

Best Practice 2 - Annual Planning

Strategic
Planning

Annual
Business
Planning

Project
Selection

Project
Creation

Project
Execution

Month-End
Processing

Closing

Top-Down Planning can be

entered annually, quarterly
Bottom-Up Planning is
aggregated from portfolio
item level into buckets by
monthly period
21

Step 1 - Plan Costs in PPM Portfolio Item

Plan Costs
in Portfolio
Items

Roll-up
Project
Planned
Costs

Transfer
Planned
Costs to IM

Set Budget
in IM

Transfer
Budget to
IM

22

Step 2 - Roll-up Project Planned Costs

Plan Costs
in Portfolio
Items

Roll-up
Project
Planned
Costs

Transfer
Planned
Costs to IM

Set Budget
in IM

Transfer
Budget to
IM

23

Best Practice 3 - PPM and IM Plan Integration

Real-time integration of
planning and budgeting data
between PPM and IM

24

Step 3 Transfer Planned Costs to IM

Plan Costs
in Portfolio
Items

Roll-up
Project
Planned
Costs

Transfer
Planned
Costs to IM

Set Budget
in IM

Transfer
Budget to
IM

25

Best Practice 4 PPM/IM Financial Integration

PPM Financial Categories, Groups and Views offer

powerful visibility of global capital budget vs spend
26

Step 4 and 5 Set IM Budget, Transfer to PPM

Plan Costs
in Portfolio
Items

Roll-up
Project
Planned
Costs

Transfer
Planned
Costs to IM

Set Budget
in IM

Transfer
Budget to
PPM

27

Best Practice 5 Distribute Budget to Projects

Budget distribution to projects is

triggered by Portfolio Item
status
IM52 distribution is performed
automatically in the background
28

Lets Discuss
Portfolio and Project Lifecycle Processes
PPM and IM differences
Portfolio Item versus Appropriation Request
Financial Views versus Plan Versions / Budget
Custom PPM & IM Integration

Year-end close best practices

Strategic portfolio planning
Annual portfolio planning/budgeting
Project planning/budgeting

Mistakes to avoid
Summary
29

Avoid These Mistakes

Portfolio Structures Aligned?
Projects Reassigned?
Projects Missing Assignment?
Portfolio Plan Rollup Incorrect?
Budget Returned and Projects
Closed?
Advance Commitments Funded?
30

PPM ~ IM Integration Structure Aligned?

The challenge when deploying an SAP Portfolio Management
solution is to maintain the PPM and IM structures synchronously

31

Reassign Projects (IM05)?

PPM option?

Reorganization of
portfolio results in
reassigned projects
Reassign in CURRENT
year & BEFORE new
approval year is
created
Cannot transfer
between programs
See OSS 192815 to
reassign carry-forward
projects
32

IMR8 - Find Missing Assignments?

Planning and
budgeting is
incomplete if
projects, orders
or appropriation
requests are
unassigned
Update or delete
unassigned
objects
PPM option?

33

PPM Rollup incorrect Missed Project Step?

Object

Step Description

SAP
Transaction

Step

Timing

Before each
Rollup-IM27

Projects and/or
Orders

Copy actual to plan for closed

months

CJ9C or KO15

Before each
Rollup-IM27

Projects and/or
Orders

Update project plans

Update commitment dates

CJ40 or KO12
ME22

Projects and/or
Orders

Adjust project budgets

CJ3x, KO2x

Before each
Rollup-IM27

Before each
Rollup-IM27

Projects

Fund & Release 1st Qtr new

year advance commitments

IM52, CJ32

Before each
Rollup-IM27

Projects and/or
Orders

Update depreciation
simulation data

CJ20N or
KO02

Before each
Rollup-IM27

Projects and/or
Orders

Settle projects
Close projects

CJ8x, KO8x
CJ20N ,KO04

Before each
Rollup-IM27

Appropriation
Requests

Refresh and plan 'wish' list

IMA11, IMA12

34

Unreturned or Not Carried-Forward Project Budget?

Mistake
Failure to timely cancel or
close projects and return
budget funds (CJ3x or KO2x).

Problem
Budget funds are not
available for allocation to
other projects and/or
projected budgets are
distorted.

Solution
Return unused budgets and
close projects not later than the
last IM27_REPEAT in fourth
quarter.

35

Carry-forward the Budget (CJCO or KOCO)

Make certain the
financial year is
closed
Repeat one last
time
Previous carryforward is
displayed

36

Projects Not Closed Timely?

Mistake

Failure to timely close

projects (CJ20N or KO04).

Problem
Depreciation, both
financial and tax, is
inaccurate.

Solution
Improve close-out processes.
Maintain frequent reviews of
projects beyond projected
completion date.

37

Project Advance Commitments correctly funded?

Mistake

Future year advance

commitments funded with
current year budget.

Problem

Solution

Current year available

funds are reduced
unnecessarily . PO
delivery dates are wrong.
Inefficient budget returns &
supplements in 4th quarter.

Fund two years instead of

one. Fund advance
commitments in current
year + 1 year.

Fiscal Year Change

Program X - 2013

Program X 2013 / 2014

Carry Forward
Measures

Measures

New Projects
Complete or Abandoned & Wish listComplete or
Abandoned

Program X - 2014

Carry Forward
Measures

New Projects &

Wish list

38

Carry-forward commitments CJCF or KOCF)

Item
Update past due delivery dates.
(CJCF or KOCF)

Problem
Available funds are overstated.

Solution
Run transaction CJCF and/or KOCF
to move past due commitments to
the first period of new year.

Before

After

39

Lets Discuss
Portfolio and Project Lifecycle Processes
PPM and IM differences
Portfolio Item versus Appropriation Request
Financial Views versus Plan Versions / Budget
Custom PPM & IM Integration

Year-end close best practices

Strategic portfolio planning
Annual portfolio planning/budgeting
Project planning/budgeting

Mistakes to avoid
Summary
40

Key Learnings
Use PPM for robust, full-featured portfolio
management
Use IM for the financial system of record for projects
A critical itemProposals (wish list) must be
submitted and updated timely
Follow the best practices for closing the year to
ensure a successful new year
Avoid the most common portfolio year-end mistakes
Fund next year advance commitments in year + 1
41

Americas' SAP Users' Group

QUESTIONS
and
ANSWERS

Thank you for attending this ASUG Webcast

tom.martin@pro-ppm.com
kent@bettisworthassociates.com

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