View
1.029
Download
1
Category
Preview:
DESCRIPTION
Citation preview
Applied Management Research Project
Managing the changing environment of finance function in organization: SAP as an enabler
Student: Devdut SahaRoll: 09BM8083MBA 2nd Year Vinod Gupta School of Management, IIT Kharagpur
2
Objective
Studying Changes affecting finance function of organization IFRS and its effects. IFRS vs Indian GAAP Taxation and regulation (Goods and Service Tax) SAP handling the finance function and changes SAP Packages (ECC and BO)
Formulating Change management plan (Linear programming
model)
3
Scope
Indian organizations The ERP considered in the study is SAP Taxes and regulations in consideration are
those applicable in India
4
What is making the environment of finance function to change?
Automation & Transparency Regulatory compliance Changes in regulations:
Accounting and reporting Taxation
Management reporting Financial planning & strategy Communication with shareholders
5
International Financial and Reporting Standards (IFRS)
Companies Target Date
Companies with net-worth of Rs 1000 crore and those which are part of BSE, NIFTY and listed in overseas exchanges
April 2011
All companies with a net-worth between Rs 500-1000 crore April 2013
Banks and non-banking finance companies April 2013
All listed companies with a net-worth of Rs 500 crore or less April 2014
6
IFRS
Historical cost and fair valuation: revaluation of intangible assets, investment property
Financial statements: SoRIE Financial report presentation: Consolidated report Distinction of current and non-current
assets/liabilities Business combinations: Everything is acquisition,
purchase method of accounting Functional currency Cash flow statements
7
Goods and service Tax (GST)
Single tax replacing indirect central and state taxes Exports- Zero rated, imports & domestic goods Destination principle Wider tax base Elimination of multiplicity and cascading effect Likely to increase exports Reduction in prices of goods Not applicable for real property, alcohol, petroleum
and natural gas, and electricity
8
SAP Applications
Enterprise Central Component FI CO Extended financials: VIM, Treasury, T&E, FI-CA
Business Objects Strategic enterprise Management (SEM) Enterprise Performance Management (EPM) BI, BW, XBRL Governance, Risk and compliance (GRC) Financial Supply Chain Management (FSCM)
9
Activity Sub-Activities SAP Solution
Strategy and execution Influence corporate strategy through financial insight, Encourage enterprise-wide adoption of Strategy, Execute Finance strategy
SEM: BPS,CPM, BCS, ERP financials (CO-PA)
Regulation and governance Monitor regulation and ensure compliance,Operate and monitor internal controls over financial
reporting, Rationalize and manage required governance bodies
GRC, BI, ERP financials, SEM:BPC, XBRL
Risk & Capital Identify and manage enterprise risks, Ensure access to capital, Optimize capital structure
GRC, FSCM, Treasury, ERP financials (collections, credit mgmt, AR, AP, invoice mgmt, cash-bank mgmt)
Performance & decisions Define and monitor enterprise performance metrics, Deliver information needed to make after-tax business decisions
EPM, SEM: CPM,BPS, ERP (CO-PA)
Close, consolidate & report Capture, summarize, analyze & report financial results and related disclosures to management and external stakeholders
BI, BW, XBRL, SEM: SRM
Transaction processing Process financial transactions efficiently and effectively
FSCM, FI-CA, T&E mgmt, ERP (new GL), VIM
10
Sector Analysis - Manufacturing
Challenge SAP Package Remarks
Reaping benefits of globalization
SEM:BCS, SEM:BIC, BW There is more than one package that can handle the same challenge. The choice of the package depends on the type of industry, organization and the objective to achieve.
Profitability Analysis CO-PA, BI, BW, XBRL, SEM: CPM
Mergers and acquisitions BI, BW, SEM:BCS
Managing and controlling financial risks
GRC, FSCM, Treasury, ERP financials (collections, credit mgmt, AR, AP, invoice mgmt, cash-bank mgmt), SEM:CPM, EPM
11
Sector Analysis - Retail
Challenge SAP Package Remarks
Mergers and acquisitions BI, BW, SEM:BCS There is more than one package that can handle the same challenge. The choice of the package depends on the type of industry, organization and the objective to achieve.
Profitability analysis CO-PA, BI, BW, XBRL, SEM: CPM
Financial consolidation SEM:BCS, BIC, BI, BW, XBRL, EPM
Forecasting (sales, profit etc)
SEM:BPS, CPM
12
Change Management Plan
Drafting the AS-IS finance function
Drafting expected finance function
GAP Analysis(Effort estimation)
Prioritizing Activities/Events
To-be finance function
Execute in-house or
outsource?
Selecting External Consulting Company
outsource
Project Implementation
plan
In-house
Change Management plan
Formation of Project Team
Project Execution and monitoring
13
Change Management Model
Changes in organizational structure (OT) Changes in the finance processes (FP) Training the people as per their roles (TP)
14
Change Management Model
Objective: Maximize Value addition∑ (BOT(i) – COT(i)) + ∑ (BFP(j) – CFP(j)) + ∑ (BTP(k) – CTP(k))
for all i, j and k
Prefix “B”= Benefits, “C”= Costs
Constraints ∑ CTP (k) ≤ TB for all k. TB is the training budget ∑ COT (i) ≤ OTB for all i. OTB is the budget for costs of
organizational change ∑ TFP (j) ≤ ET for all j. TFP =Time reqd for change in
financial process, ET= Overall Expected time for change
15
References
Report of GST Task force: E&Y Similarities and differences- A comparison of
IFRS, US GAAP and Indian GAAP: PwC Responsive Finance: Deloitte www.sap.com Change Management Strategies for
successful ERP implementation: Adel M Aladwani
16
Thank You
Recommended