SAPtips #4 060311 EMlinks

Undocumented Features…Timesaving Solutions…Best Practices

Unlocking the Value of your SAP InvestmentJu

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3 ◆ How Do We Assess Customer Profitability? A New Approach to Costing Freight and Other Expense Groups, by Russ Hardy, Data2Info Inc.To get a real handle on customer profitability, you need to account for thehidden costs in the order fulfillment process. SAP® customers have a great opportunity to truly identify their most profitable customers—just by usingfunctionality that comes with the CO module in virtually all versions of R/3.

SAPtips © 2003 Klee Associates, Inc.

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C O V E R S T O R Y

F E A T U R E S8 ◆ FINANCIALS - What's So Special About Special G/L Indicators?

by Rohana Gunawardena, Exium, Inc. Sometimes the best SAP function-ality is sitting right in front of our eyes. Such is the case for Special G/LIndicators. Once you realize what the Special G/L Indicators can do,you'll wonder why you didn't take advantage of them sooner.

18 ◆ SAP CRM - Using the Reference Document Field for Pricing in CRMand R/3: A Case Study, by Scott Cameron, SAP CRM Consultant. One ofthe most fascinating things about SAP CRM is the tight integrationbetween CRM and R/3, and the flexible customization that is possiblebetween them. SAP CRM Editor Scott Cameron has just completed such a project, in which he and his team created a custom solution for pricingsurcharges in both R/3 and CRM.

22 ◆ APO - Fulfilling the Promise: APO's Advanced Checking Capabilities -Contrasting Multi-Level Checking and Capable to Promise, by DanSulzinger, e-Consulting Group, Inc. Fresh from his most recent investiga-tions into APO 3.0 and the latest-and-greatest version (3.1), APO EditorDan Sulzinger is here to tell us about the rich possibilities available toSAP users in the GATP Advanced Methods area—focusing on two of thesemethods, Multi-Level Checking and Capable to Promise.

26 ◆ LOGISTICS - Taking Advantage of Pricing Extensions Within SD, byJim O'Day, Nassau Technology Group. Logistics Editor Jim O' Daydemonstrates the precision of SAP pricing by explaining how to make areturn credit price dependant upon the returned condition of the material.As with all of Jim's tips to date, readers don't need any mySAP®-relatedproducts to take full advantage of his recommendations.

32 ◆ HR & PAYROLL - Improving Your HR Reporting Strategy: How toUse Output Management and Ad Hoc Query Tools for Better HRReporting, by Greg Robinette, Robinette Consulting. HR Payroll EditorGreg Robinette always has fresh ideas on how to enhance HR reporting inR/3. In this latest article, Greg explains how Ad Hoc Queries can be usedto locate and present customized reporting data from Payroll Infotypes. Healso advises us on how to develop an output management strategy to ensurethat SAP reporting is done on the basis of "lowest cost, highest output."

F R O M O U RM A N A G I N G

E D I T O RAt SAPtips, our mission is so simple,

it's almost a cliché: we're dedicated tohelping SAP® users get the most out oftheir SAP systems. But the truth is thatit's not a cliché at all: running SAPwithout a world-class SAP knowledgebase can get you in a world of trouble.Don't take my word for it—just try thisrecent SAP news from Computer Weeklyout for size: "Industrial gas giant BOChas lost as much as $7 million dollarsdue to poor planning during a SAP ERPimplementation at its US operation."Clearly, implementing enterprise soft-ware is still high stakes stuff, and get-ting the most out of your SAP system isindeed a "bottom line" issue.

We believe SAPtips can play animportant role in helping companies toidentify inefficiencies and anticipatecostly snafus. The consultants whowrite for us have been around theblock more than a few times, and everylast one of them truly believes that thelessons they've learned can make a dif-ference to other SAP users. They're

From the Editor continued on page 2

Jon Reed, Managing Editor

Managing Editor: Jon ReedPublisher: Andy Klee

Assistant Editor: Emil MarxGraphic Designer: Mark Hunter

Klee Associates, Inc.1-866-JDETips 1-970-856-4811


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White Papers continued on page 3

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From the Editor continued from page 1

glad that SAPtips gives them an outletto share this hard-won information,and we're sure glad to give them thatopportunity. Their passion for solvingbusiness problems with SAP is the trueengine behind SAPtips.

Of course, the hardest thing about"getting the most out of SAP" is thatSAP itself is a moving target. You canwear yourself out just keeping track ofthe acronyms as SAP modifies andexpands its product line. Just last week,I was interviewing an SEM consultantwho mentioned a new aspect of SEMcalled "SRM," and I said, "But isn'tthat the same abbreviation that SAP isusing for Supplier RelationshipManagement?" The answer, of course,was "yes," and we laughed it off,because we know that by the time wesort it out, SAP will have clarified theissue and moved on to some other newproduct branding initiative.

But sorting out the terminology is notso funny when you're assessing majorupgrade options, and you don't under-stand how the Internet TransactionServer evolved into the Web ApplicationServer, which is now part of theNetWeaver technology platform.

At SAPtips, we're here to help youmake sense out of all the acronyms thatfall within the broad landscape of SAPand mySAP® products (and restassured, over time, we'll get to themall). Our editorial coverage maintainsa dual focus: helping users get the mostout of existing R/3 functionality, andmaking sense of new SAP technologiessuch as mySAP products and Web-related initiatives.

This issue's cover story illustrates ourcommitment to helping users leveragetheir existing R/3 investment. In the firstof a series of articles on analyzing cus-tomer profitability, FI/CO Editor RussHardy shows us how the CO modulecan be used to track hidden customercosts such as freight, samples, andproduct returns. Continuing with thetheme of "getting the most out of R/3,"our new FI/CO Editor RohanaGunawardena debuts with a handyarticle about how to utilize a SpecialG/L indicator that most users see everyday but don't necessarily take advan-tage of. Our editors swear by the factthat the average SAP user isn't fully uti-lizing the R/3 functionality they'vealready paid for, and many of our arti-cles touch on this theme.

41 ◆ BUSINESS WAREHOUSE - Using BW for Industry-Specific Business Content: SAP IS-Retail Data Design and Reporting in BW, byArthur "Pat" Pesa, arthurpesa, inc. In this article, BW Editor Pat Pesa gives readers his first view of Business Warehouse from a functional direction. Focusing on how to populate BW InfoCubes with retail business content for reporting purposes, Pat's insights will be of special interest to SAP retail users. This article will also be relevant to SAP users who are concerned with BW InfoCube design and population and BW reporting capabilities.

47 ◆ ABAP/JAVA DEVELOPMENT - Enhancing SAP Value withMobile Business Solutions: A Hands-on Guide to SAP Mobile Development(Part One of Two), by Krishna Kumar, Enterprise Horizons Inc. In thisgroundbreaking article (the first in a two-part series), ABAP/Java EditorKrishna Kumar outlines the architectural choices and implementationchallenges facing the SAP mobile development team. Krishna also guidesus through the mobile device options available for SAP users and assessesthe cost and functionality parameters for each.

55 ◆ BASIS - Can Your System Handle the Stress? A Step-by-Step Guide toStress-Testing Your SAP System, by Joey Hirao, Jotech LLC. If you want tofind out how much "load" your SAP system can handle, you have twooptions: you can wait till your system is live and "see what happens," oryou can conduct pre-"go live" stress tests to ensure that your system isready for anything your users can throw at it.

59 ◆ CIO CORNER - Why Some CIOs Are Ten Times More Effective ThanOthers, by Harry Joiner, Reliable Growth. Harry's bold and incisive takeon how CIOs can stand out from their peers by combining tangible andintangible leadership skills.

WHITE PAPERS

New White Papers Now AvailableFor SAPtips Subscribers on www.SAPtips.com

How to Develop Web Services in WebAS Part One: Making Sense of BusinessServer Pages by Axel Angeli, Logosworld.com Reading about hot new SAP technolo-gies like Web Application Server and Business Server Pages is one thing, understand-ing how they can help your company build a more web-friendly SAP architecture isanother. Maybe it's because SAP technical guru Axel Angeli is based in Germany(SAP AG headquarters), or maybe it's just his passion for all things SAP, but Axelseems to have a better handle on SAP's new technology platform (and how to explainit) than anyone we know. We're very excited to have Axel on board for a series of articles on developing web services using SAP's Web Application Server. In his bril-liant debut article, Axel not only lays the groundwork for a conceptual understandingof SAP web services, he also helps us with the simple questions we needed to know,like the differences between WebAS versions 6.1, 6.2, and 6.3, and why the WebApplication Server is such a technical breakthrough in the first place.

From the Editor continued on page 3


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In terms of our other mission, demys-tifying new SAP functionality, we'vegot great articles on a number of cut-ting edge SAP areas this time, fromAdvanced Checking Capabilities with-in APO, to a case study of SAP CRM-R/3 integration, to ABAP/Java EditorKrishna Kumar's tour de force articleon SAP Mobile (Wireless) Deployment.And once again we've got some excel-lent white papers for you (see the listat the end of the table of contents),which subscribers can download fromour document library. If you want toget a better handle on SAP WebServices and the Web ApplicationServer, you won't want to miss AxelAngeli's outstanding white paper. Axelexplains the "moving target" of SAP'sevolving technology as well as anywriter I know.

Finally, you'll see that in this editionof SAPtips, we tackle some of theindustry-specific issues that SAP usersare dealing with. BW Editor Pat Pesa'sarticle addresses key issues for retailand consumer products users who arerunning BW and/or IS-Retail, andSimon Core's white paper on theBudgetary Ledger is directed specifi-cally towards the needs of SAP PublicSector users. We'll continue to offerarticles with industry-specific contentin future editions of SAPtips.

Of course, every SAP user's needs area little different, and that's why all ofour editors, myself included, welcomefeedback from our subscribers on thecontent of our articles and the types ofarticles you want to see. At SAPtips,we're not interested in "one size fits all"advice; we know that each SAP user isfacing unique implementation chal-lenges and testy economic circum-stances. As we see it, SAP can eitherhelp companies face these challengesmore effectively, or SAP can becomepart of the problem. At SAPtips, we'recommitted to helping companies findcreative ways to use their SAPresources, anticipating problems beforethey occur.

We look forward to hearing from youand taking your feedback into accountin future editions of SAPtips.

Jon Reed, Managing Editor, [email protected]. �

From the Editor continued from page 2Managing A Portfolio of Projects in an SAP Environment: A Step-by-Step Guide,Using the Investment Management (IM) Module by A. Kent Bettisworth,Bettisworth and Associates, Inc. "Managing a Portfolio of Projects" might sound abit theoretical, but as this white paper proves, it's anything but. As more and moreSAP users look to utilize their SAP data in strategic ways, Project PortfolioManagement enables companies to combine high-level budgetary planning with areal-time ability to adjust tight budgets and re-allocate scarce resources as markets fluctuate. One of the foremost leaders in this field, Kent Bettisworth, hascrafted a fascinating, in-depth article on how to draw on core R/3 functionality inthe Investment Management and Project Systems modules to achieve a whole newlevel of control over project cost management. In this ambitious article, Kent manages to combine innovative costing strategies with hands-on configurationtechniques. Best of all, the con set up in just a few weeks. Because Kent knows thatthere are always stumbling blocks along the way to SAP greatness, he's devotedmuch of this article to nitty gritty of identifying common IM/PS implementationproblems and recommending proven solutions.

IS-PS: CONFIGURING THE BUDGETARY LEDGER by Simon Core, FI/FM ConsultantPublic Sector organizations running SAP have special financial considerations andbudgetary regulations to comply with. SAP's IS-PS industry solution ships withsome helpful functionality in the Budgetary Ledger that SAP users can takeadvantage of. In this hands-on guide to configuring the Budgetary Ledger, FI/FMconsultant Simon Core explains the two aspects of the Budgetary Ledger derivation tool, and how the integration between Budgetary Ledger and FundsManagement helps Public Sector companies stay on top of budgetary accountingin compliance with government guidelines.

A DATA ARCHIVING STRATEGY FOR INTERMEDIATE DOCUMENTS (IDOCS)by Breck Whitten, SAP Data Archiving Project Manager, Halliburton Breck Whittenhas learned the hard way: when you manage a database that is 3.5 terabytes in size,all of your data archiving snafus are magnified. Fortunately for us, Breck is willingto share the insights his team has gleaned from their data archiving challenges. Inhis latest article, Breck tells us about how his team discovered some inefficiencies intheir archiving of IDOCs, and he outlines the methodology they developed to reduceIDOC archiving costs and improve archiving efficiency. As always, Breck's in-deptharticle comes complete with a detailed configuration guide and terminology appendix.


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Editor's Note: To get a realhandle on customer profitabili-ty, you need to account for thehidden costs in the order fulfill-ment process. As FI/CO EditorRuss Hardy notes, SAP® cus-tomers have a great opportunityto truly identify their most prof-itable customers—just by usingfunctionality that comes with theCO module in virtually all ver-sions of R/3. In this issue's coverstory, Russ walks us throughhow to take a customer-prof-itability approach to the costingof freight, returns, and otherexpense groups. In future edi-tions of SAPtips, Russ willexpand on the theme of customerprofitability as it applies to theidentification of other significant"hidden costs"—all by using theunderutilized but standard R/3functionality.

When I read Harry Joiner's"Five Secrets of a Winning CRMStrategy" in the April 2003 edi-tion of SAPtips, I realized thatcustomer profitability is one of thekey areas in SAP that companieshave under-utilized. The perspec-tives Harry provided reinforced,in my mind, the benefits of differ-ent approaches to measuring andreporting profitability within SAP.

One of Harry’s references was tothe outdated production andadvertising approach of "massmarkets." Harry notes that it'sgetting more difficult to achieveprofitability in a saturated "metoo" marketplace, where cus-tomers have 24/7 access to prod-ucts and expect customized solu-

tions at rock bottom prices. To beprofitable, firms need to use infor-mation to discover opportunitieswithin their individual customervalue streams. A shift to cus-tomer-centricity, however,requires an awareness of whenand where to spend money toachieve high ROI on marketingexpenditures. Customers are notall the same, and the costs of pro-viding efficient interactivity withcustomers should be part of a cus-tomer profitability analysis.

Since the core R/3 transactionprocessing system has crucial datathat is relevant to customer-prof-itability analysis, it makes senseto use CO-PA for some of thisanalysis. In this article, we'll givereaders several tips for using CO-PA to analyze customer profitabil-ity. We'll start with an in-depthlook at a better way of allocatingfreight expenses, and then we'll

touch on how these same tech-niques can be used in otherexpense areas, such as returns andspecial handling. These tips canbe utilized in all versions of SAPfrom 3.1 onward.

Costing Freight, Part One:A Typical Scenario

A common scenario for theorder-to-cash process is the record-ing of freight charges. Often a firmhas a freight-rating system thatcalculates a suitable freight rate fora given shipment to a customership-to address. This is usuallyrecorded in the form of an SDPricing Condition Type ZF00, forexample (note that the SAP deliv-ered condition types of HD00 orKF00 could also be used). Oncerecorded, the same freight rate canbe shown on the sales billing docu-ment-pricing procedure.

Another part of this commonapproach is to have a cost centerthat collects the actual freightcosts as they come in from thepurchasing/AP system. Oftenthese expenses are aggregated andbear no attributes to differentiateby customer/product detail. Evenif they did, the A/P and cost cen-ter accounting systems do nothave a mechanism to post detailto customer segments. The freightexpenses are also often posted ina different fiscal period than thesales billing documents. Thisaccounting treatment does notlend itself to any on-line integrat-ed customer-profitability analysis.

If the FOB1 terms result in thefreight charges being billed to the

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How Do We Assess Customer Profitability? A New Approach to Costing Freight and Other Expense Groups

by Russ Hardy, Data2Info Inc.

Customer profitability

is one of the key

areas in SAP that

companies have

under-utilized.

1 Freight On Board – the contractual terms of shipment detailing who pays for what and when ownership changes.


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customer, then theSD design is usuallyto record these dol-lars as a "cost recov-ery to a cost center."This is accomplishedby having theCondition TypeZFCC mapped toaccount key ERFthat has an accountassignment to anexpense cost elementtype 1 and a costobject assignment ofa cost center (usual-ly the same cost cen-ter that has capturedthe expenses). Theconfiguration has toaddress the SAPtreatment of costobjects, where aprofitability segmentis the primary costobject and a costcenter would have astatistical posting.There is a substitution rule thatsets the profitability segment to"null," allowing the cost center tobe the real cost object inControlling.

If the shipping contracts arebeing managed appropriately andthe freight-rating system is main-tained consistently with the con-tracts, then the freight cost centerwould probably have only a smallresidual net balance. This isassuming that any time differ-ences between recognition ofexpenses and the capture ofrecoveries are ignored for thisanalysis and everyone is happy(from an internal expense man-agement perspective).

But we haven’t addressed cus-tomer profitability! We don'tknow which customers are costingus the most in freight charges, and

we have no way of determiningwhich accounts are the most prof-itable (and deserve the mostattention and service).

Costing Freight, Part Two: How to Allocate FreightCosts to IndividualCustomer Accounts

If we want to tie freight costs toindividual customers, the ques-tion comes down to whether thecustomer is billed for these freightcharges or not. Many companieshave customers with both "FOBshipping plant" or "FOB cus-tomer dock." This obviouslyimpacts customer profitabilityand the comparability of one cus-tomer with another. We need tofind a way to meet the cost centeraccounting view described above,while also creating a customerprofitability view in costing basedCO-PA. One can accomplish this

by defining the SD PricingProcedure to deal with freight,using three lines (shown as 300,400, & 500 in the example inFigure 1).

The intent is to record freightcharges in CO-PA as a customer-related cost, except for those billingswhere the customer pays. Thefreight recoveries would be postedto a cost center. See Figure 2.

For us to realize a "profitable"approach to freight costing, thefollowing points must beaddressed:

1. The freight-rating system(or an SAP condition record)should populate SD condi-tion ZF00 with a freightcharge appropriate for thisproduct/customer ship-toscenario. This condition typeJ

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Figure 1: SD Pricing for Freight


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is statistical (i.e., it is notposted to FI-GL), but shouldbe mapped to a CO-PA valuefield in costing-basedProfitability Analysis.

If the customer is to be charged forthese costs, then the SD pricing pro-cedure should copy this amountinto a different condition, ZFCC.The dollars are then posted viaSD/FI Account Determination to anFI-GL account, and in CO-CCA tothe cost center of the coding block(remember to use a substitutionrule to delete the cost object assign-ment to a profitability segment).

2. The reverse or negative valueof condition ZFCC should becopied into SD condition ZFPA(ZFPA only has a value if thecustomer is being billed forfreight). ZFPA is also statisti-cal, and is mapped to the sameCO-PA value field as ZF00.Remember to keep the plusand minus signs of SD, FI, andPA sorted out appropriately:

• ZF00: positive in SD, positive in PA, doesn’t post to FI

• ZFCC: positive in SD, cred-it in FI, credit in CO, does-n’t post to PA

• ZFPA: negative in SD, nega-tive in PA, doesn’t post to FI

The result is that if a customer

is billed for the freight, then thevalue recorded in CO-PA to valuefield VVFRO is zero. Otherwise,the freight cost is recorded in CO-PA for the customer.

A further design option for thisscenario would be to use valuefield VVFO in CO-PA as the trac-ing factor for a cost center assess-ment at month end. Any residualamounts in the freight cost centerwould then be allocated to onlythose customers who drive freightcosts. It would be a business deci-sion regarding how any residualfreight expenses would be allocat-ed; logic could be presented forany number of allocation bases.

A CO-PA customer profitabilityreport can now be designed inreport painter that shows revenue

less various discounts (sometimes referred to as a "price waterfall") equals net sales

less product costequals ,margin

less direct freight plus indirectfreightequals realized profit

Comparing "realized profit"over a range of customers pro-vides a picture of profitability thatcontains some insight to the vari-ability. One could plot this datawith a GIS software application

(geographic information system)to get a visual depiction of howprofitability varies by region,sales district, or marketing pro-grams. One could compare theprofitability of existing customersto potential new customers thatmay have more favorable ship-ping terms or logistics. One couldcompare low customer profitabili-ty with logistics data to analyzeoptions (such as sourcing options,different carriers, different modesof shipment, different packagingimpacts, etc.).

Such comparisons can triggerinnovative thoughts. For example:when assessing customer prof-itability, since one can includedata for outbound freight, can oneinclude any data relating toinbound freight charges? This is amuch more complicated scenario,but one that may be interesting toexplore in a future article

Free SamplesHaving done this for freight,

one can see opportunities to dosimilar accounting for other cus-tomer costs. Another examplewould be for "Free Samples." Aswith freight, a commonapproach is to capture the prod-uct cost for the free sample(usually shown in the pricingprocedure as SD Condition TypeVPRS) and then to post these toa sales or marketing cost centeras an expense. J

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Figure 2: Freight Condition Types

SD ConditionReal or Statistical Account CO-PA Value Field& Cost Object

ZF00 Freight Cost Statistical CO-PA N/A VVFRO

ZFCC Customer Charge Real Cost Center 6nnnnnnn N/Aexpense cost element

ZFPA = negative value of ZFCC StatisticalCO-PA N/A VVFRO


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To concurrently capture thecosts of free samples as a cus-tomer-related cost, one would addto the SD Pricing Procedure a sta-tistical condition (for example,ZCFS) that was a copy of theVPRS value. Then this could bemapped to a CO-PA value fieldand reported as a customer cost.

Product ReturnsA third example relates to

product returns. The standardSAP treatment of returns is thatthey result in a reversal or reduc-tion in sales revenue. With a verysimple CO-PA valuation user exitABAP code, one could test for theSD billing document type and ifit is "RE" for a return, then therevenue could be copied into adifferent value field. Thus, thecustomer profitability statementwould show the original salesrevenues and how much waseroded due to returns. This viewconsiders returns as a "cost ofquality" from a customer per-spective. If the sales order "rea-son code" is also captured as aCO-PA characteristic, then thecustomer profitability can beanalyzed by that view of thebusiness.

Special Packaging orHandling

Some customers require specialhandling or packaging related totheir orders. Examples could bespecific packaging materials, spe-cial labeling, picking and packingrelated to different quantities orunits of measure, additional testing,and many other scenarios. To theextent that these are significantextra costs incurred for identifiablecustomers, and that at least an esti-mate can be made of the amount orcost per unit, then there may beways to include these as customercosts within the CO-PA posting.

The easiest method would be tohave these as conditiontypes/records within the SD pricingprocedure. Then the mapping toCO-PA is quite natural and wouldbe similar to the treatment of freightas discussed above.

If this approach is not practi-cal, then another option is to havea month-end allocation process inCO-PA. This could be a straight-forward assessment of costs froma logistics cost center to CO-PAprofitability segments, based onsome arbitrary tracing factor. Ofcourse, a monthly SAP COprocess does not support anybilling of these service charges tocustomers; it would be solely aninternal cost analysis tool.

However, a more precise methodthan the "peanut butter spread"approach of assessments may be touse an "Indirect ActivityAllocation" from a cost center to aprofitability segment.

The work area responsible forproviding the extra services couldset up "Activity Types" for eachdifferent service. There wouldneed to be a planned activity priceposted to the activity type/costcenter combinations (usuallyentered annually as part of thebudget process). The indirect-activity allocation cycle definitionwould then stipulate how muchactivity was consumed per periodper receiver.

The execution at month-endwould then multiply the quantityof service provided times the price,crediting the cost center and deb-iting the profitability segment.Usually the receiver would not beto a low level of detail such as"individual customer." That lowlevel of detail may not be known

and could also be a performanceissue. The receiver would likely besome user-defined customer grouplevel, and then, if necessary, thecosts could be further allocateddown to customer by use of the"Top-Down Distribution" func-tionality within CO-PA.

ConclusionThese are a few examples of

using core R3 CO-PA to capturedetails relating to customer prof-itability that otherwise would belost in the expense part of a Profitand Loss Statement. For thosecustomer costs relating to balancesheet influences such as workingcapital (e.g.. customer cost ofcredit, inventory carrying costs,consignment costs, etc.), a toolsuch as SEM may be more useful.In any case, the objective isalways the same: to get muchmore detail on the customer vari-able costs previously embedded inexpense categories, so that stepscan be taken to squeeze the costsout and to assist with customeraccount management (pricing,entry/exit strategies, cross andup-selling, etc.).

Russ Hardy, Data2Info Inc. Russhas over eight years of SAP experi-ence, having consulted on tenmajor SAP projects to date. Hisspecialties are business metrics andfinancial results planning. Hisexpertise includes all of SAP'sControlling (CO module) function-ality, with detailed expertise in CO-PA (Profitability Analysis). Beyondthe core SAP R/3 area, Russ is cer-tified as a mySAP® SEM (StrategicEnterprise Management) consult-ant. Russ is also certified as aBusiness Process Design consult-ant. Russ can be reached [email protected]. �


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Editor's Note: Sometimes thebest SAP® functionality is sittingright in front of our eyes, butwe're so used to our routine thatwe pass right over it. Such is thecase for Special G/L Indicators—a handy but overlooked checkboxthat appears whenever you postan FI document. As our newFI/CO Editor RohanaGunawardena knows firsthand,once you realize what the SpecialG/L Indicators can do, you'llwonder why you didn't takeadvantage of them sooner. Thoselittle indicators can be used for allkinds of handy projects—mostnotably the segregation of cus-tomer and vendor balances forbetter FI/CO reporting. In thisscreen-shot intensive, step-by-step article, Rohana tells us howwe can use the Special G/L forseveral common business needs,including the factoring (sale) ofinvoices to third parties for cashflow purposes.

1. What Is a Special G/LIndicator?

Have you ever looked at thatsmall box next to the accountnumber when posting an FI docu-ment and wondered what it does?Did you assume that this smallfield was related to somethingobscure like a bill of exchange, sosurely it couldn't be that impor-tant? In this article, I will explainto you just how powerful thissmall field can be and how you

can harness it to your advantage.I will start with an overview of

what the Special G/L indicatorfield does and finish with anexample of how this functionalitycan be harnessed to provide anelegant solution for recording fac-tored invoices.

The main benefit of using thisfield is the segregation of customerand vendor balances to allow moreeffective reporting. Do your cus-tomers or vendors have balancesthat are different from the normalday-to-day trade balances, e.g.,deposits or trade credits? Have youever wondered how to report theseseparately, other than recordingthe transactions in Excel?

Special G/L transactions inaccounts receivable andaccounts payable can be shownseparately in the general ledgerand sub-ledger. They allow youto segregate customer or vendorbalances so they can be reportedseparately from regular tradebalances.

Some standard SAP processeswhere Special G/L Indicators areused:

• Security deposits

• Down payments

• Bills of exchange

• Guarantees

• Individual value adjustments

• Amortization

• nterest receivable

1.1. Reconciliation AccountsNormally, the G/L reconcilia-

tion account for an A/R or A/Ptransaction is based on the valuein the customer or vendor mas-ter record. By assigning aSpecial G/L indicator to theposting, you can override thedefault reconciliation accountand have the balances in theG/L segregated for more effec-tive G/L reporting.

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What's So Special About Special G/L Indicatorsby Rohana Gunawardena, Exium Inc.

Figure 1: Account Entry Fields at the Bottom of the FI Document Entry Screen, FB01

The main benefit of

using the Special G/L

field is the segrega-

tion of customer and

vendor balances to

allow for more

effective reporting.


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When an FI-AR or FI-AP docu-ment is posted, the default recon-ciliation account can be seen inthe FI document. In this case thereconciliation account 12000002is chosen from the customer mas-ter record. See Figure 2.

When a posting is made using aSpecial G/L indicator, the defaultreconciliation account is changed.In Figure 3, the Special G/L indi-cator N has been used, and as aresult G/L account 12016102 isused as the reconciliation account.See Figure 4.

2. What Does the G/LIndicator Do?

2.1. Posting KeyWhen posting customer or ven-

dor transactions, only the follow-ing posting keys can be used withSpecial G/L indicators. In theposting key configuration, OB41,the Special G/L check box ismarked for these posting keys.

09 Customer Special G/L Debit 19 Customer Special G/L Credit 29 Vendor Special G/L Debit 39 Vendor Special G/L Credit

This list does highlight one potential down side to usingSpecial G/L indicators: withnormal AR & AP postings,transaction types can be seg-regated by posting key, e.g.,posting key 15 for incomingpayments. But if an incom-ing payment is posted with aSpecial G/L indicator, thereis no pre-set way to segre-gate it from other SpecialG/L credits. However, if youwanted, you could createadditional posting keys for

Special G/L transactions in trans-action OB41.

2.2. Integration Between FI-GL and the AR & AP Sub-Ledgers

This is a brief overview of howto integrate an AR posting to G/Lin SAP.

A typical AR posting would be acash payment by the customer. Thisis a two line JV entered by the userinto SAP using transaction F-28:

Dr 10470002 CashCr 13564 Customer XYZ

This can be thought of asa three-line entry: a balanc-ing JV to G/L and a single-sided entry in the AR sub-ledger. The three entrieshappen to be automaticallybased on the two-line JVentered by the user into SAP.Remember that AR is a sin-gle-sided sub-ledger, whileG/L is a balancing double-sided ledger:

Double-sided G/L entryDr 10470002 CashCr 120000 Trade A/R

Single-sided AR entryCr 13564 Customer XYZ

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Figure 2: Default Reconciliation Account in the Customer Master, Transaction XD03

Figure 3: The Default Reconciliation Account Can Be Seen in the FI Customer Document

Figure 4: Modified Reconciliation Account When a Special G/L Indicator Is Used.


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You can see that the singlecustomer line is posting toboth G/L & AR by looking atthe line item detail of the doc-ument, where you can seeboth a customer number anda G/L account number. SeeFigure 3 & Figure 4.

2.3. Reporting

2.3.1. Line Item DisplayWhen using the FBL1 &

FBL5 line item display trans-actions, the Special G/L indi-cator transactions are sepa-rated at the bottom of the list,with a summary of balancesby Special G/L indicators.See Figure 5.

A summary of customerbalances by Special G/L indi-cators can be found quickly intransaction FD10 under theSpecial G/L tab. See Figure 6.

2.3.2. G/L BalancesUsing report RFSSLD00, or

any other FI-GL account bal-ance report, you can view thebalances on the different rec-onciliation accounts. SeeFigure 7.

3. Default Values3.1. Parameters for FBL1

& FBL5When displaying customer

(FBL5) and vendor (FBL1)line items, the default value toselect Special G/L items can-not be set in the regular FB00transaction where userdefaults for FI can be set. SeeFigure 8.

In this case, setting theparameters is done by enter-ing Parameter ID LD0 forcustomers and LK0 for ven-dors (value "X X") in your

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Figure 5: Customer Line Item Display Using Transaction FBL5

Figure 6: A Summary of Special G/L Balances Can Be Found in Transaction FD10


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user profile. Use thispath: TransactionSU3, Parameterstab, System Ë Userprofile Ë Own dataË Parameters tab(press)

4. StandardIndicators

Many Special G/Lindicators are con-figured in the stan-dard SAP system. Touse these, you onlyneed to define thealternate reconcilia-tion accounts in con-figuration. SeeFigure 10.

4.1. Indicator-Specific Screens

For severalprocesses such as Billof Exchange andDown Payments,SAP has developed indicator-spe-cific screens and transactions thatare used in conjunction with theSpecial G/L indicators. In these

cases, a little known field called"Special G/L transaction type",UMSKS, comes into play.Whenever a Special G/L indicator

is defined, a matching Special G/Ltransaction type is defined auto-matically by SAP in tableT074U—it is usually the same as

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Figure 7: Segregated Special G/L Balances Can Be Seen in the G/L, Report RFSSLD00

Figure 8: Transaction FBL5 Selection Screen

Figure 9: Set User Parameters to Automatically Select Special G/L Items, Transaction SU3


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the Special G/L indicator.In the case of Bill of Exchange

and Down Payment Special G/Lindicators, the Special G/L trans-action type is always one of thetwo values below:

These values cause the indica-tor-specific screens to be activeduring FI document entry anddisplay.

5. Factoring Example5.1. OverviewMany businesses factor

their invoices and sell theinvoices before they are paidby the customer to a thirdparty such as a bank for asmall discount in order tohelp their cash flow. Once thecompanies sell the invoices tothe bank, they still have tocollect the full payment fromthe customer and pass this onto the bank. They also need torecord the receipt of cash andpayment of a discount fee tothe bank for providing thefactoring service. If not allinvoices for a customer arebeing factored, it is alsoessential to identify whichinvoices are factored, so thatthe bank can be re-paid assoon as the cash is received.

In SAP, there is no standardfunctionality to deal with thissituation.

There are several possiblesolutions:

1. Leave factored items on cus-tomer account in SAP andrecord factored items in Excel.

2. Create a custom Special G/Lindicator to record factoredinvoices.

3. As the factoring process is avery similar business process tobills of exchange, configure a

custom Special G/L indicatorlinked to the bill of exchangefunctionality, Special G/Ltransaction type = "W", whichcan be configured using trans-action OBYN.

4. Create a Special factoring cus-tomer and transfer the factoredinvoices to the factoring cus-tomer.

Let’s consider these solutions:

1. Using Excel or another exter-nal system is easy to set up andcan be managed by theaccounting user. However, thesolution is not scalable whenlarge volumes of data areinvolved, and the reporting willnot be available globally to allusers. Problems also arise whenmultiple users need to updatedata at the same time.

2. The Special G/L indicatorsolution allows the user toleverage existing functionalityin SAP, especially reporting. Itallows a clear indication of thecustomer position using theFBL5 transaction and segre-gates the factored amount onthe balance sheet.

3. The bill of exchange basedsolution is quite interesting, asit allows the use of the Specialbill of exchange screens in FIdocument entry, which allowsfor additional data entry.

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Figure 10: Some of the Standard Special G/LIndicators

Special G/L Process Special G/L Process Specific Configurationtransaction type Indicators Transactions Transactions

A Down Payments A, B, C, F, I, F-37, F-29, F-39, OBXR, OBYRJ, K, M, O, T, U, V, Z F-47, F-48, F-54

W Bill of Exchange B, Q, R, S, W FBW1, FBW2, F-36, OBYN, OBYMF-33, F-34, F-35, F-20,FBW5, F-40, FBW6


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4. With a Special factoringcustomer, you will not beable to view all of the cus-tomer's items on one screen,and a new customer needsto be created for each cus-tomer, who has to be fac-tored. When moving invoic-es to the new account, youwill have to use cross-cus-tomer clearing, which addsto the complexity.

My experience has been thatend users have usually pre-ferred option two at first, how-ever, they will usually requireadditional memo and datefields for factored documents,which results in option three beingthe best solution, as you can usethe additional bill of exchangefields to store this data, and youcan also use additional reportingsuch as RFWEKO02. The only

draw back is that the end-userprocess gets a little more complexas the Special bill of exchangetransactions need to be used. Tokeep the focus on the Special G/Lfunctionality, I will focus on option2 as a solution.

5.2. Configuration Most of the required configura-

tion is located in the IMG at IMG ËFinancial Accounting Ë AccountsReceivable and Accounts Payable ËBusiness Transactions Ë Postingswith Alternative Reconciliation

Account Ë Other Special G/LTransactions.

5.2.1. Define SpecialG/L Indicator

When defining a newSpecial G/L indicator, it iswise to choose a numberrather than a letter, as SAPhas selected most of the let-ters for pre-defined use.

To create a new SpecialG/L indicator, choose trans-action OBXY, DefineAlternative ReconciliationAccount for Customer, orOBXT, Define AlternativeReconciliation Account forVendors. See Figure 12.

Create the new entry andthen double click on theentry to define the reconcil-iation accounts to be used.See Figure 13.

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Figure 11: Bill of Exchange Specific Data Entry Screen.

Figure 12: Define New Special G/L Indicators in Transaction OBXY


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You will be taken to the proper-ties screen where you can enterseparate texts for the debit andcredit transactions.

Do make a note of the check-box "Rel.to credit limit"— thiscan be used to include or excludethe Special G/L balances fromcredit management calculations.Your selection for this item willdepend on whether or not youhave a contract for recourse ornon-recourse factoring. In thisexample, the checkbox is blank,so Special G/L balances do notimpact credit management as theclient has contracted for non-recourse factoring, where the fac-toring company carries the bur-den of bad debts.

When assigning an alternatereconciliation account for theSpecial G/L indicator, remem-ber that this is dependant on thecustomer or vendors' defaultreconciliation account. If youuse many reconciliationaccounts, you will have to makemultiple entries.

Note that the same Special G/Lindicator code can exist for a cus-tomer and vendor account andhave a completely different use for

each. The customer account andvendor account indicators are com-pletely independent of each other.

5.2.2. Define DocumentChange Rules

Transaction OB32, IMG path =IMG Ë Financial Accounting ËFinancial Accounting GlobalSettings Ë Document Ë Line itemË Define Document Change Rule

This configuration allows forthe change of certain FI documentfields in change mode, FB02,when used in conjunction withSpecial G/L indicators. I will notuse this setting in this example,but it may be useful for you withyour local configuration.

5.3. AccountsHere is an overview of the G/L

accounts used in this example:

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Figure 13: Enter Texts for New Special G/L Indicator in Popup Screen

Figure 14: Define Properties for Indicator

Figure 15: Assign Alternate Reconciliation Account


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5.4. Transaction StepsHere are the SAP transactions

steps to be undertaken in the fac-toring life cycle.

5.4.1. Create InvoiceAs part of the normal invoicing

process, the FI invoice document,RX, is posted to the customeraccount.

5.4.2. Record Invoices forFactoring

Once you have decided whichinvoices to factor, you will need tomove these to be line items withSpecial G/L indicator 0. Createthe new lines with transactionFB05 and clear the existing RXinvoice line. In the accountingdetail below, I have shown thereconciliation account number,but you will actually post to thecustomer number.

5.4.3. Record Incoming Cashfrom Factoring Company/Bank

Record the cash payment fromthe factoring company/bank inyour cash account and expense thefactoring discount. Also record theliability of the repayment to thefactoring company. Post as a regu-lar SA journal using FB01.

5.4.4. Record Cash Receiptfrom Customer

When the customer makes apayment, clear the open SpecialG/L item with transaction F-28like any normal customer pay-ment. In the accounting detailbelow, I have shown the reconcili-ation account number, but youwill actually post to the customernumber.

5.4.5. Record Cash Repayableto Factoring Company/Bank

Once the customer has made apayment, you need to record theamount to be repaid to the factor-ing company/bank, as this is real-ly their cash that you are collect-ing on their behalf. Post as a reg-ular SA journal using FB01. Youcan use a daily list of clearedSpecial G/L indicator 0 line itemsto calculate the amount to beposted. You can manage account120160 on an open item basis forgreater clarity and post this entryusing F-04.

5.4.6. Remit Cash toFactoring Company/Bank

On a regular basis, make arepayment to the factoring com-pany/bank of the amountsrepaid by the customer. Actualfrequency and process of repay-ment will depend on your con-tract with the factoring compa-ny/bank. Post as a regular SAjournal using FB01.

5.5. AccountingHere is an overview of the

accounting transactions used inSAP to record the factoring liabil-ity and the subsequent cashJ

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Account Name Description

104700 Checking account G/L account for bank account

120000 Trade A/R (customer recon acct) Normal customer reconciliation account

120160 A/R Factoring Liability Liability account that shows that repayment owed to bank offsets debit balance in factoring reconciliation account. Can be an open item managed account for greater clarity.

120161 Trade A/R-Factoring Special G/L indicator 0 reconciliation account, balance of factored (customer recon acct) invoices outstanding. Mark as reconciliation account type D.

260592 Sales Tax Payable Sales tax collected from customers payable to government

269140 Collections Payable-A/R Factoring Cash receipts for factored invoices, which are now repayable to the factoring company/bank

410000 Revenue Sales revenue account

892100 Other-Factoring Expense Expense account to charge factoring fees

Once the customer has

made a payment, you

need to record the

amount to be repaid

to the factoring

source, as this is

really their cash that

you are collecting

on their behalf.


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receipt and repayment to factor-ing company/bank. Transactioncode and document type are showfor each posting. In the case ofpostings to customer reconcilia-tion accounts, the customer num-ber rather than the G/L accountnumber will be entered in thetransaction.

5.6. ClearingWhen clearing accounts, you

need to explicitly select SpecialG/L indicator items; they arenot selected by default. In step4 of the factoring process, whena cash receipt for a factoredinvoice is received, the SpecialG/L indicator needs to be

entered in the initial screen oftransaction F-28. Turn off theStandard OIs checkbox if youonly want to select Special G/Litems. Unfortunately, there is noparameter ID for this field.

Dr Cr Account Description Amount Comment

1. Invoicing VF01 RV - FI/SD interface posting

01 120000 Trade A/R (customer recon acct) 2,000,000 Create customer invoice in AR

50 410000 Revenue (1,904,762)

50 260592 Sales Tax Payable (95,238) Sales tax @5.00%

2. Factoring: record invoices for factoring FB05 DZ - Post with Clearing

09-0 120161 Trade A/R-Factoring (customer recon acct) 2,000,000 Move invoice to Special G/L indicator 0

15 120000 Trade A/R (customer recon acct) (2,000,000) This is an automatic clearing line

3. Factoring: incoming wire received FB01 SA - Standard Journal posting

40 104700 Checking account 34,580,000 Single posting for multiple invoices

40 892100 Other-Factoring Expense 420,000 Discount charge, fee to bank

50 120160 A/R Factoring Liability (35,000,000) Record factoring liability

4. Cash Receipt: Clear Factored Invoice F-28 DZ - Post Incoming Payments

40 104700 Checking account 2,000,000 This is the general cash/bank account

19-0 120161 Trade A/R-Factoring (customer recon acct)(2,000,000) This is an automatic clearing line

5. Cash Receipt: Record Liability to Bank FB01 SA - Standard Journal posting

40 120160 A/R Factoring Liability 2,000,000 Release factoring liability.

50 269140 Collections Payable-AR Factoring (2,000,000) Record cash payable to the bank

6. Remit Collection to Bank: On a weekly basis repay the bank FB01 SA - Standard Journal posting

40 269140 Collections Payable-AR Factoring 2,000,000 Release liability to the bank

50 104700 Checking account (2,000,000) Wire cash to banK


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6. Concluding ThoughtsThere are always untapped

areas of SAP functionality thatSAP users have not taken fulladvantage of. Clearly, SpecialG/L indicators are a great exam-ple of such functionality. In thisarticle, we've "lifted the hood"on the G/L indicators and lookedat how they can be configured tosupport a variety of financialprocesses such as invoice factor-ing. Next time you're dealingwith the need to segregate cus-tomer and vendor data forreporting or transactional pur-poses, remember that handy lit-tle Special G/L indicator.

Rohana Gunawardena, ExiumInc. Rohana is a Senior FI/COConsultant Specializing in glob-al, multi-site rollouts. Rohanahas been working with SAP since1992, focusing on the FI and COmodules with emphasis on busi-ness segment reporting, cross-module integration to FI/CO,sales-cycle accounting, and A/R.He also has experience with SDand ABAP. Rohana is a Fellow ofthe Institute of CharteredAccountants in England andWales. He can be reached [email protected].�

Figure 16: In Transaction F-28 Explicitly Choose Special G/L Indicator 0

Figure 17: In the Select Open Items Screen You Need to Explicitly Choose Special G/LIndicator 0.


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Editor's Note: One of the mostfascinating things about SAPCRM is the interplay betweenthe CRM and R/3 systems. Thistight integration allows for anumber of unique, configurablesolutions that enable companiesto modify SAP to meet theirbusiness needs in ways thatweren't previously possible.SAP CRM Editor Scott Cameronhas just completed one suchproject, where he and his teamcreated a custom solution forpricing surcharges in both R/3and CRM. Best of all, this solu-tion did not involve user exits orRFC calls. In this "real life casestudy," Scott tells us exactlyhow an SAP user configured thisfunctionality, and how itenabled the user to trigger pric-ing discounts both from withinthe SD module, and from withinCRM (through Internet Sales).

For years, customers have beenstretching SAP to accommodatetheir business needs. I have justfinished working with an SAPimplementation partner,Innovapost. Innovapost leveragesIS/IT solutions across the CanadaPost Group of companies and theglobal postal industry. TheInnovapost CRM team and I weretasked with a business issue ofusing the reference documentfield (VGBEL) for pricing in anR/3 and an SAP 3.0 CRM system.We had a scenario where anInnovapost client wanted to pricea surcharge based upon a cus-tomer contract and a materialwithin that contract. The techni-cal name for the "reference docu-ment" field or the contract field isVGBEL.

In this article, we're going toprovide our solution, which usesthe same reference document field(VGBEL) within both the R/3and CRM environments withoutneeding to write a user exit or anRFC call.

Background Information:The customer is currently run-

ning on SAP 4.6b and SAP CRM3.0 environments. So why thechange now? Because this cus-tomer’s business has changed overthe past couple of years, and they

needed to implement new func-tionality in order to adapt to theirchanging business environments.This customer currently uses SAPcontract functionality, and thenew business requirement was touse their current customer con-tract master data to allow for acustomer discount to be triggeredwithin pricing. This pricing dis-count would then be executed viastandard SAP SD pricing, andwould be triggered via the SDsales (the customer contract) doc-ument number. In order toJ

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Using the Reference Document Field for Pricing in CRM and R/3: A Case Study

by Scott Cameron, SAP® CRM Consultant

Figure 1: Business Process Flow for VGBEL Pricing Configuration

– Article– Reference document

ZZVGBEL (ref doc number)MATNR (article #)

Table 986 is assigned toAccess Sequence

AS ZFSC assigned to CT

ZFSC CT assigned to PP

Pricing Pro.SRSC09Trs: SPRO

AccessSeq. ZFSCTrs: SPRC

AccessSeq. ZFSOTrs: SPRO

ConditionTable 986Trs: V/05

R3


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accommodate this request, weneeded to add another pricingtable (this is standard SAP func-tionality), and a new accesssequence. This customer alsorequested that, within this busi-ness requirement, we replicatethis same pricing functionalitywithin the SAP CRM environmentin order to support their InternetSales business channel.

Currently, the business uses an"inside-out" data strategy. The

R/3 system controls the pricing,and data coming from R/3 isassumed to be correct. (For moreinfo on the "inside-out" strategy,see my article, CRM Versus R/3:Where Should We MaintainCustomer Master Data? in theApril 2003 edition of SAPtips.)

The VGBEL Pricing SolutionFor this new VGBEL project, a

standard pricing procedure andcondition types were used, exceptfor a new pricing table and amodification to the KOMP table.See Figure 1.

As you refer to this figure, notethat we are using Condition TypeZZCA, Pricing ProcedureZSAP01, and Pricing Table(Condition Table) A986.

Steps to configure the pric-ing change:

Step 1 - Within R/3, create:

• Add a new pricing table withthe fields of "ReferenceDocument" and "Material." Inthis article, we'll refer to thistable by its numerical referenceas T986 or A986.

• Add table A986 to the accesssequence (ZABC). Withintable A986 (Reference docu-

ment and a material) the fieldwithin the Catalog will use thenew table, an that table willhave the character of ZZVG-BEL and the field source ofKOMP – VGBEL. The charac-ter of ZZVGBEL will need tobe added to the KOMP tablefor this. This is not standardconfiguration, but can beadded to the KOMP table as an"INCLUDE."

Add table A986 to the accesssequence (ZABC). Within tableA986 (Reference document and amaterial), the field within the cat-alog will use the new table, andthat table will have the characterof ZZVGBEL with the fieldsource of KOMP VGBEL.

Step 2 - Within CRM, create:

• Add the ZZVGBEL to the fieldcatalog. This is completed as aheader table entry within theCRM system (Transaction codeCTFC_CRM). See Figure 2.

Step 3 - Create the mappingsfrom R/3 to CRM:

Now we are going to create themappings from the R/3 system tothe CRM system for the pricingcondition downloads. J

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Figure 2: Field to Set Up for VGBEL Within SAP CRM

Now we are going

to create the

mappings from the

R/3 system to the

CRM system for

the pricing

condition downloads.


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The mappings will be as follows(see Figure 3):

Map TableCND_MAPM_CNV_FLM withthe following entries:

Transaction code: use SE16 toadd new entries (You may need toensure the system is opened forobject and cross-client changes inBasis. This should be trans-portable, but it will depend uponyou system setup.)

• Local_field is the field used inCRM.

• Remote_field is the field usedin R3.

• Conversion_type is the methodused to update A-direct.

The conversion type of "A"allows the system to download thedata without checking the validi-ty of the sales documents againstthe CRM database.

How the fields are used duringthe configuration of the initialdownload:

• When you download the con-dition configuration and exe-cute /SAPCND/RV12N001 toupdate the conditions, the newcondition table should be usingthe value defined in local_field.

• When you execute /SAPC-ND/RV12N001 to generate theobjects, your new CNCCRM-

PRCUSXXX file will bemapped to use the local_field.

You may want to check whichfields have the mapping defined asstandard by SAP. You can checktable CND_MAPC_CNV_FLM.This table contains the fielddescriptions from SAP. This iscontained within SAP OSS note427945.

If the same field is defined in bothtables (CND_MAPC_CNV_FLMand CND_MAPM_CNV_FLM), theentry from CND_MAPM_CNV_FLMis used.

Step 4 - Map the PricingCondition Table from R/3 toCRM:

Since we have added a new con-dition table with the R/3 system,we need to add it to the CRM sys-tem. As a result of the initial pric-ing configuration download, thenew pricing table will be createdin the CRM system. A new map-ping for the data will be needed.

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Figure 3: Overview of the Tables to Be Mapped from R3 into CRM (ex: Table 986)

Since we have added

a new condition table

with the R/3 system,

we need to add it to

the CRM system.

Ensure the new field to beused in CRM is defined..ZZCRM_VGBEL was addedFor the authorized users.

CRM

– Article– Reference document

ZZVGBEL (ref doc number)MATNR (article #)

Table 986 is assigned toAccess Sequence

AS ZFSC assigned to CT

ZFSC CT assigned to PP

Pricing Pro.SRSC09Trs: SPRO

AccessSeq. ZFSCTrs: SPRC

AccessSeq. ZFSOTrs: SPRO

ConditionTable 986Trs: V/05

R3

CND_MAPM_CNV_FLM

Field Catalog

2ACND_MAPT_ACS_REM_CUST

Map R3 field to CRM.In this example:ZZVGBEL mapped toZZCRM_VGBELWith direct update (A-no validation function)

Enter the R3 field created.In this example, fieldZZVGBEL was added.


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Within the CRM system:Use Transaction code SE11 to

add new entries to the structure.

• "Component" is the field usedin R3.

• Use the "Component type" dropdown.

This table is used when youdownload the condition masterdata. Condition A will be used tofind the field definition. If thistable is not updated, you willreceive a BDOC error "SYSFAIL."

In this scenario, we have useda standard mapping and addedthe field to it. This mappingnow contains the Z* namingconvention.

This completes the configurationand mappings. The SAP standardconfiguration and data downloadsshould be re-executed now.

After the downloads are com-pleted, your customer is ready touse the new pricing functionalitywithin the IPC.

In ConclusionThe above solution allowed our

client to implement this new func-tionality within a very short timewindow. Since our go-live, wehave not had any changes to thepricing configuration or the map-pings, and in fact, the client hasbeen exploring the use of thisfunctionality within other lines ofbusiness.

One question we faced whenproposing this new solution waswhether this new pricing configu-ration is upgradeable. The quickanswer is "yes." Currently, SAPsupports the use of A900 typepricing tables, customer-definedaccess sequences, and customer-

defined discount/ surcharge pric-ing condition types. Since thisconfiguration is consistent withinboth environments (R/3 andCRM), the customer will not haveany issues in upgrading softwareversions for either their R/3 orCRM environments.

This solution we've described isa great example of using your datastrategy (inside-out), trusting yourdata integrity, and stretching theSAP configuration to accomplish abusiness requirement.

In closing, I would like to thankMarta Miyazaki and MassimilianoPica from Innovapost for theirtechnical expertise on this solution.Without these people, we could nothave delivered this solution.

Scott Cameron is a former BigFive Consultant who has spentthe last three years managing thesale and implementation of theSAP CRM application, up throughthe current 3.1 version. In addi-tion, Scott has seven years of SAPimplementation experience,which includes a deep trackrecord in SAP R/3. His R/3 back-ground includes SD, MM, andWorkflow configuration, and he isan expert on SD Pricing andVariant Configuration processesas well. Scott's email address [email protected]. �


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Editor's Note: APO ships withso much functionality, it'salmost scary. Fortunately, APOEditor Dan Sulzinger has beento the mountaintop. Fresh fromhis most recent investigationsinto APO 3.0 and the latest-and-greatest version (3.1), Dan ishere to tell us about the rich pos-sibilities available to SAP® usersin the GATP Advanced Methodsarea. Dan's last two articlesfocused mostly on Basic ATPMethods, but in this new piece(the first in a series), Dan guidesus into more advanced areas.Dan kicks off the series with anoverview of the key terms andprerequisites for using any of theAdvanced Methods. Then hehones in on two of these methods,Multi-Level Checking andCapable to Promise. By con-trasting the two methods, Dandebunks common misconcep-tions about each, and providesus with valuable APO-relatedtips along the way.

In my previous articles, I dis-cussed ATP and Global ATP; inthose articles, I walked readersthrough the ATP Basic Methods.In this next series of articles, I willstart digging into some of themost exciting tools within APO:the APO Global ATP AdvancedMethods! The capabilities dis-cussed in this article are some ofthe most advanced ATP capabili-ties, which deliver on the promiseSAP offered some six years ago.The capabilities found inAdvanced Checking techniques,such as Rules-Based ATP, Multi-Level Checking, and Capable toPromise, are not, and I mean not,warmed over, old school planning

techniques! With GATP AdvancedMethods, we finally have the toolsto truly promise—and know thatour promise to deliver won't bebroken. Finally, we are able todrive our supply chain, as opposedto our supply chain driving us.

This kind of talk might seemboastful now, but after we com-plete this article series onAdvanced Checking capabilities, itwill become apparent that SAP'soffering delivers as advertised.After finishing these articles, manyreaders will want to run out andget themselves some GATP. But weall know that we don’t just "go getsome GATP." I have repeatedlynoted that APO is not a plug-and-play tool, and Advanced Checkingrequires all of the hard work anddedication that has been discussedin earlier editions of SAPtips. So,let's build on these efforts and takeon the challenge of implementinga fully integrated ATP solution.Each company will focus on differ-ent APO components in this

endeavor, according to the uniquerequirements of your business andindustry.

Just how powerful are theAdvanced Methods? Consider thepotential of Rules-Based ATP, mypersonal favorite. With Rules-Based ATP, I build the "Rules ofEngagement" for the way I wantto operate my business. In theevent a shortage is detected, I caninstruct SAP to check an alternatelocation for the product; if it is notavailable in the secondary loca-tion, SAP checks for alternateproduct in the primary location.Should this step not resolve theshort, it goes to the next location(which has been defined previous-ly) and checks for an alternateproduct. If, after all of this, theshortage is not resolved, then pro-duction of the primary product istriggered. This is all donebecause I defined the relationshipbetween customer, product, loca-tion, cost, and criteria that allowme to better serve my customers.Rules-Based ATP is an iterativeprocess, meaning it will continueto search for a solution based onthe criteria that I define. It is crit-ical to note that GATP follows ourinstructions—it does not inventnumbers, nor is it psychic.Finally, with Rules-Based GATP,the reaction will be consistentlypredictable, based on the tacticalstrategies and best practices that Iwant my company to follow.Now that you understand myposition on the merits of Rules-Based ATP, it is incumbent uponme to provide a "fair and bal-anced" assessment of the otherAdvanced Methods that APOdelivers. J

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Available to Promise – What APO® Delivers – Part Three: Contrasting Multi-Level Checking and Capable to Promise (CTP)

By Dan Sulzinger, e-Consulting Group, Inc.

With Rules-Based ATP,

I build the "Rules of

Engagement" for the

way I want to operate

my business.


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The following ATP Methods areconsidered "Advanced Methods":

• Combination of BasicMethods

• Rules-Based ATP

• Capable-To-Promise (CTP)

• Multi-Level Checking

• Simulation and Explanation

Going through all of thesemethods in a meaningful way willrequire more than one article. Inthis edition of SAPtips, we'll startby reviewing the prerequisites youmust understand before utilizingany of the Advanced Methods.Then we'll shed some light on twoof the Advanced Methods,Capable-To-Promise and Multi-Level Checking, by contrastingone against the other.

Prerequisites:Requirements for Usingthe Advanced Methods

Understanding this discussionrequires a knowledge of the nutsand bolts for using the AdvancedMethods. These prerequisites arethe building blocks necessary forintegration, reaction, and presen-tation of the solution during anyATP request processing. In orderto take advantage of theAdvanced Methods, we need toknow how the following elementsare going to be populated andfrom where they are sourced:

Business Event: is loaded atruntime from the R/3 System withthe value of the checking rule.

ATP Group: is loaded in thelocation-specific product master,if you transferred customizations.Simply put, ATP Group is theaccumulation groupings that

define how to react to shortfallquantity. Remember: ATP groupis always assumed from the prod-uct master at runtime; this is a"gotcha!" (You need to activatethe accumulation of confirmedquantities.)

Check Mode: When you trans-fer ATP Customizing during theinitial supply, the check mode isfilled with values from R/3.Check Mode is the combination ofassignment mode and productiontype. If it was not transferredfrom R/3, it is taken from theproduct master.

Check Mode TIP 1: For APO-specific products, you must fill theCheck Mode in the location-spe-cific product master. The require-ments class can only be adoptedfrom SD. So, no other R/3 mod-ule can transfer requirementsclasses. Without SD, the CheckMode is read from the APO prod-uct master. This is also the casefor Rules-Based ATP with prod-uct substitutions, which is alsoread from the product master forthe subsequent substitutions.

Check Mode TIP 2: As a rule,make sure the Check Mode isfilled in the APO product masterto elevate the potential for resultsthat were not what you expected.

Check Mode TIP 3: I recom-mend that the functional staffsupporting APO and GATPunderstand the R/3 plug-ins.Depending on the version of R/3and APO you are using, the plug-ins vary and the impact is verydifferent. The APODocumentation CDs outline thisinformation in a very usablematrix in the technical integrationsection under GATP.

Check Instructions: Determineswhat we want to do if and when ashortage is detected. CheckInstructions belong to APO and aretherefore always maintained inAPO. The Check Instructions are,in reality, our "Rules ofEngagement." Check Instructionsdetermine which Basic Methods areprocessed and in which order: checkwith neutral results, time of produc-tion, or rules-based checks.

Check Control: CheckControl is used to determine thechecking for sub-locations andthe checking for versions. CheckControl determines whether weuse checking horizons, whetherwe check for deltas, whether weconsider past receipts, andwhether we use check horizonfor goods receipt.

Categories: There are also non-SAP categories to consider, such asthe Map R/3 MRP element. Tip:Remember APO categories areconsidered non-SAP categories!

Scope of Check: Is alwaysassigned a check control and acollection of SAP categories andnon-SAP categories.J

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For APO-specific

products, you must

fill the Check Mode in

the location-specific

product master.


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Characteristics-DependentPlanning (CDP): CDP employscharacteristics for planning in theenhancement industry (i.e., paper,oil processing, metal fabricationindustry) and of course the semi-conductor industry. One notewor-thy feature of these industries'production is that many products(co-products) come from a singleproduct process.

C h a r a c t e r i s t i c s - B a s e dForecasting (CBF): CBF carriesout the planning in the SAP APOcomponent Demand Planning. Thevast majority of the demand plan-ning functions for forecastingfuture requirements are availablehere. In SAP, these singular config-urable definitions (i.e., size, color,engine, upholstery) are defined ascharacteristics. The characteristicvalues are like size: exampleswould be small, medium, andlarge; likewise, color would bemagenta, white, gold, etc.

Now that we've covered the pre-requisites to using the AdvancedMethods, let's hone in on the twoAdvanced Methods we're lookingat this time around: Multi-LevelATP Check and CTP.

Juxtaposing Multi-Level ATPCheck (MATP) and Capable-To-Promise (CTP) In order todiscuss Multi-Level ATP Checkand Capable to Promise, it is nec-essary to juxtapose how they oper-ate and illustrate comparable func-tions and limitations. Some peopletry to explain the differences bysaying that CTP is time-dimension-al, and therefore time-specific, andthat MATP offers better perform-ance. But this is a bit simplistic. Inreality, it all depends on the busi-ness objectives for the types ofproducts handled by the company,and other variables. In Table 1, I'veoutlined the major differencesJ

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Table 1: Contrasting Multi-Level Checking with Capable-to-Promise

Multi-Level ATP Check CTPAvailability Check Execution

1. A product availability check, or a checkagainst the forecast, can be carried out at thecomponent level.

TIP: Scope of check, checking horizons, andshortage checks are used.

Note: This difference between MATP and CTPis considerable, and if you are using CDP(Characteristics-Dependent Planning), thensome capabilities are limited.

TIP: Rules-based ATP check can and should beused with MATP.

2. MATP does not support characteristics-dependent planning (CDP).

The rationale is that CDP works with charac-teristic value assignments on the receipt andrequirement elements of individual orders.These do not exist in the ATP time series inLiveCache.

3. Due to the internal structure of the ATPcheck, the ATP check is not as time-specific asCTP.

Note: MATP does not work to the exact secondas CTP does.

4. ATP tree structures are not taken intoaccount in planning. Therefore, no orders existat the time of the check. A dependent require-ment of a component is only visible when theATP tree structure has been converted to aPP/DS order. When a very large schedulinghorizon is defined, PP/DS orders are createdimmediately for each Multilevel ATP check.The dependent requirements are then imme-diately covered.

5. The dates are determined by simple lead-time scheduling.Lead-time scheduling uses the followingproperties:• Is based solely on the production calendar

of the location and is location-dependent.Do not overlook this!

• Does not consider resource schedules. • Does not consider lot size. The lot-for-lot

order quantity is always used. • No association to bucket limits. • No blocks are considered.

1. An availability check, which should not becompared with the ATP check, is carried out atcomponent level using the pegging functional-ity. In the pegging structure, all receipts andrequirements categories are handled the sameway.

Tip: No division is made using ATP categories.

TIP: Scopes of check, checking horizon, andshortage check inclusions are not supported.

Tip: CTP does not support Rules-Based ATPchecking.

2. Characteristics-dependent planning (CDP)can be fully realized with CTP.

3. CTP works to the exact second. Precisetime-specific functionality is not available forMATP.

4. PP/DS orders will always appear instanta-neously in CTP. Whether or not the plannedorders are temporary, they are order objectson which resources can be utilized directly.

Requirement Dates for the Components Determination

Check Result in Planning Considerations


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between MATP and CTP, andpointed out some critical tips fordeploying either MATP or CTP.Note: the functionality compared inTable 1 is based on the APO ver-sion 3.0 release. Additionally, sev-eral references are made to release3.1A, which I have been reviewingand testing.

ConclusionFor years, I preached that ATP

could provide such significant ben-efits that most companies could notaccurately calculate them. This wasbecause ATP was the top of thefood chain and out of reach of mostcompanies. But this comparison ofthe powerful capabilities of Multi-Level Checking and Capable toPromise has shown us that for SAPAPO users, the "true ATP" aspira-tion has the potential to becomereality. Nevertheless, we still have alot of questions to answer and a lotof APO functionality to cover. Welook forward to continuing this dis-cussion of Advanced Checking inthe next edition of SAPtips, and welook forward to reader input on thekey areas you would like us toaddress.

Daniel P. Sulzinger, Senior SAPConsultant, eConsulting Group,Inc. For the last sixteen years,Dan has consulted and trainedclients deploying packaged sup-ply chain solutions. He has ledmany multinational companiesthrough the process of assessing,defining, and deploying manufac-turing and supply chain solutions.For the last five years, Dan hasfocused on SAP's AdvancedPlanner and Optimizer (APO)and Business Intelligence (BW)products. Dan has delivered SAPeducation and training for APO,BW, and R/3 modules, and he is afrequent speaker at Supply Chainand Logistic events international-ly. Dan's email address [email protected]. �

Multi-Level ATP Check CTPCheck Results Comparison

6. The results overview offers a built-in dis-play of the check results for sales order itemand all components checked.

Missing parts list displays the componentsand characteristic values there that have ledto a delay or reduction in confirmation.

7. Product availability check at componentlevel promises a better performance becausethis check uses time series.

Note: For users of the R/3 ATP Server, theaggregates in the time series are comparableto the Time Axis stores in buffered memory.

8. A "daily production rate" can be mapped byproduct allocation(s), and the check is execut-ed against the allocation(s). This check onlyconsiders exact days.

9. No lot-size calculation is carried out byATP.

Tips: The lot-for-lot order quantity is used.

6. You check the results of the CTP process inthe PP planning log.

7. Orders are planned in their entirety, whichis a major performance consideration.

TIP: If your company has configurable productand is using CDP, then this limitation is nor-mally considered necessary for your business.

8. The planned orders are scheduled finitely tothe resources immediately. This is a config-urable option.

9. CTP always uses lot-size calculation.

Finite Scheduling on Resources

Performance

Lot Sizes

Table 1: Contrasting Multi-Level Checking with Capable-to-Promise


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Editor's Note: In this "bottom-line" era for enterprise software,SAP® pricing is the right func-tionality at the right time. SAP'spricing capabilities can be tiedinto numerous business process-es, allowing SAP users to attachpricing capabilities to many dif-ferent production scenarios. Inhis latest article, LogisticsEditor Jim O' Day demonstratesthe precision of SAP pricing byexplaining how to make a returncredit price dependant upon thereturned condition of the mate-rial. As with all of Jim'stips to date, we don't needany mySAP®-relatedproducts to take fulladvantage of his recom-mendations—we don'teven need to be running on4.6 to utilize this power-ful functionality.

Pricing is one of the mostrobust applications withinthe SAP system. It is con-structed so that one mayset pricing based uponessentially any informationthat can be captured with-in the system. This makesSAP pricing a very power-ful business tool. If youmanage, support, workwith, or just casually knowsomeone in your LogisticsDepartment, a fundamen-tal understanding of pric-ing and how to use theSAP-delivered extensionscan make you a valuablecommodity within yourorganization. Pricing is allabout money, which gets alot of attention, and SAPpricing can be used in

many ways to meet whatever thefolks in the MarketingDepartment dream up.

SAP stores a lot of information,and any of this information maybe used as a basis for making apricing decision. However, if thedata needed to make a pricingdecision is not available in stan-dard SAP, it is relatively simple totake the steps to incorporate thatdata into pricing. So it should betheoretically possible to set pric-ing based upon any required sce-

nario. While this statement maycause you (as a skeptical, discern-ing reader of this fine publication)to raise an arched eyebrow or emita muffled chortle, it can bedefended. Some examples of pric-ing that can be supported include:

• price specified as cost plus aspecified percentage sur-charge,

• pricing dependant upononline orders versus phonedversus faxed orders,

Taking Advantage of Pricing Extensions Within SDby Jim O'Day, Nassau Technology Group

Figure 1: Credit Indicators Added to Custom Material Screen


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• price adjusted by currencyexchange rate,

• return credit price basedupon condition of returnedmaterial (either serviceableor unserviceable).

SAP allows us to extendtables with additional data,that is, required for makingpricing decisions, so we canstore necessary information andset pricing to reflect this data.Let's expand on one of theexamples above and go throughthe steps of extending SAP'spricing capabilities. Let's saywe need to make return creditpricing dependant upon thereturned condition of the mate-rial. Assume that we started bycreating two new fields ascheckboxes in the data diction-ary, appended each onto thematerial master (MARA), andthat we have already incorpo-

rated these new fields on our cus-tom material screen. See Figure 1.

We need to be able to accessthese new fields for pricing. To dothis, we need to append the fieldsto the pricing table. As these arematerial fields, they will corre-spond to the line item (ratherthan header) pricing structure.SAP uses table structure KOMP tostore line item pricing fields.Structure KOMPAZ is reservedfor fields added at the customersite. See Figure 2.

Once these fields are added tothe KOMPAZ append structureand the table is generated, theyshould be available for use in set-ting up pricing condition tables.To check on this, go to pricingconfiguration to check the fieldcatalog (path Sales andDistribution / Basic Functions /

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Figure 3: Adding New Fields to Catalog

Figure 2: Appending New Fields into the Data Dictionary


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Pricing / Pricing Control/ Define Condition Tables/ Conditions: AllowedFields). Depending uponyour software release, thisscreen acts slightly differ-ently. If the new fields arenot immediately availableon the screen, you shouldbe able to select via the"New entries" option. Ifyou are working in anearly SAP release (prior torelease 4.0), you mayhave to add your entriesto Table T681F manuallyvia transaction sm30.Once complete, the fieldsshould be available asillustrated in Figure 3.

Once the fields areincluded in the pricingfield catalog, we canincorporate them into apricing condition table. Inthis example, we will setup two pricing conditiontables: one for the service-able credit and anotherfor the unserviceablecredit. We are also incor-porating a field "condi-tion" which is input bythe quality inspectionteam upon receipt of thereturn to determinewhether this is a servicea-ble item (conditions "A","B", "C") or unserviceable ("D","E", "F"). The condition field isincluded as part of the pricingcondition (which allows us to setup a sliding scale of amount to becredited, based upon the servicea-ble or unserviceable condition ofthe return). See Figures 4 and 5.

We now need to add program-ming logic to pass the serviceableand unserviceable credit valuesfrom the material master throughto the pricing structure that we

have defined above. Since we cre-ated the credit indicators as"checkboxes" on the screen, theyget stored as either an "X" ifchecked, or a null " " (space) if notchecked. This is fine if we onlycare about whether the credit indi-cator has been maintained. Butlet’s take this one step further andmake the system also react whenthe indicator has not been set.

If we want to be able to createpricing based upon a null entry,

we need to pass something otherthan a "space", as pricing cannotrecognize a null value in a tablekey. For example, suppose wewant to grant zero credit in theevent that the appropriate materi-al credit indicator field is notmaintained. We can create a100% discount record to make thepricing end up zero, but we can’tcreate a record with credit indica-tor = "space" because the systeminterprets this as a required fieldthat you have not filled.J

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Figure 4: Serviceable Credit Condition Table


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We work around this by adjust-ing the ABAP code to move a ‘Y’to the credit indicator if set and a‘N’ to the indicator if not set. Thisallows us the freedom to createcondition records for either sce-nario. You will need to install thecode within module MV45AFZZin form userexit_pricing_pre-pare_tkomp.

* Sample Conversion from checkboxvalues to Y/N for condition techniquedata: dis_x value 'X',

dis_y value 'Y',dis_n value 'N',dis_blank value ' '.

if zmaratemp-zzservcreditind = dis_x.tkomp-zZSERVCREDITIND = dis_y.

else.tkomp-zZSERVCREDITIND = dis_n.

endif.if zmaratemp-zzunservcrdtind = dis_x.tkomp-ZZUNSERVCRDTIND = dis_y.else.tkomp-ZZUNSERVCRDTIND = dis_n.

endif.

The next step is to create a con-dition type that we will use toapply the serviceable and unser-viceable credit price. In the exam-ple used here, we have created a"ZRES" serviceable credit condi-tion type and a "ZREU" unser-viceable credit condition type.This was done for simplicity ofuse by the production supportstaff—it is easier to visualize thisas two separate condition types.This could also be all lumpedwithin a single condition type as

the two are mutuallyexclusive—the con-dition or thereturned materialuniquely defines thisas serviceable orunserviceable. SeeFigure 6.

As part of pricing,the condition type isassigned to an accesssequence. The accesssequence will haveall of the conditiontables to which acondition type maysearch for a match-ing record for thecondition to beapplied. In our case,the access sequenceneeds to incorporatetables 983 and 981that we created inFigure 4 and Figure5 above.

Please remember, ifyou are maintainingthe access sequencefor a new table, youmust open the"Fields" segment forthat table so that thefields will be recog-nized during theaccess. Failure to dothis will result in theJ

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Figure 5: Unserviceable Credit Condition Table


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access being executed, but thefields not being filled duringthe pricing access, so yourcondition cannot be met.Please also remember to selectthe "Utilities" upon exiting togenerate the access, as youraccess will not be active untilgenerated.

Adding the condition typeto the appropriate pricingprocedure completes theconfiguration.

The master data may thenbe maintained for the specif-ic pricing records.

To summarize, to have SAPmake pricing decisions basedupon custom fields, the fol-lowing steps are required:

1. Append the appropriatemaster data table.

2. Append the appropriate pric-ing communication structure.

3. Create the pricing conditiontable.

4. Add programming logic tomove the data into the pric-ing communication structure.

5. Create the condition type.

6. Assign to an access sequence.

7. Assign to a pricing procedure.

8. Maintain master data (pric-ing record(s) via transactionvk11).

Of course, the above examplewas just one way to address pric-ing requirements associated withthe introduction of new fields. Forinstance, rather than appendfields and screens as shown above,

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Figure 7: Access Sequence Overview

Figure 6: Serviceable Credit Condition Type


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it would be possible to use SAP’svariant configurator, combinedwith variant pricing, to satisfy thisbusiness requirement. There aretypically many choices availablewhen tackling a developmentproject within SAP, and often theone selected is based on thedesigner’s comfort level andexpertise within each option.

Within SD, there are many otherpossibilities we may explore whenaddressing pricing requirements.SAP provides a transaction(VOFM) that includes many pric-ing and other system enhancementand customization functions. We'lllook at some of these other pricingoptions in upcoming editions ofSAPtips, focusing on the use ofpricing formula and requirementsexits in our next issue.

Jim O'Day, Nassau TechnologyGroup. Jim specializes in logisticsand supply chain consulting toclients in the Pharmaceutical,Consumer Product, High Tech,and Chemical industries. He haseleven years of SAP implementa-tion experience and has served invarious hands-on management,development, and lead consultingroles on over forty SAP implemen-tations. Jim spent five years at SAPas a consultant and developerbefore co-founding the NassauTechnology Group, Inc. (NTG).NTG provides consulting, develop-ment, and outsourcing services forbusinesses utilizing ERP solutions.Jim can be reached [email protected]. �

Figure 9: Serviceable Credit Condition Record

Figure 8: Pricing Procedure with Conditions Added


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Editor's Note: With eachrelease of R/3, SAP® steps up tothe plate with better reportingfunctionality. In the April 2003edition of SAPtips, GregRobinette told us how to config-ure Payroll infotypes for morerobust reporting capabilities. Inthis follow-up piece, Greg tellsus how Ad Hoc Queries can beused to locate and presentreporting data from Payrollinfotypes. But before Greg takesus through generating Ad HocQueries using his usual in-depth,screen-by-screen approach, headvises SAP users on how todevelop an output managementstrategy to ensure that SAPreporting is done on the basis of"lowest cost, highest output."

In our last article, we used thebusiness case of a line managerneeding to see his employee’s401K information. We used thepayroll infotypes to allow themanager to use PA20, the "dis-play master data," to view indi-vidual employees’ payroll results.This is fine for individual infor-mation, but the manager alsoneeds to be able to view his entiregroup’s information. This articlewill explore the use of the Ad HocQuery tool to tie together the var-ious infotypes storing employeedata. Using Ad Hoc queries, theline manager will be able to viewdata using the various infotypesto consolidate and present a spe-cific view of his (or her) employ-ees. With these Ad Hoc tech-niques, he'll be able to find, sort,and present payroll data from thepayroll infotypes, and he'll also beable to draw on other personneldata in addition to payroll data,

Shortly, we'll return to our hypo-thetical line manager and showyou how he can set up Ad Hocreporting tools to meet his report-ing needs. But before you dive intoHR reporting, you should makesure you have a solid output man-agement strategy in place, so let'stake a look at that first.

The Four Steps of AnEffective OutputManagement Plan

The key to the lowest cost, high-est value reporting output of SAPHR is to have an output manage-ment plan. The output manage-ment plan is a consistentapproach deployed to all users,which provides a roadmap to thereporting tools available. In manySAP HR implementations, thestandard method of developingreports is to create a custom

ABAP report. This is costly andheavily dependent upon availableABAP resources. Thus, one of themain goals of our output manage-ment plan is to provide our userswith the same level of reportingservices while reducing the needfor custom ABAP. In our approachto output management, we breakthe process into four steps.

One thing common to all foursteps is the necessity for the usersto have an understanding of theirdata. The more involved the usersare with the data, the better theycan provide development require-ments and utilize the SAP HRreporting tools.

These are the four steps:

1) Look in the SAP standarddelivered reports for a reportcontaining the data elementsyou are trying to report on.

2) If there are no standardreports available, use the AdHoc Query tool to develop auser-derived report from apredefined InfoSet.

3) If the Ad Hoc Query tool isunable to collect and presentthe data in a format accept-able to the users, an SAPexpert should use SAP queryto develop the report.

4) Finally, if no options meetthe reporting requirements,define the technical require-ments and use ABAP todevelop the report.

Let's break down the first cou-ple steps in more detail. J

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Improving Your HR Reporting Strategy: How to Use Output Management and Ad Hoc Query Tools for Better HR Reporting

by Greg Robinette, Robinette Industries and Consulting

One of the main goals

of our output man-

agement plan is to

provide our users

with the same level of

reporting services,

while reducing the

need for custom ABAP.


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The initial step is to examinethe standard delivered reports.This is the most neglected step atmost locations. Usually the users

are unaware of these reports or donot know how to find them. Thestandard path to these reports isshown in Figure 1.

These reports can be brokendown into two general categories:Master Data related reports, andthe organizational related reports.These are sometimes referred toas PA (Master Data) and PD(Organizational Data). SAP pro-vides good descriptions and infor-mation about these reports withinthe R/3 system and atwww.sap.help.com. The key tiphere is to ensure that the userswho are looking for a suitablereporting alternative start withthe delivered reports.

In many reporting situations,the standard reports will not bewhat the users desire. Let'sassume that our hypothetical linemanager falls into this category.Our line manager wants to see the401K information for his costcenters, but there are no stan-dard-delivered payroll infotypereports available for this. He hasthe option of examining eachemployee’s record using transac-tion PA20 (See Figure 2) andrecording the result manually, orhe can use an Ad Hoc Query.

Setting Up Ad Hoc QueryReports, Step One:Defining InfoSets

Ad Hoc Query is the second stepin our output management pro-gram. Ad Hoc Query usesInfoSets, a predefined set of dataelements, and allows the user toquery these InfoSets. The usersdefine which selection criteriathey will query with and what theoutput will be.

To utilize the Ad Hoc Querytool, there are several system con-figurations that need to be set upfor the users. We will step througheach of these system require-ments. (Note: the Ad Hoc Queryfunctionality is specific to version4.6. In previous versions of R/3,J

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Figure 1: Menu Path to Standard HR Reports.

www.sap.help.com


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similar functionality iscalled ABAP query. Inthis article, we will onlybe addressing the 4.6 ver-sion using its uniqueterms and set up.) We willbe using the payroll info-types for our example,but Ad Hoc Query can beset up for all the infotypesand for other types of HRdata.

Generally, users will nothave access to the defini-tion and control of theInfoSets, but will haveaccess to the Ad HocQuery tool. Generally, thefunctional configurationspecialist will define theInfoSets, set up usergroups, and perform thequery administration.These tasks form thefoundation for Ad HocQuery.

To define the InfoSets,begin with transactionSQ02; this is the InfoSetinitial screen. Here wecreate and define theInfoSet. Our example isZLINEMGR, an InfoSetwe are designing to reporton payroll and personaldata. Name your InfoSetand click the "Create"button. (Choosing a logi-cal naming convention,such as one based uponuser areas of interest, canhelp minimize mainte-nance tasks.) Next, you'llsee the title and databasescreen. This is where youselect the logical database to startdefining the InfoSet. See Figure 3.

In our example, we chose thePNP logical database; this con-tains the payroll infotypes as well

as the other master data info-types. On this screen, you are pre-sented with an infotype selectionfor your InfoSet. Choose the info-types from which you want togenerate reports. We will choose

basic personal data infotypes0000- Personnel actions, 0001-Organizational Assignment,0002- Personal Data, 0402-Payroll Results, 0446- Payroll USFed Taxes, and 0450- Payroll USJ

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Figure 2: Payroll Data For a Single Employee


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State Taxes. Click on the greencheck or press "Enter." The nextstep is to choose the specific fieldsyou wish to use in the Ad HocQuery. These fields are the samedata elements in each of the cho-sen infotypes. They are used forselection criteria and for definingthe output. The system will pro-

pose a predefined grouping ofdata fields. See Figure 4.

In Figure 4, the screen showsthe three working frames fordefining the InfoSet. The left-hand frame shows the selectedinfotypes. When these areopened, all of the available data

fields for the infotype are dis-played. Those with an entry inthe Field Group column are thefields the system has included inthe field groups for use inqueries. You may add any fieldfrom the same infotype to its cor-responding field group; forexample, if you want to add the

O r g a n i z a t i o n a lAssignment end date,link field P0001-ENDDA to the fieldgroup for organizationalassignment. Click on theEnd Date field in the leftframe, technical nameP0001-ENDDA, anddrag it to the Field Group02 OrganizationalAssignment. See Figure 4.

Keep in mind that onlythe data elements addedinto an InfoSet will beavailable to use as aselection criteria, or asan output for display inyour report.

When you have exam-ined your data andselected the fields rele-vant to your InfoSetrequirements, it is timeto check, generate, andsave the InfoSet.

Review the fieldgroups one last time,checking to ensure theyare relevant to the datayou want to run querieson. Now, click on thescales icon or push theF8 key to check theInfoSet for inconsisten-cies. (This is usually nota problem when usingthe basic logical data-bases.) Next, generatethe InfoSet using the"generate" icon or byJ

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Figure 3: Defining and Naming the InfoSet


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pressing the Shift and F6 keys.The final InfoSet definition stepis to save. Use the "Save" icon orthe Control + S keys.

Setting Up Ad Hoc QueryReports, Step Two: AssignUsers to the InfoSet

Now that the InfoSet has beengenerated, we need to assign theusers to the InfoSet. Use transac-tion code SQ03 to create, change,and define the user groups andthe assignment to InfoSets. Ouruser group is ZLINEMGR. Enterthe name in the User group fieldand click the "Create" icon. Enterthe user group text name andsave. See Figure 5.

Now you are ready to add userIDs to the user group. Click on the"Assign users and InfoSets" but-ton. Here, a list of users may beentered by user ID. Only thoseusers included in the user groupwill be able to access the InfoSetto generate Ad Hoc queries. SeeFigure 6.

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Figure 4: Adding Fields/Data Elements to the InfoSet Field Group.

Figure 5: User Group Definition


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Notice the checkbox next to theuser ID. This checkbox must beselected for any user who requiresthe authorization to changequeries or create them for the spe-cific InfoSet. If it is not checked,

the user will be able to run thequery, but won't be able to save itor modify other queries. However,the line managers will have fullauthorizations. Click on the"Assign InfoSets" pushbutton. A

list of InfoSets available forassignment is presented. Selectthe ZLINEMGR InfoSet. Thisassigns the InfoSet to the usergroup. Save the user group. TheInfoSet is now ready for the usersto conduct Ad Hoc queries. Now,you're ready to use the Ad HocQuery reporting tool.

Using the Ad Hoc Query Tool To demonstrate the use of the

Ad Hoc Query tool, let's return tothe scenario of our line managerwho wants to generate reportsthat allow him to look at 401Kdata, organized by cost centergroups. To use Ad Hoc Query, fol-low the menu path➠ HumanResources➠ Information System➠

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Figure 6: User ID Assignment

Figure 7: Output for Personnel Number Selected With Text and Value

Field output selection with text andvalue for the personnel numbersselected


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Reporting Tools➠ Ad Hoc Query(Technical transaction codeS_PHO_48000513). The Ad HocQuery screen has three areas. (Forthis article, we will be using onlythe basic query functionality.There are extended capabilitiesavailable in Ad Hoc Query thatrequire you to develop a level ofproficiency in the basic function-ality first.) The upper left frameis for the field groups, containingthe fields available for selectionand output. The lower section isthe output presentation. The righthand frame is the selection andreporting period selection area.The field selection area has fold-ers containing the data fieldsavailable for selection and output.

Check the Personnel Numberfield under the Selection columnas the selection criteria for our

report. Note the appearance of thefield in the right hand selectionarea. You can choose as manydata fields for selection as youwish; however, they will only beeffective if the user understandshow the data interacts.

Next, we select the output fields.Since our hypothetical line man-ager wants to generate reports on401Ks by organizational cost cen-ter, we choose the personnel num-ber from the actions field group,the cost center from the organiza-tional assignment field group, andthe 401K fields from the payrollresults field groups. If you rightclick on any field selected foreither selection or output, you willsee a choice of how the data ispresented in the query. You maychoose the text field if there is oneassociated with the field, or youmay choose the system value. In

Figure 7, you see the PersonnelNumber field outputted with thetext and system value shown.

The final step in defining thequery is deciding on the reportingperiod. This refers to the existenceof the records against which youare running the query. If youselect "Today" and the recordonly exists in the past, it will notbe considered for selection. It issafest to start with the reportingperiod for all time to insure everyrecord is considered. As users gainfamiliarity with the data and thereporting periods, they will reduceruntimes and duplicate recordsselection by choosing periods ofrecord existence in line with thequery logic.

Select "Reporting period All,"and the date field will showJ

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Figure 8: Ad Hoc Query Ready to Run.


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01/01/1800 to 12/31/9999. Thefinal area available to modify isthe Reporting set area. As yougenerate queries that have differ-ent characteristics, you can usethe query results as your data setfor subsequent queries.This is very useful func-tionality when you havedependent queries. Alwaysstart with unrestrictedreporting sets to insure fullconsideration of records.Our query is ready to use.See Figure 8.

The user can now addselection values to thePersonnel Number selec-tion fields. Click on the boxwith the horizontal yellowarrow next to the field inthe selection frame. Thisdisplays the MultipleSelection screen. You maychoose ranges, specific val-ues, and apply Booleanoperators to your selectionconditions. See Figure 9.

The user can now run the queryin two ways. To get a quick view ofhow many records the selection cri-teria will find, click on the Hit listbutton. The example query returned641 persons. See Figure 10.

The final output can be dis-played by clicking on the out-put button in the tool barabove the field group frame.The results default to the SAPList Viewer method of display.They can be sent to local filesor directly to Word or Excelthrough the output displaytoolbar. The sample reportshows the list of our line man-ager’s employees and the datahe requested. See Figure 11.

This query can be savedand reused. It can be modi-fied to add more relevantselections or outputs. Theuser has control over the out-put, and these selectionsshould bring the output to theend user faster.

ConclusionThe use of the Ad Hoc Query

provides a powerful user-orient-ed tool, which relieves ABAP pro-gramming requirements and

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Figure 9: Choosing Multiple Selection Values

Figure 10: Hit List Results


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enhances the SAP user experi-ence. This article is a startingpoint for using Ad Hoc Query.The management of HR InfoSets,user groups, and queries providesthe ability to further refine yourSAP system. We hope you willuse this article to move on to amore efficient output manage-ment strategy for your SAPinstallation.

Follow-Up Tips:Additional Ad Hoc Query func-

tionality you may want to explore:

1) Change your edit settings toproduce differing output lay-outs, to get default values foryour outputs/selection fields,and to use statistic views.Use the drop down menuunder EDIT in the tool bar toaccess the EDIT features.

2) Use "set operations." Setoperations are useful forcombining results from dif-ferent selection criteriaaccording to Boolean set

operations. Use the dropdown menu under theEXTRAS heading. Thismenu contains these opera-tions options.

3) Expand your query manage-ment to include develop-ment, test (QA), and produc-tion systems. Use reportRSAQR3TR.

It is advisable to have a goodunderstanding of the basic func-tionality of the Ad Hoc Query toolbefore moving on to the advancedfunctionality. Keep in mind thatthe Ad Hoc Query tool is most rel-evant when used in the produc-tion environment. In order to usethe Ad Hoc Query in a "live" set-ting, you will need an access andsecurity plan for the Ad HocQuery administration.

Appendix-Transaction CodesSQ01 SAP Query: Maintain

queries

SQ02 SAP Query: MaintainInfoSet

SQ03 SAP Query: Maintainuser groups

PA20 View Master DataPQAH Ad Hoc QueryS_PH0_48000513 Ad Hoc

Query

Greg Robinette, RobinetteIndustries and Consulting. Greg isan SAP certified human resourcesapplication consultant. His mostrecent projects have involved de-coupling the HR module, upgrad-ing from 3.1 to 4.6, and developingoutput management and reportingstrategies. He has led projects inpayroll in SAP and other softwarepackages. Greg has a varied back-ground including packaging systemdesign, service, and installation,hotel engineering management, andbusiness development for mechani-cal contracting and veterinary hos-pitals. Greg's email address [email protected]. �

Figure 11: Final Query Results Outputted in SAP List View


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Editor's Note: IS-Retail hashad its share of growing pains,but SAP continues to refine IS-Retail functionality to meet theneeds of its retail and consumerproducts customers. Nowhere isthis effort more evident than inthe integration between IS-Retail and BW for the purposesof customized reporting. In thisarticle, BW Editor Pat Pesagives readers his first view ofBusiness Warehouse from afunctional direction. Focusing onhow to populate BW InfoCubeswith retail business content forreporting purposes, Pat'sinsights will be of special inter-est to SAP retail users. Thisarticle will also be of interest toSAP users who are concernedwith BW InfoCube design andpopulation, BW reporting capa-bilities, and the integration offunctional business contentbetween BW and core SAP mod-ules such as MM and SD. Notethat Pat's article applies to theretail functionality that shipswith the 4.6 R/3 release.

If you're planning a BusinessWarehouse IS-Retail implementa-tion, this article will help get youstarted down the right path. Andif you're looking to learn moreabout the design of InfoCubes andthe structuring of business con-tent within BW, you'll find thisoverview of InfoCube design forIS-Retail interesting. In this arti-cle, we are focused on the IS-Retail sector from the BusinessAnalyst's point of view. SAP pro-vides a broad, well-engineeredRetail component that integrateswith MM, SD, and Purchasing toprovide a robust solution for the

Consumer Products and Retailingsector. Although early releases ofIS-Retail were a little sketchy, theversion of IS-Retail that shipswith 4.6 is robust enough to allowSAP Retail users to access the ver-tical business content they needfrom BW for reporting and otherRetail business functions.Consequently, in this article, wewill be covering this deliveredbusiness content in BusinessWarehouse and R/3.

Within this article, I will providethe beginning of a functionalanalysis matrix that can be usedto flesh out requirements anddesign objectives from businessfocus groups in the requirementsgathering phase. I will also pro-vide a basis for design and devel-opment of key InfoObjects andInfoCubes, as well as identifyingcorresponding extractors andstructures in R/3 and the databasis for our requirements. To

complete the discussion, I will pro-vide a basis for reporting once wehave data in BW. The reportingwill concentrate on the IS-Rprocess model and activity-basedroles in managing the retail side ofinventory, goods movements forboth issues and reversals, and pur-chasing. Needless to say, the samemethodologies I present here forthe design of InfoCubes and cus-tomized reporting are not limitedto IS-Retail and can be applied tomany other industries and types ofbusiness content within BW.

Since the Retail configurationwill comprise data elements ofMaterials Management, Sales andDistribution, and aspects ofPurchasing, along with Retail-specific data elements, we willconcentrate on the Retail specificswith mention of the ancillarydependencies of the MM, SD, andpurchasing groups when relevant.We are operating on the assump-tion that the Retail configurationin R/3 is somewhat standard.There is no way to capture com-pany specifics such as customiza-tions and customer-specific dataelements. Therefore, I will assumethe generic stance of detailingexisting BW functionality andgive some additional examplesthat I have found useful duringthe implementation phase. Thecontext of this article will be BW2.1C. Although most of the tipshere will also apply to BW 2.0,there are several benefits to usingBW 2.1C with IS Retail R/3.Those benefits will be illustratedwithin the article. Finally thereporting aspect will cover severalreports and queries that are deliv-ered as standard business content,J

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Using BW for Industry-Specific Business Content:SAP® IS-Retail Data Design and Reporting in BW

by Pat Pesa, arthurpesa, inc.

Needless to say, the

same methodologies I

present here for the

design of InfoCubes

and customized

reporting are not

limited to IS-Retail.


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as well as several reports that Iconsider important additions tounderstanding retail sales per-formance, as seen from a goods-movements point of view.

Retail Business Categoriesand Business Units

To completely understand allaspects of operational retail busi-ness, it is necessary to source datafrom more than just R/3 OLTP.True data requirements extend farbeyond transactional processingand into Customer RelationshipManagement, WarehouseManagement, Supply ChainManagement, not to mentionPoint of Sale, Risk Management,Electronic Banking, and manyother areas. For the benefit of

understanding general datarequirements, I will brieflydescribe the operational aspects ofthe retail business categories thatwill provide the basis for analysisin BW. Most of these source sys-tems will be readily available inretail environments. We are pri-marily concerned with the follow-ing categories:

• Customer RelationshipManagement• CRM marketing• Customer loyalty

• Category Management• Merchandise and assort-

ment management• Price and promotion man-

agement

• Supply Chain planning• Distribution network

planning• Forecasting and replen-

ishment

• Supply Chain Execution• Procurement• Inventory management• Warehouse management

While this list is far fromexhaustive, it will serve as a basisfor understanding our datarequirements from an analyticalperspective.

In R/3 and BW, there are sever-al modules or functional groupsthat account for the bulk of theseaforementioned categories, such

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Category Management Description Data Source

POS Data Mart Point of sale data POS systems in combination with SAP transactional data

Master Data Management Materials Management Master Data from Mara Marc, etc.

Consumption and Shopping Behavior CRM, third party or SAP Geographical and demographical data from CRM

Market Basket Pricing & Analysis SAP pricing determination Pricing info records and master data from MM

2-phased Wholesale/ Retail Pricing SAP pricing determination Pricing info records and master data from MM

Table 1: Functional Reporting Matrix

Supply Chain Planning Description Data Source

Out of Stock Analysis Article Demand Planning DP / DM

Over Stock Analysis Article Demand Planning DP / DM

Slow/Fast-Moving Article SD transactional data analysis SD, MMRanking

Collaborative Master Data Materials Management SD, MMManagement Customer Master KNA1

Conditions and Bonus Pricing, planning, and consumption SDManagement consumption

Vendor Exception Analysis Vendor Master and returns management, Procurementprocurement goods management

Table 2: Supply Chain Planning Functional Reporting Matrix


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as CRM, APO, or DemandManagement in R/3. It is not nec-essary to have all of these modulesoperational for smaller Retailimplementations. Also, data cancome from a non-R/3 source suchas a third-party CRM package ora third-party Demand Planningsystem. It all depends on theimplementation, but the constanthere will be the necessity to makesure data is transformed and validfor analysis.

The functional reportingmatrixes in Figure 1 and Figure2 can be used to gain a betterunderstanding of the actual datarequirements from a businessperspective.

Retail Functionality in R/3OLTP and BusinessWarehouse

At the top level ofBW, we have theA p p l i c a t i o nComponent IS-R forRetail services.Immediately underthat, we have theInfoArea 0RT Retail.It is within thisApplication Area thatwe will find the nec-essary delivered busi-ness content. Itshould be noted thatfollowing the instal-lation of any/all busi-ness content, it mustbe activated to beavailable within theapplication area hier-archy. All deliveredbusiness content fromSAP is installed in a"D" status orDelivered. It must beactivated to appearas "A" status orActivated. That pro-cedure will cover the

standard functionality in BW; forR/3 OLTP data, we have the newextractors from BW 2.0 on,which are found in the MCEXfunction group. These replacethe LIS structures, with theexception of 2LIS_40_S278. Thefollowing extractors are consid-ered important for retail datarequirements.

• 2LIS_02_SCL - Purchasing(Schedule Line)

• 2LIS_03_BF - MaterialMovements

• 2LIS_03_UM - Revaluation

• 2LIS_40_S278 - Transfer BW:Stock

• 2LIS_11_VAITM - Order: Item

• 2LIS_12_VCITM - Delivery:Item

• 2LIS_11_V_ITM -Order/Delivery – Settlements

• 2LIS_13_VDITM - BillingDocuments – Position

• 2LIS_40_REVAL -Revaluation at retail

This list is not exhaustive, but itdoes show the basic extractorsfound in R/3 OLTP for the funda-mental data requirements forRetail Analysis. I have found thatthe pre-delivered content inIS–Retail is exceptionally well bal-anced in the Consumer ProductGoods industry. For clothing man-ufacturers and other industriesthat produce CPG materials, the

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Figure 3: Transaction Data and Corresponding InfoStructure


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level of pre-delivered analyticalfunctionality will suit most organi-zations with only minor modifica-tions. However if you’re a foodproducer or grocer, you may findthat the level of customization nec-essary for effective analysis has tobe managed from the requirementsgathering phase through deploy-ment to ensure all developmentpoints are met in time. While somemay find deployment easier thanothers, it ultimately comes down tobusiness processes and how theyneed to be modeled or representedin BW. Figure 3 illustrates therelationship among the R/3 appli-cation component, the correspon-ding InfoStructure, and the BWtransfer structure.

Moving from R/3 and into BW,we find the level of business con-

tent well defined. As of release2.1C, there are approximately 10InfoCubes and 2 MultiCubes thatcover the basic functional area ofIS-Retail.

• InfoCube: 0RT_C01 Article

• MultiCube: 0RT_C40 Article/ Month

• MultiCube: 0RT_C41 Article/ Week

• Purchasing InfoCube:0RT_C05 Goods Procurement

• Inventory ManagementInfoCube: 0RT_C35 ArticleMovement

• InfoCube: 0RT_C36 Stock /Week

• InfoCube: 0RT_C37 Stock /Month

• InfoCube: 0RT_C38Revaluation at Retail

• InfoCube: 0RT_C39Revaluation at purchase Price

• Sales InfoCube: 0RT_C02Customer

• InfoCube: 0RT_C03Consumer

• Logistics InfoCube: 0RT_C04Merchandise flow

There are several key InfoCubesfound within the standard busi-ness content that are usedthroughout IS-R. Additionally wecan make use of MultiCubes that

are joinedagainst severalother InfoCubesto gain addition-al insight intoIS-R operationalbusiness. Oncewe have definedb u s i n e s sr e q u i r e m e n t sfrom the end-user communityand assortedbusiness owners,we shouldi m m e d i a t e l yattempt to mapthese require-ments againstthe deliveredbusiness con-tent. Mappingthe knownre q u i r e m e n t sagainst existingbusiness contentwill ensure thereuse of existing

objects, many

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Figure 4: Initialization of Open Stocks Transfer


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of which are well developed andinclude all the necessary elementsfor meaningful analysis.

In the event of customizations inSAP R/3 that force the develop-ment of certain objects in BW, itwill be of utmost importance todetermine the correct InfoCube aswell as the dimension for the objectin question. This will ultimatelyimpact performance and thereforeusage in the end-user community.In order to begin to understand thearchitecture established by SAP forBW IS-Retail, it will be importantto thoroughly examine the existingbusiness content and correspon-ding extractors in R/3. From thisunderstanding, we can then beginto design additional InfoObjectsthat can be included within theexisting content or incorporatedinto new user-created content, suchas a custom InfoCube and corre-sponding extractor. Figure 4 illus-trates the user's choices duringOpen Stocks transfer. During thedata initialization effort, one canchoose the data source type, suchas "valuated stocks only." You canalso record control data and trans-fer control data. These options willprovide fine granularity in recordselection and record control.

The rule rather than theexception here is to use existingbusiness content rather than todesign customized objects. Tofurther aid the developmentteam in understanding IS-Retail, SAPnet or OSS should beconsulted and searched for doc-umentation on IS-Retail. Thereis plenty of documentation onbusiness content, as well asinformation on design anddevelopment that will providegreat insight into developmentand use of existing content toserve retail analysis.

Reporting in IS-RetailDuring the requirements gath-

ering phase, we will be looking atoperational as well as historicalanalysis metrics. This is the pointat which we can discuss and distilthe operational reporting require-ments with each of the businessowners. To further educate thedevelopment team as well as thefunctional team responsible forunderstanding requirements, eachmember should be given a report-ing/analysis matrix developed byincorporating the existing cate-gories of reports with the func-tional areas that will be includedwithin the scope of development.This can be accomplished by afunctional team lead using thedocumentation for the existingbusiness content as well as OSSdocumentation for IS-Retail eval-uations and content. This willserve as a starting point in deter-mining the correct level of analy-sis. A complete list of reportsfound within the delivered con-tent can also be furnished.

To understand reporting in BWfor IS-R, we need to understandthe process model created toenable end-user analysis. Thisprocess model can be brokendown into two specific attributes.

1. Definition of the role-orient-ed activity groups

2. Definition of the reportsand/or queries assigned tothese roles

The process model found in theretail channel structure in BW canbe described as follows:

• Activity Group – Retail Role

• Sub-activity role – Decisionsituation

• Directory – decision specif-ic content

• Report / Workbook –Queries

This outline defines the exist-ing and recommended activity-based role model found in with-in the IS-R process model. If thisis not used, it is strongly recom-mended that a process model bedeveloped that is similarlydesigned and implemented,although that would be some-what of a re-invented wheelapproach. One thing to note isthat SAP profoundly promotesthe use of role-based securityand authorizations for both R/3and BW. Hence you will findmany developed roles that canbe assigned to the end-usercommunity.

Retail BuyerAs an example we can look at

the Retail Buyer role found in BW:this is technically known as"SAP_BW_0ROLE_0055". It isdesigned to serve an individualwho manages the buying or order-ing of components or articles andhas several reports/queriesassigned that support the opera-tional activity of buying. SeeFigure 5. J

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One thing to note is

that SAP promotes

the use of role-based

security and

authorizations for

both R/3 and BW.


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This short list should suffice inillustrating the organizationaleffort applied to each role, as wellas the ability to assigned addition-al objects such as reports andqueries to each role whether pre-delivered or custom.

Time should be taken to lay outthe organizational structure ofeach end-user group or communi-ty prior to developing roles andauthorizations. Doing this workupfront will reduce the adminis-trative effort in the future when itcomes to assigned roles andauthorizations. It will also allowthe incorporation of cross-appli-cation area authorizations, suchas a Purchasing group’s need tosee financial data in CO-PA.

Conclusion:Within this article, I used a top-

down approach to establish thecorrect framework for under-standing what is needed in a com-plete IS-R deployment. I purpose-

ly took a generic perspective inrelating what is available from adelivered business content strate-gy, and what could be done usingthis existing content. Most retailbusiness units need to developadditional customizations to sup-port a certain percentage of theirbusiness processes. Following therecommendations in this articledictates that we thoroughlyunderstand what IS-Retail cus-tomizations are available, andhow we can utilize BW to supportour IS-Retail initiative. We canthen reliably integrate our cus-tomization effort within thismodel. This would allow for useof existing technology, while per-mitting new development to co-exist within the 0RT InfoArea.Based on the fact that many retailoperations will have third-partysystems to incorporate, it wouldbe best if some research were con-ducted on integration paths with-in BW. In BW 3.0 and above,there are opportunities to inte-

grate additional reporting envi-ronments as well as additionaldata integration tools. If readersare interested, we'll look moreclosely at third-party integrationwith BW in forthcoming articles.

Arthur "Pat" Pesa, arthurpesa,inc. Pat is a senior independentconsultant specializing in SAPBusiness Warehouse andApplication Link Enabling. Hehas over nine years of SAP R/3experience, specializing inABAP/BAPI development,Internet based order-processingsystems, and DemandManagement integrations withthird-party Demand Planningsystems. Pat has spent the lastthree years as a BusinessWarehouse consultant, specializ-ing in technical leadership rolesand solution design and develop-ment. Pat's email address [email protected]. �

Decision Making Situation Sub – DM situation Workbooks / Queries

Ordering Purchase order Vendor purchase orderOpen on-order stock Cross company POPurchase orderOrder unitPurchasing margin

Goods receipt GR vendorTotal GR vendorGR W/o purchase orderCross company GRPromotion GR

Returns Vendor returnsTotal returns vendor

Invoice credit memo Vendor invoiceVendor credit memo

Open - to - buy Open

Vendor Evaluation Service level Vending service level vendor

Vendor statistical sales Sales

Figure 5: Retail Buyer Role in R/3


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Editor's Note: "GoingWireless" sounds pretty hip, butas ABAP/Java Editor KrishnaKumar can attest, "mobileenabling" an enterprise environ-ment like SAP brings with itsome new complexities—not tomention a bunch of new "buzz-words." In this groundbreakingarticle (the first in a two-partseries), Krishna outlines thearchitectural choices and imple-mentation challenges facing theSAP mobile development team,providing SAP developers withcrucial tips for optimizing datapresentation and access onmobile devices. Krishna alsoguides readers through themobile device options availableand assesses the cost and func-tionality parameters for each.Finally, Krishna wraps up thisinstallment with an example ofa real-life SAP mobile rollout,in a J2ME environment. In thenext edition of SAPtips, Krishnawill examine a business caseinvolving the SAP Mobile (ME)solution, so be sure to stay with-in our range.

Introductionmo·bile (m b l, -b l , -b l ) –

(Webster)

adj.Capable of moving or of being

moved readily from place toplace: a mobile organism; amobile missile system.

Capable of moving or changingquickly from one state or condi-tion to another: a mobile, expres-sive face.

With the rapid advancement inwireless networking infrastruc-ture, mobile computing hasgained widespread acceptancefrom the technology community.This is one of the most excitingareas in technology; the futurebrings timely, personalized trans-actions that can be conducted justabout anywhere. Generally speak-ing, mobile devices are small,pocketsize devices that are light-weight, with a long battery life,and the ability to perform multi-ple functions. It is likely that usersof mobile devices will not just surfthe Web with their mobile device,but instead will rely on personal-ized information such as prioritye-mails, stock quotes, and weath-er reports generated to matchtheir exact location. Since mobileinformation is "demand based"rather than "supply based," thetechnology is also sometimesreferred to as "Push" technology.

M-commerce typically beginswith simple transactions, such asplacing a bid at your favorite auc-tion site, or making a hotel reser-vation for a weekend getaway. Astechnology improves and pricesfall, user expectations from thetechnology will increase, and theadoption domain will expand toenterprise applications. In thisarticle, we will extend variousoptions of mobile enablement tothe SAP platform, focusing onspecific business modules thatmay serve as ideal candidates formobile computing. Once we makeour case for mobile deployment,we'll address the implementationchallenges, and review the optionsfor mobile devices, operating sys-tems, and architectures that SAPusers can choose from. Finally,we'll wrap up part one with a casestudy of a mobile deployment thatI was involved with.

But before we begin, we shouldremember that "going wireless"means mastering a whole new set ofbuzzwords and lingo. To that end, Ihave included an appendix with themost commonly used terms anddefinitions. Should you run into anyunfamiliar terms or acronyms asyou're reading this article, refer tothe appendix for an explanation.

Making The Case ForMobile Enablement

It is essential to understand thatmobile-enablement of the SAPlandscape is often best suited formature SAP implementations.Mobile solutions are usually ultra-thin client installations; hencebusiness validations are best doneat the backend.

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Enhancing SAP® Value with Mobile Business Solutions: A Hands-on Guide to SAP Mobile Development (Part One of Two)

by Krishna Kumar, Enterprise Horizons Inc.

It is essential to

understand that

mobile-enablement

of the SAP landscape

is often best suited

for mature SAP

implementations.


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The benefits of mobile com-merce solutions are best describedas follows:

• True, real-time capture ofsensitive business parame-ters like inventory and fieldvalues.

• Accurate, first-hand input ofinformation, with an increasein efficiency and effectivenessof information distribution.

• Specific, role-based informa-tion entry, thus creating poten-tial end-user license savings1.

• "Push" Model ensures timelyand organized delivery of

user-personalized informationand alerts.

• First-hand end-customer visi-bility, both for field serviceand field sales.

• Better location-based businessdecision making, e.g., accu-rate geographic-based logis-tics with telemetry services.

The ImplementationChallenge

With the expansive increase inthe adoption of mobile and wire-less-enabled services, the marketwitnessed a glut of varying stan-dards from various device manu-facturers, each claiming to estab-

lish the next breed of standardsand protocols. This inundationresulted in varying choices for theconsumer community, but with itcame decision-making challenges.Devices ranging from cell phonesto PDAs to GPS systems are nownetwork-enabled.

Some of the typical organiza-tional challenges of implementingmobile solutions are:

• Lack of knowledge on thebenefits of the solution

• Abundance of technologyoptions, hence lack of a cleartechnology roadmap

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1 Disclaimer- SAPtips makes no guarantees on license savings. Please refer your software contract with SAP.

Device Type Business Application Comments Enterprise Cost ( $ / Unit)Suitability

Cell Phones Simple sales info, alerts Small screens, not very Poor $150enterprise data friendly.

PDA Sales, warehouse, field service, Serves most mobile needs, but High $300(Personal Device Assistants) asset management, CRM, shop floor may not be very robust for field use.

Mobile handhelds Warehouse management, field Robust for most field needs. Very High $1000 to $3000- (PDA devices for field use) service, asset management, CRM,

shop floor, logistics execution

Barcode devices & Warehouse management, field Typically, are read- only devices. High $1000 to $2000mobile printers service, asset management They do not provide ‘point-of-activity’

information.

Pagers and alert devices Infrastructure exception alerts, Small screens, could be used for SMS Medium $500 to $2000KPI alerts, inventory management or messaging applications.

GPS (Global Positioning Logistics execution, location-based Used for location identification of ($300 to $1000systems) devices ( asset management, field service resources for better supply chain

optimization and planning.

Point of sale devices (kiosks) CRM, consumer interaction, Used for collecting consumer profiles Low $1000for smart sales. Typically used in mature CRM installations in retail or CPG companies.

Smart cards CRM, consumer interaction Used for collecting consumer profiles Low $2 to $15for smart sales. Typically used in mature CRM installations in retail or CPG companies.

Figure 1: Mobile Device Options and Enterprise Suitability Chart


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• Offline versus online issues –Issues regarding data integri-ty and offline data access

• Lack of knowledge in choiceof device – Incompleteanswers to what work best foruser needs, now and later

• Role resolution issues – whogets to see what information?

In this first of a two part article,we will discuss various mobiledevice and technology options,along with some of the preferreddevelopment environments forSAP mobile projects. In part twoof the article, we will discuss theSAP Mobile Development Toolkitat length and some of the pitfallsto avoid in a typical deployment.Also in this article, I will highlighta live business scenario and thedevices and technology used tomake it a success.

Choosing The RightDevice(s)

Figure 1 presents a broadbrushstroke of mobile deviceoptions including an assessmentof their suitability for enterprise(SAP) environments, and ageneric categorization of whichoptions are best suited for indi-vidual business applications.

Now that we have covered therange of devices, let us considersome of the development choicesthat are appropriate for SAP users.Most devices run native software toperform housekeeping functionslike file management, synchroniza-tion, and multi-tasking. The mostpopular operating systems (OS) forthese devices are PalmOS andWindows CE. There are otherdevices that do not run on anyoperating systems, but expose pro-gramming capability via estab-lished protocols like WAP.

Making The RightProgramming Decisions

As with standard GUI program-ming, the SAP mobile developerhas a gamut of developmentchoices. There are three funda-mental differences betweenmobile and standard GUI pro-gramming that limit mobiledevelopers:

1. Lack of guaranteed back-endaccess (when there is no net-work coverage)

2. Limited screen real estate

3. Limited memory and CPUresources

The first limitation brings with itan inherent need to upload (ordownload) data with the back-end. This process is called synchro-nization (also called active-sync orhot-sync). Synchronization is theprocess of overlaying data fromone system (mobile or desktop)over another system (desktop ormobile). The very definition of"synchronization" can bring somedaunting data integrity issues. Apoor synchronization strategy cancause serious data consistencyissues and could potentially lead toincorrect business decisions.

The second limitation - screensize - requires a major shift in thedevelopment methodology. Toovercome these limitations, it isessential for the mobile developerto think like a mobile user. Themobile screens have very littlescreen surface area to displaydata. Figure 2 presents some tipsfor optimizing presentation anddata access for mobile users.

Choosing The RightArchitecture

The architectural choices forSAP-enabled mobile solutions are:

1) SAP Mobile (SAP ME)

2) J2ME (Java Micro Edition)

3) Windows CE.NET

4) Third party products (e.g., Avantgo, Intermec)

5) Custom applications

In this two-part primer, we'llfocus on the first two developmentapproaches. First, we'll discuss ageneric approach to architectingan enterprise-mobile landscape,and then we'll present a case study,which involved an SAP mobiledeployment in a J2ME environ-ment. In the next edition ofSAPtips, we'll examine a businesscase involving the SAP Mobile(SAP ME) solution. Please notethat irrespective of which solutionyou use, the principles of mobilearchitecting remain the same.

Architecture of a Mobile Device Most mobile devices support a

native operating system (OS),typically, either PalmOS orWindows CE. Also, most mobiledevices come with a light browser,typically, an Internet Explorerbrowser that supports lightHTML or WML . Also, mostJ

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The very definition

of "synchronization"

can bring some

daunting data

integrity issues.


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mobile devices support Native UImodels (for form design), anddevice managers for printer, LAN,and other peripheral interfaces.Mobile devices have a uniquedevice identifier, called device-ID,that uniquely represents thedevice in a mobile landscape. Thisdevice controls certain key busi-ness functions, like role recogni-tion and the nature and amount

of information to be downloaded.The newer versions of mobiledevices come with SOAP-enabledAPIs that support Web serviceinterfaces with back-end systems.

Synchronization Process"Synchronization" is a key ele-

ment in the offline functionality ofa mobile device. Synchronizationcan happen via the LAN,

serial/parallel ports, or via wirelessecosystems like the802.11x/Bluetooth connectivity.Most devices provide native sup-port for synchronization (likeActive Sync (Windows CE) andHotSync (PalmOS)), that themobile programmer can make useof. Figure 3 shows a typicalthroughput for mobile device syn-chronization.

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Tip Best Practice Devices suitability

Since screen sizes are small, information interface Use simple menus, addressable (by numbers), Cell phones, PDAs, handheldsshould be optimal. avoid detailed reports, make information

simple and ensure that it can be acted upon with simple key strokes.

Avoid textual entry. Make input fields selectable with drop-down Cell phones, PDAs, handheldsboxes, check boxes, or radio buttons.

Provide threshold attributes during paging alerts. When working with enterprise solutions SMS devices, pagers, cell phonesthat use messaging to alert roles on critical alerts, it is important to provide specific information, e.g., instead of "inventory shortfall on product ABC", provide "product ABC at 3% below replenishment." Keep in mind that with paging systems, the user does not have the ability to "drill-down" to details.

Support HDI (Human Device Interfaces) Most mobile devices come with HDI support, PDAs, GPS systems, kioskswherever possible. e.g. stylus or handwriting recognition. The

mobile system should support this interface wherever possible.

Support a Web-friendly interface for Most PDAs have Web-browsing capabilities. PDAs, handheldsinformation entry. It is simpler to dispense HTML content to a

device rather than custom-building forms. Most PDAs run a light Web server on the device, thus eliminating the need for separate forms during offline operation.

Data synchronization PDAs are not always connected to a wireless PDAs, handhelds, (some) mobile phonesnetwork. During offline operation, data stored in the local database needs to be synchronized with the back-end database. This process is called synchronization.

Support for multi-network synchronization Though this may not be always necessary, it is a good idea for the architecture to consider synchronization via multiple means, e.g., LAN, GPRS, GSM, cradle, etc.

Authentication and multi-user support The device should be able to support basic PDAs, handheldslog-on validation and multi-user support.

Figure 2: Tips for Optimizing Mobile Device Presentation and Data Access

2 ‘Light’ represents skimmed functionality- which means, typically, no support for applets, JavaScript and complex markup tags.


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Most mobile devicescome pre-deliveredwith a light database.Thus during onlinemode, the mobiledevice functions like anormal browser, withdatabase updates tak-ing place at the back-end server. Duringoffline operation, the‘light’ browser takesover, rendering theHTML pages (usual-ly, ASP or JSP pages)locally. The "light"database gets updat-ed with the informa-tion from the localWeb server. Thisdatabase then getssynchronized (vias y n c h r o n i z a t i o nrules) with the back-end.

The Mobile EngineMiddleware

The mobile engineserves as the middle-ware between themobile device and theback-end server. During onlinemode, the middleware acts as thebrokering layer between thedevice and the business back-end.During offline operation, the mid-dleware helps in synchronization,ensuring that the synchronizationrules are conformed with. DeviceID identification is also usually afunction of the middleware.

The middleware usually doesthe data mapping and the callingof the respective BAPIs in theback-end SAP system.

Case Study of an SAPMobile DeploymentBusiness Case:

A major tools manufacturerwanted to enhance customer field

service. Here were some of the keyimprovement considerations:

• Improvement of customercomplaint response times

• Associating the service rep-resentatives with the rightskill-set

• Identifying the problembeforehand, and being appro-priately prepared with inven-tory of spare parts and equip-ment to fix the problem

• Being able to schedule theservice representative on thefly and to use spatial opti-mization (GPS positioning) to

find the closest technician forquickest outage response

• Spot invoicing and serviceorder documentation

• Remote inventory lookup andpurchase requisitioning func-tions for expedited inventoryfulfillment

• Accurate return-service datein case of complex servicerequests

SolutionClearly, the requirements of the

business case prompted a mobilesolution. Various devices wereevaluated, and finally a range ofrugged Intermec and RIM basedhandhelds were selected for fieldJ

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Figure 3: Throughput for Mobile Device Synchronization

SynchronizationEngine

Master Web Server

Mobile Engine

Role Resolution

Mobile Device

Master Db

Native SoftwareInterface

Native Web Server

Light Db

Synchronization Base

DeviceManagers

Browser SOAP

Security

NetworkDevices

LAN, WAN, GPRS, GSM, Bluetooth, 801.11x (over http, https)

Native OS(like WIN-CE, Palm OS)


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deployment. Since the service rep-resentatives were usually servic-ing remote outage locations, typi-cally with no network coverage,the solution had to have a robustoffline capability. J2ME wasselected as the development envi-ronment for custom-building themobile solution.

The solution flow was broadlylaid out in the following manner:

1) Configuration of skeletal HRmaster data for device, per-sonnel number identification(Infotypes), and skill sets(Qualifications)

2) Creation of ServiceNotification (in ServiceManagement Module (SM))by service dispatcher, withmention of the problem Id(symptom)

3) A custom program is execut-ed to evaluate the typicalskill set needed to serve theoutage scenario.

4) A page (SMS) is sent viaemail, with a hyperlink tolaunch the notification appli-cation.

5) Each field representativesynchronizes her handheld atthe end of the day, and allrelevant notifications aredownloaded into the hand-held. Other information,such as address, map direc-tions, weather details, and abrief customer and outagehistory gets downloaded intoher device.

6) The nature of the symptomand a resolution history alsogets downloaded (the servicetechnician can pick a rangeof solutions from a screen

and preferentially downloadthe selection to her hand-held).

7) During her field trip, the serv-ice technician gets promptedwith possible resolution sce-narios based on the history ofdownloaded solutions.

8) She can then pick an invento-ry of products, equipments,and spare parts needed to fixthe problem. She can checkthe inventory (if online) andcan place a replenishmentorder. The system checks tosee if the product is in stockor otherwise issues a purchaserequisition.

9) If, during the field trip, theservice technician is notonline, then the informationregarding her purchase requi-sitions is stored offline andgets synchronized with theback-end during her dailysynchronization runs.

The Solution ChallengeIn theory, this solution flow

sounds very efficient, but whatabout the following scenario:

• The service technician con-nects to SAP to download thelist of service notificationsfrom SAP’s SM (ServiceManagement) database.

• He downloads the inventoryavailability list of parts thathe may need to fix the serviceoutage situation.

• Now, he goes offline to theservice site, where he has noaccess to the SAP system. To fixthe service problem, he needsspare parts, for which he logsonto the InventoryManagement system to reserve

inventory (he creates a reserva-tion, good issue). Bear in mindthat the SAP system has notregistered the event yet.

• Based on the forecasted avail-ability date, the service tech-nician promises a resolutiondate to the customer.

• In the meantime, anotherservice technician with a sim-ilar requirement reserves theinventory, and gets a positivecommitment for the product.

• Later in the day, the first tech-nician "synchronizes" hisdevice and realizes to his hor-ror that his earlier commit-ment was compromised by asubsequent inventory request.

The above issue represents a typ-ical challenge that a system archi-tect faces in designing systems thatare distributed databases with spo-radic network connections. Thereexists no panacea to deal with data-base inequity issues arising out ofdistributed, disconnected databas-es, but here are a few tips to mini-mize such occurrences:J

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Later in the day, the

first technician

"synchronizes" his

device and realizes to

his horror that his

earlier commitment

was compromised.


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The Solution Approach • The business functions select-

ed for mobile enablementshould be very self-contained.Typical examples wouldinclude: customer surveys,service notifications, goodsreceipt tracking, and assetmanagement. Avoiding cross-departmental functions likeinventory checking, and docu-ment postings help significant-ly in managing disconnectsamongst databases.

• The back-end systems shouldbe made the dominant domainduring synchronization runs.Business conditions permitting,the back-end should be mini-

mally overwritten by eachdevice—especially if there isoverlap across multiple devices.For example, if an employeeuses two PDAs to update herexpense record, then the back-end should validate the device-ID before uploading it into thedatabase, to ensure that theuser does not accidentally over-write the records.

• Each PDA should be identifiedby a device ID that is refer-enced to a role, e.g., each serv-ice technician should be pro-vided with a unique device ID.In this manner, the databasecontribution of each role canbe uniquely tagged to each

device, and database spill overis avoided.

See Figure 4 for a graphical rep-resentation of our case study withJ2ME architecture.

Concluding Thoughts ForPart One

The key to a successful mobileadoption is ease of use. Make yourmobile application system lean,intuitive, and less intrusive, even ifit demands business innovation.The solution to efficacious onlineperformance is never in one place;instead, it is a derivative of smartarchitecting, smart functionalitychoices, and creative application ofcustomer interaction information.Though it may seem tempting tocreate software specific to a deviceconfiguration, desist from the idea,as it may hamper scalability andupgradeability. Finally, a goodmobile solution never assumesconsistent bandwidth, network, orresource availability. The solutionshould work seamlessly in eitheronline or offline environments. Inthe second part of this primer, wewill discuss implementation toolsand tips using the SAP Mobiledevelopment kit and the J2ME(Java Micro Edition) toolset.

Krishna Kumar, EnterpriseHorizons Inc. Krishna has overten years of SAP and mySAP®experience in Senior ProjectLeadership and consulting roles.He has worked extensively inBusiness Intelligence and ProcessOptimization solutions usingABAP and Java-based solutions.Krishna has spent the last fouryears working on mySAP based e-business solutions, building tem-plates for rapid mySAP deploy-ment. He can be reached [email protected]. �

Figure 4: J2ME Architecture Used in Case Study

PrinterInterface

BarcodeInterface

LANInterface

Java Enabled Device

Light Db

DeviceAuthentication

Mobile Engine

Native DeviceOS

LAN Dial-up

SynchronizationEngine BAPI call

SM, MM-IM, MM-PUR

Browser

Native Web Server

Small FootprintBusiness Engine

J2ME Interface

Event Register

Synchronization Base


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Glossary: Terms an SAP Mobile Developer Needs to Know

ASD Area of Screen Display. The screen length multiplied by its width. The real estate available for information output.

Base station The base station is a multi-circuit transceiver located at the center of a cell whose primary purpose is to handle all incoming and outgoing calls within the cell. The base station relays the mobile's signal to the MTSO via wire line.

Bluetooth Low power radio technology, which replaces the need for wires connecting electronic devices such as personal computers, printers, palm top computers, and mobile phones.

CDMA Code Division Multiple Access. CDMA separates communications by code. Voice is encoded into digitized bits, and groups of bits are tagged with a code.

GSM Global System for Mobile Communications. A digital cellular communications standard used throughout Europe and Australia. The standard is used in three distinct frequency bands – 900Mhz, 1800Mhz, and 1900 MHz.

GPRS General Packet Radio Service. This is the means of data transfer over the GSM network. Maximum speeds of up to 171.2 kilobits per second (kbps) are achievable with GPRS using all eight timeslots at the same time.

SIM Subscriber Identity Module. The smart card used in digital phones. It carries the user's identity for accessing the network and receiving calls, and also stores personal information, such as phone directory and received SMS messages.

PDA Personal Digital Assistant. A top-of -the-range personal organizer, which allows you to store information and to use simple computer programs.

SMS Short Message Service. Two-way text messaging service is offered on digital networks. Messages of up to 160 characters can be sent at low cost.

Third Generation(3G) Third Generation, or 3G, is the wireless communications involving Internet access and data delivery to mobile phones with audio, moving color images, and sophisticated internet services.

J2ME Java 2 Micro Edition. A development kit that enables the development of application for the mobile devices. The Java 2 Platform, Micro Edition (J2ME) Wireless Toolkit is a set of tools that provides application developers with the emulation environment, documentation, and examples needed to develop Java technology applications targeted at mobile phones and entry-level PDAs.

Windows CE A lightweight, windows-based operating system for mobile devices. A newer version, Windows CE.NET, has been launched; it provides full-fledged support for the Web service environment using the .NET framework.

WAP Wireless Access Protocol. WAP is the equivalent of http:// for mobile devices. A markup language called WML (Wireless Markup Language) is used for coding mobile pages on the mobile device. WML has a structure similar to HTML, though much lighter for memory conservation.


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Editor's Note: If you want tofind out how much "load" yourSAP system can handle, youhave two options: you can waittill your system is live and "seewhat happens," or you can con-duct pre-"go live" stress tests toensure that your system is readyfor anything your users canthrow at it. In this helpful guide,Basis Editor Joey Hirao tells ushow to conduct such a test, whichmany users confuse with a soft-ware functionality test. In astress test, you're not testingyour software, but the Basis sys-tem capacity and system config-uration. As Joey has learned onproject after project, the efforttaken to plan and conduct acomprehensive stress test (whichcan also be performed on a sys-tem in production) pays offgreatly in terms of reducingcostly system overload anddowntime. Joey's stress testguide applies to virtually allversions of SAP and all support-ing databases.

IntroductionAs "go live" approaches, one pre-

vailing question lurks in the mindsof technicians and managers alike:"Can our servers handle our pro-duction load?" Well, one way oranother that question will beanswered; either prior to "go live"during a controlled stress test, orduring a thrashing rampage on areal production day. Either way, theanswer will be known. The objec-tive of this article is to outline thesteps necessary to plan and executea successful SAP system stress test.I will use the following outline todiscuss the different phases of thestress test project:

1. Test Planning

2. Preparation

3. Execution

Test PlanningThe planning phase usually

occurs months prior to the actualexecution of the stress test.Relative to the timeline of an SAPimplementation, stress test plan-ning may start as early as the tailend of the SAP "Blueprint" phase,and as late as weeks after theactual "go live." You might ask,"Why would you do a stress testafter go live?" The answer to thatquestion tells us more about thepolitical realities of an SAP imple-mentation than it does abouttechnical best practices. In eitherevent, it is definitely more sensi-ble to perform the test prior to "go

live" rather than afterwards. Inshort, the primary objectives ofthe planning stage is to identifythe following:

1. Purpose

2. Scope

3. Test Tools

4. Physical Environment

PurposeThe purpose of the stress test

needs to be clearly identified, doc-umented, and communicated.Customarily, the objective of astress test is to measure the capac-ity that the hardware can sustain.A stress test is often mistaken as asoftware functionality test. Thedifferences are subtle but verydistinct. A software functionalitytest measures whether an SAPtransaction can be completedwithout failure. Failure in thiscase is usually a result of incom-plete or erred module configura-tion, faulty data, or softwareerrors. In contrast, a stress testmeasures itself against a definitivenumber of dialog steps (SAP’smeasure of load) per frequency oftime. By definition, a failure of astress test is the direct result ofinadequate Basis capacity and/orsystem configuration. A stress testshould measure all the followingBasis component statistics:

1. SAP Basis utilization

2. Database utilization

3. Operating system utilization

4. Network utilizationJu

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Can Your System Handle The Stress? A Step-by-Step Guide To Stress-Testing Your SAP® System

by Joey Hirao, Jotech LLC

A stress test is

often mistaken as

a software

functionality test.

The differences are

subtle but

very distinct.


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A breakdown in any of the Basiscomponents is cause for immedi-ate corrective action to resolve thedeficiency. Corrective actionsinclude Basis layer reconfigura-tion and/or additional hardware.

ScopeThe scope of the test is the next

item to consider. In a complexSAP implementation, componentsother than SAP are often includedin the scope. For example, if amiddleware product is imple-mented within the process flow ofan SAP process, then that compo-nent should probably be includedin the scope of the stress test. Thescope should identify SAP mod-ules, to include online compo-nents, batch printing, and anyother upstream or downstreamsystems. As this is an SAP-centricstress test, the amount of loadstarts with SAP and transcendsinto other systems. This measureof load is translated into a com-mon denominator called dialogsteps. Dialog steps are SAP’smethod of measuring load.

The golden number of dialogsteps is calculated from the differ-ent SAP transactions, and the fre-

quency of those transactions.SAP’s sizing questionnaire willprovide you with the golden num-ber of 100% dialog steps.

Test ToolsIn order to achieve the different

levels of load for the stress test,testing tools are often utilized.Figure1 shows some availabletesting tools along with a briefdescription.

Aside from the cost factor, thereare other important features in atesting tool. One of the mostimportant characteristics of a test

tool is the ability to reproducetesting scenarios without devia-tion. This makes the extractedperformance data from the testcomparable. Comparability isparamount. If, for example, weperformed three separate testswith the same scenarios, weshould theoretically expect toreturn similar performance statis-tics. However, if we performed thesame tests and obtained three dif-ferent statistical results, we are ina world of hurt. How can wedetermine what to change, if any-thing?

Scalability and flexibility gohand in hand. Scalability meansthe ability to simulate a small to alarge number of concurrent users.During the actual test, we will startwith a small number and gradual-ly increase the user count.Flexibility is the ease with whichthese iterative changes can bemade. Additionally, flexibilityaddresses the capability of the toolto simulate all the different busi-ness transactions in SAP. Forexample, the newer mySAP®.com"enjoy" screens use complex activex components that not all standardtools such as CATT can handle.

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Tool Description Positive Negative

Human interaction Human interaction is 1. No additional 1. Uncontrolled and incomparablesimply the utilization of software costs test scenariosmanual human labor to 2. Utilize existing 2. Logistical challengegenerate a level of load. resources

Computer Aided A standard SAP tool useful 1. No additional 1. Not scalableTesting Tool (CATT) in data loads and user load software costs

simulation 2. Standard toolset 2. Limited use

3rd Party toolsets Enterprise stress testing 1. Controlled and 1. Additional software costtools are designed specifically comparable testingto generate a controlled load scenarioson the system. 2. Flexible and 2. Requires additional

scalable skill set

Figure 1: Available Tools for SAP Stress Testing

One of the

most important

characteristics of a

test tool is the

ability to reproduce

testing scenarios

without deviation.


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Now that we have the tools nec-essary to generate a load, we needsome tools to collect and gatherperformance metrics. All themajor hardware and databasevendors provide the Basis admin-istrator with performance moni-toring and recording tools. SAPhas built some excellent perform-ance monitoring tools into theBasis module under CCMS. TheSAP tools give a great overview,however, the granularity is mostlyin hours. The primary require-ment of these monitoring tools isto be able to track performancedata in small time incrementsover the duration of the stress test.Since a typical duration of thestress test iteration is usually anhour, data collection should be assmall as a few minutes. A goodtechnique is to utilize both SAPand external hardware and data-

base monitoring toolsto collect the data.Either way, so long asthe data is captured ina consistent manner,the name brand of thetool is irrelevant. For alist of some useful per-formance metrics togather, see Figure 2.

Physical EnvironmentBy definition, the

environment of thestress test needs to beon the same hardwareas the production sys-tem. In reality, thereare two viable alterna-tives for the physicallocation of the stresstest. First, you canexecute the stress testin the actual produc-tion client, on theactual productionhardware. This is thepreferred method.Another option is to

execute the stress test in a similarhardware configuration, but noton the actual production client. Ifexecuting on non-productionhardware, make sure you have thesame software and hardware con-figuration!

When you choose to do the testin a location other than the actualproduction system, planning andpreparation time will increase sig-nificantly. The environment, allthe way from the disk sub systemlayout to the server configuration,will need to be the same as theproduction version.

If the tests are to be conductedon production, the following itemswill needs to be considered:

1. How to revert back to thestate prior to the test

2. How to prevent any unautho-rized access on productionduring the test

3. How to effectively communi-cate production unavailabili-ty during the test

Test PreparationDuring the test preparation

phase, all the pieces to the puzzleare put together. The followinglist summarizes the actions thatneed to occur:

1. Test script

2. Systems installation

Test scriptsRegardless of the test tool cho-

sen, scripts need to be created.The scripts are created based onscope, and represent all the trans-actions that will be executed dur-ing the test. If the tool is software-based, actual software scriptsneed to be created for the tests.Scripts are also created forhuman-generated loads. Similarto the software scripts, thesescripts for human-generated loadsdetail to the tester what transac-tions to process during the test.Data is often overlooked. Withoutdata, the tests will not run. Thereneed to be sufficient amounts ofdata to execute the necessaryamounts of transactions, oftenhundreds of times. Therefore,data needs to be generated andcreated in preparation for the test.

Systems installationSystems installation refers to

the systems preparation for thetest. This includes the actual SAPsystem and interfaced externalsystems, as well as the stress testtools. The SAP system needs to betuned to meet the expected pro-duction load. This involves Basisconfiguration at the network,J

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Figure 2: Useful Performance Characteristics for Stress Test

Component Data to CollectNegative

Operating systemProcess statisticsMemory statisticsPaging statisticsDisk statisticsOperating system faultsCPU statisticsSyslog events

DatabaseBuffer utilizationLoad profileWait eventsSyslog events

SAPBuffer utilizationLoad profileWait eventsSyslog eventsDialog steps

NetworkUtilizationLoad profileCPU statisticsSyslog events


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operating system, database, andSAP layer. If the test tools are soft-ware-based, the test tools need tobe installed and set up. When uti-lizing testing tools on a large scaletest, you may need to set up multi-ple test tool application servers todistribute and handle the load.

ExecutionThe actual stress test is divided

into at least two phases. The firstphase is a log-on test and the sec-ond phase is actual load genera-tion. This process may be repeat-ed in numerous iterations. Thenumber of iterations depends onyour objective as well as systemperformance. If the system fails tosustain a small amount of load,additional hardware may need tobe ordered in order to accommo-date the increased levels of load.The result would be more itera-tions of testing.

Prior to actually starting a test, abaseline needs to be measured. Thebaseline will be used to measurethe load as the test progresses. Thefirst test is the log-on test. The goalof the log-on test is to measure theability of the system to sustain lev-

els of concurrent user log-ons. Agradual increase in number is tar-geted; for example, 50%, 75%,100% and 150% of expected userconcurrency. When the system cansustain at least 100%, the test goesto the next phase.

The test phase utilizes the sameconcept of percentage steppingused in the log-on test. After eachpercentage test, performance datais analyzed. If any technicalchanges are necessary, the samepercentage test is retested to vali-date the change. This process con-tinues with each percentage level.The result will be translated intoa graph that measures the mar-ginal decrease of performance forevery additional load. See Figure3 for a sample execution plan fora stress test.

ConclusionThe stress test, if done prior to

"go live," will hopefully revealany technical shortcomings ofyour hardware and Basis architec-ture. The key to executing thestress test is planning. The testsshould be calculated and method-ical. The technical statistics, pro-

duced as a result of the test, mustbe thoroughly analyzed for anypotential technical bottlenecks.On the last stress test that I exe-cuted, I ended up ordering addi-tional CPUs for my database serv-er. All the sizing questionnairesfrom SAP and the hardware ven-dor said we were well sized, butthe stress test proved to us that weneeded more horsepower. Thestress test will prove to be one ofthe most important tasks you doprior to switching the "go" buttonon your SAP system. At the mini-mum, it will let you rest a littleeasier at night.

Joey Hirao, Jotech LLC. Joey is aBasis consultant with expertise inSAP Basis, UNIX, NT, and data-base technologies. He designs,implements, and maintains SAPsystems for customers worldwide.Joey has been working with SAPtechnology for the past six years.He is the founder of Jotech LLC,and the author of SAP R/3Administration for Dummies.Joey is SAP Basis certified, SolarisAdministrator certified, and aMCSE. Joey can be reached [email protected]. �

Phase Load Date Start End simply the

Log-on Test 50% Day 1 9AM 10AM

Log-on Test 75% Day 1 1PM 2PM

Log-on Test 100% Day 1 5PM 6PM

Stress Test 50% Day 2 9AM 10AM

Analysis/Corrective action 50% Day 2 1AM 2PM







Figure 3: Sample Execution Plan for a Stress Test


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Editor's Note: Harry's take onhow CIOs can stand out from thepack is the culmination of histhinking about how to integratetangible, bottom-line resultswith the "intangibles" of people-driven leadership.

I’m very fortunate in that bothmy father and my father-in-lawwere successful businessmen.

In 1972, my father co-foundedan international food trading com-pany that last year was the secondlargest exporter of US poultry—just behind Tyson Foods. At $400million in annual sales, his com-pany ships 11,000 truckloads offrozen food to 110 countries eachyear. And they don’t kill anything.With offices around the world, allthey do is buy, finance, sell, andship product. In 30 years, myfather and his partner have builtan organization where the people,processes, infrastructure, andcompensation systems form a self-reinforcing loop of recurring prof-itability.

Equally successful was myfather-in-law—who never went tocollege, yet rose through the ranksof Citibank to become the CEO ofa multi-billion dollar real estateinvestment subsidiary of a Fortune20 insurance company. At the pin-nacle of his career, he presided overa 450-person organization packedwith Ivy League MBAs.

By any measure, both men areat least ten times more effectivethan the average businessperson.How did they do it? Each manhas tremendous drive, excellentclarity of thought, a results-driven

personality, and managerialcourage. But there’s somethingelse. They have the “X factor”—a secret ingredient that allows thedirect reports of an Executive tobelieve in the Executive due to theExecutive’s magnetism and self-confidence. It’s what I call theGreat Enabler because it enablesmanagers to accomplish theirobjectives through other people.

When I think of my father-in-law, sometimes I wonder whatmotivated Citibank to hire him inthe first place. No college degree.No abundance of relevant workexperience. Sure, he had sometechnical knowledge of real estate,but nothing that truly distin-guished him from the other appli-cants. But he had the “X factor”in large enough quantities to be

easily recognized in an interview.And the hiring manager wasn’tafraid to surround himself withyoung lions. That was lucky. ForCitibank, that is.

Recently I asked these guys“What’s the secret of wealth?”Without hesitation, both said“Leverage and Appreciation”.In the real estate and financial mar-kets, that means buying an assetthat costs $100 with a 10% downpayment. That’s leverage. Then ifthe asset value increases by 10% to$110, the investor’s cash-on-cashreturn would be 100%. That’sappreciation. If you do enough ofthose deals with enough money,sooner or later you’re rich.

Great, you say. What do leverageand appreciation have to do withinformation technology? Since thisarticle promised to tell you whysome CIOs are ten times more effec-tive than others, I’d like to applythese concepts to the managementof human capital—your compa-ny’s most under-leveraged asset.

Leveraging Human CapitalAs it applies to the management

of human capital, “leverage”means being able to increase yourown capacity by delegating toreliable, high-capacity individu-als who know how to effectivelyexecute to the letter and spirit ofthe assigned task. This assumesthat you know what, when, andhow to delegate, and that youhave a sufficient number of loyaldelegates to whom to delegate.It’s also incumbent upon you toarrange your team in a way tomaximize efficiencies and oppor-tunities for synergy.J

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Why Some CIOs Are Ten Times More Effective Than OthersBy Harry Joiner, Reliable Growth

What's the secret

of wealth?

Without hesitation,

both said

"Leverage and

Appreciation."


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Human CapitalAppreciation

As it applies to the managementof human capital, “appreciation”means having leverageable dele-gates whose talents improve withtime. Simply put, good hiresimprove with age and appreciatein value.

Now more than ever, CIOs lackthe time to micromanage under-performers. The rate of techno-logical and competitive changeboth inside and outside their com-panies dictates that the CIO’sdirect reports must be able to notonly deal with change, but alsoanticipate it. Accordingly, CIOsneed scalable direct reports whoare good now and will becomeeven better over time.

What is “Scalable”? Scalabilitydetermines the extent to whichyou can build a world-class organ-ization around a given employee.It’s what separates the “A players”from everyone else. A companyloaded with scalable A players is“Stockholder Nirvana”.

The Three DimensionalCareer

I have always believed thatevery worker’s skill set is three-dimensional: All workers musthave technical expertise; industry-specific expertise; and company-specific expertise. The degree towhich those areas overlap evenlydefines the overall expertise of theemployee. The evenness of theoverlap will determine how wellrounded the employee is.

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Figure 1: SCALABLE profile with EVEN overlap in TCI attributes

Now more

than ever,

CIOs lack the time

to micromanage

under performers.

“A” PlayerIntangiblesCompany-Specific

Expertise

Industry-SpecificExpertise

TechnicalExpertise


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However, the effectiveness of theemployee—and ultimately theemployee’s scalability—is gov-erned by a set of “intangibles”.Figure 1 illustrates the attributesof an "A Player". Sometimes it isjust as important to know what notto look for:

Click the following links to see the attributes of:

B players (Figure 2):

www.ReliableGrowth.com/Figure2.bmp

C players (Figure 3):


D players (Figure 4):


Let’s take a look at eachdimension in turn.

Technical ExpertiseThis is the area with which

CIOs are most familiar. Technicalability includes worker attributessuch as programming certifica-tions, demonstrated levels of soft-ware competency, comfort with allof the technologies and vendorsthat are on the company’s currentand future agenda, fluency withtechnical jargon, and so forth.Since most CIOs know how tointerview candidates for theseskills, I won’t get into this here.

Company ExpertiseFor a scalable IT staff member,

company-specific expertise con-cerns the application of informa-tion technology that can leveragethe company’s strengths and min-imize or correct its weaknesses. Atruly outstanding applicant willknow how most of the followingfunctional areas can influenceyour company’s overall perform-ance now—and in the future:

1. Company’s image2. Level of planning/Marketing skills3. Company’s reputation for quality4. Company’s reputation for service5. Accessibility to raw materials6. Information availability7. Familiarity with market8. Company’s market share9. Market size

10. Market growth11. Pricing strategy12. Research and development13. New product ideas14. Distribution strategy – domestic15. Distribution strategy – export16. Ease of entry17. Geographical proximity18. Sales force19. Advertising and promotion20. Cost of capital21. Financial stability22. Profitability23. Return on equity24. Debt to equity ratio25. Manufacturing facilities26. Economies of scale27. Capacity to increase production28. Ability to deliver on time29. Technical and manufacturing skills30. Manufacturing costs31. Company’s leadership32. Management aspirations for

the company33. Dedication and skill of workers34. Entrepreneurial orientation35. Flexibility and adaptability36. Staff relations/Administration skills37. Ability to respond to changing

conditions38. Relationship with suppliers,

middleperson39. Language abilities/Professional

qualifications40. Technical qualifications TQM

environment41. Marketing knowledge42. Information management/Use of it43. Technology management

Industry ExpertiseFor a scalable IT staff member,

industry-specific expertise con-cerns the application of informa-tion technology as it can maxi-mize the company’s opportunities

and minimize its external threats.A truly outstanding applicant willknow how most of the followingexternal factors can influenceyour company’s overall perform-ance now—and in the future:

1. Population trends2. Age distribution3. Birth, death, and marriage rates4. Lifestyle trends5. Mobility trends6. Population’s level of education7. Change in buying patterns of typical

family8. Growth of economy9. Size of market for products, rate of

growth10. Foreign exchange position11. Stability of currency, convertibility12. Per capita income, rate of growth13. Income distribution14. Balance of economy (industry-

agriculture-trade)15. Rate of inflation16. Stability of government17. Tariffs18. Regulations in competitive practices19. Product labeling requirements20. Consumer information requirements21. Product standards22. Government controls & legislation reg-

ulating business23. Non tariff barriers24. Ethnicity of the population25. Changes in consumer tastes26. Business ethics27. Social factors in business28. Change in cultural values29. Importance of environmental issues30. Pace of technological change31. Innovational opportunities32. Dominant market players33. Number of players34. Production capability35. Price advantages/Disadvantages36. Distribution

advantages/Disadvantages37. Market segmentation38. Product quality39. Product positioning40. Supplier power41. Customer Power42. Threat of substitution43. Threat of new entrants44. Intensity of industry rivalry





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45. Transportation costs/Availability46. Distribution within market47. Extent and reliability of postal and

phone systems

Obviously, it’s impossible tocover all these subtopics during asingle interview. But detailingthese issues helps us to see thescope of the skills we need to seein our "peak performers," bothduring the interview process andafter they're on the job.

The CIO who is ten-times moreeffective than others will alwaysidentify A players who 1.)Understand the technology; 2.)Have a genuine affinity for thecompany and its markets, and 3.)Can help the CIO understand anddeal with the internal and exter-nal issues that keep the CEO upat night. All of the issues above—in whole, in part, or in any com-bination—can keep CEOs awakeat night.

The IntangiblesThis is the most important area

for CIOs who want to leveragetheir employees, and it’s also theone most misunderstood by CIOs.The intangibles have a major rolein determining the employee’sscalability, and include such traitsand abilities as:

1. Setting Priorities2. Results Orientation3. Managing Vision4. Understanding Others5. Managing Negotiations6. Decision Quality

Of course, there are dozens ofintangible leadership traits, andmainstream Leadership Gurushave begun to invade the IT mar-ket with their own definitions.For example, in a recent issue of

CIO Insight magazine, WarrenBennis claimed that there are justfour enduring characteristics ofleaders: 1.) Adaptive capacity;2.) Ability to engage others; 3.)Voice; and 4.) Purpose. In myopinion, that’s just the tip of theiceberg.

Regardless, savvy CIOs willknow their company’s culture andindustry before interviewing freshcandidates or promoting fromwithin. For example: The“Success Profile” of a Wal-MartIT staff member would be verydifferent from that of an IT staffmember from a small, high-techstart-up venture. Wal-Mart val-ues hierarchy and has a com-mand-and-control organizationalstructure. A high-tech start-upventure might insist that every ITstaff member play many roles,thereby placing a premium onstaff members that can makedecisions on the fly.

It's up to every CIO to firstdefine the IT department’sSuccess Profile for each position.That means selecting the attrib-utes and then defining what they

mean. For example:

1. Setting Priorities: Has abias for action; Spends timeon what’s important; Canquickly sense what will helpor hinder the accomplish-ment of a goal; Values time;Creates simple improvementsand metrics; Creates focusamong team members

2. Results Orientation: Alwaysbeats plan and stretch objec-tives; Consistently one of the topperformers; Very bottom-lineoriented; Pushes self for results

3. Managing Vision: Seesbeyond today; Is future opti-mistic; Can define their suc-cess relative to the long-term;Can inspire and motivateothers; Doesn’t shirk person-al responsibility

4. Understanding Others: Listensfirst; Suspends judgment andassumptions until caller has hersay; Accepts diversity in others;Relates well to all kinds of peo-ple; Shows diplomacy and tact;Uses callers’ emotional balance toclose them to their benefit

5. Managing Negotiations:Gains trust quickly; Seesconflicts as opportunities;Can settle disputes with aminimum of noise; Good atfocused listening and canunderstand others quickly; Iscool under pressure; Isappropriately funny and canuse humor to ease tension

6. Decision Quality: Makesgood decisions based on amix of analysis and commonsense; Most of the person’sdecisions turn out to be rightover time; May be sought outfor advice by others

The CIO who is

ten-times

more effective

than others will

always identify

A players


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For a comprehensive list of 70intangible leadership attributesand their behavioral definitionslike those above, email me at:[email protected]

Knowing how to attract, identi-fy, interview, hire, measure, man-age, and motivate a diverse groupof scalable star employees willmake a huge difference when theCIO must appoint a BusinessLead (for example) to drive andcommunicate the progress of anERP implementation to seniorexecutives. If this Lead is not anew hire, then the Lead maycome from the CIO’s current poolof software developers and sys-tem administrators.

Either way, the Lead should beable to explain the benefits ofERP within the context ofCompany-specific and Industry-specific issues. If the Lead fails todo this credibly, then the seniorexecutives might question thecompetence of the IT team andthe validity of the project itself.And in the trenches, the Leadmust be able to inspire adoption,especially when ERP solutionsrepresent a discontinuous innova-tion for the company.

Of Jack Welch and .400 Hitters

The cultivating of star employ-ees must be systematic, as it is atGeneral Electric. Throughout histenure as CEO, Jack Welch under-stood the baseball axiom that theacquisition of a .400 hitter isalways a blessed event unless theteam’s batting average is alreadyhigher than that.

As a result, Welch mandatedyearly “Session C” employeereviews, during which all GEemployees are scored on the basisof the Four E’s: Execution;Energy; ability to Energize others;and Edge. Welch’s objective wasto measure each employee’s per-formance and their potentialagainst these criteria. Employeesfrom the same business unit arethen rated against each other on abell curve.

Every year, the top 20% are lav-ishly rewarded and promoted, themiddle 70% are allowed to stay,and the bottom 10% are fired.Yes, fired. Every year. AndSession C still exists today.

In his book “Straight from theGut” Welch recounts how thisnatural selection process was easyfor the first few years. The .150hitters knew they were bad, andthey were summarily asked toleave. But as the collective bat-ting average for the team wentup, the process became muchmore painful. Yet Welch persist-ed, and the resulting organizationbecame the rave of the Fortune500.

Welch famously believed that ifthe rate of change in your companyis less than the rate of change out-side, you’re in big trouble.Knowing that they had to contendwith Session C, GE managers wouldnot even consider interviewing acandidate unless they thought thenew hire had the characteristics andskill set to create value for at leastthe next five years.

Lesson #1: To radically increasetheir own leverage, CIOs mustmanage their organization asnature would, with neither mal-ice nor pity. The business envi-ronment is dynamic, and new-hires’ skills and characteristicsmust always “lead” the trends.The ability to make good deci-sions regarding people representsone of the last reliable sources ofcompetitive advantage since veryfew organizations are very goodat it.

Starting today, begin a sys-tematic process of:

1) Proactively searching outand identifying A players(from within or outside ofthe firm).

2) Using the most rigorousselection methods to makefewer mistakes and hire andpromote only A players.J

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The cultivating

of star employees

must be systematic,

as it is at

General Electric.

All GE employees

are scored on the

basis of the Four E's:

Execution, Energy,

ability to Energize

others, and Edge.


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3) Improving your department’sexisting “human capital” byproviding employees withdevelopmental training,and/or redeploying low per-formers into roles in whichthey can excel.

4) Requiring subordinate man-agers at all levels to embracea meritocratic approach forthe creation of their teams.

Remember, this process shouldbe ongoing and not just a one-time initiative. Manage your teamas nature would, and your staremployees will love you for it andwill want to stick around.

Ways to Identify a Future Star

Over the years I have come tobelieve that people are a lot likebatteries: They are much morepowerful when linked together.However, different batteries dodifferent things, and a powerfulbattery that’s a poor fit with theothers is useless. Here are severalways to hitch your wagon to afuture star:

1. Know what you need, andask other department headswhat they need from yourpeople. Using the form ath t t p : / / w w w. r e l i a b l e -growth.com/ideal.pdf, getthem to define their idealfirst, then a week later, askthem to rate individual staffmembers with whom theyare in regular contact (seeh t t p : / / w w w. r e l i a b l e -growth.com/actual.pdf).Score the fit between theideal and the actual. Is thegap trainable? See Figure 1– 4 to appreciate visually theimportance of intangibles.

2. Develop leading and laggingindicators of leadership suc-cess. Going back to GE’sexample, how would youknow on the front end if anemployee had the ability toenergize others? What wouldbe the leading indicators ofthat? What would be theback end effects of such anincrease in energy levels?How can you quantify theseleading- and lagging-indica-tors such that they areMeasurable, Objective,Relevant, and Controllable(MORC) by the employee?Assuming all metrics areMORC, link pay to perform-ance wherever possible. Youmight need to be creative:One CIO gave poker chips toall department heads that hisIT staff members served. Thedepartment heads were toldto give a poker chip to the ITstaff member whenever thestaff member went “above-and-beyond” the call of dutyto serve them. The pokerchips could later be redeemedfor cash or time off.

3. Hire opportunistically. Postjob openings always, not justwhen you actually need peo-ple. You can’t hurry love,nor can you hurry a starhire. You’ve always got tobe in the market for talent,able to recognize it, and ableto bid aggressively for itbefore your competitorsdrive up the price for it.

4. Look outside of your indus-try. Worry about scalabilityfirst, because you can’tcoach that. You can train allof the other attributes, andyou might be very refreshedby having someone on yourteam with a perspectivethat’s completely new toyour team.

5. Interview for leadershipattributes using the EARtechnique:

• Example – Find an exampleof a situation where the per-son has the opportunity todemonstrate the desiredbehavior. Then use probingquestions to drill down on thesituation in which the behav-ior was used.

• Action – Ask the candidate towalk you through what theydid to handle the situation.

• Results – What was the resultof the behavior?

Understand that leadershipdevelopment in IT is not a theo-retical issue. In a recent CIOInsight poll, 400 CIOs were asked“What are the three most impor-tant personal attributes requiredfor success in your current posi-tion?” 43% said “leadership” wasrequired, yet only 40% said thatleadership was one of their topJ

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400 CIOs were asked

"What are the three

most important

personal attributes

required for success?”

http://www.reliablegrowth.com/ideal.pdf

http://www.reliablegrowth.com/actual.pdf


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three strongest abilities. Thatmeans that this frequentlyrequired attribute isn’t even in thetop three strongest suits of 60% ofCIOs. Which brings us to …

Lesson 2: CIOs who lack thegod-given command presence tolead an organization must injectthis element into their team bysurrounding themselves withtalented young lions. And don’tworry about being eaten alive.The skills required of a liontamer differ from those requiredof lions.

Care and Feeding of Young Lions

On a final note, realize thatattracting young lions is only halfthe battle. The other half of thebattle is keeping them motivated.Here are ten ways to deal withyoung lions:

1. Provide autonomy for them,allowing them to make deci-sions that affect their jobs.

2. Actively involve them inmaking business decisionsand having a say in whatcourse of action the organi-zation takes.

3. Honestly and openly commu-nicate business realities andchanges to them in a timelymanner.

4. Do not make them wait forinformation they need to getthe job done.

5. Create a variety of challengesfor them.

6. Give them multiple responsi-bilities to accomplish.

7. Do not bog them down withoutdated technology andexcessive reliance on paper.

8. Ask them how they wouldlike to be recognized whenthey exceed expectations, andhow they would like to con-vey recognition for others.

9. Provide recognition in theform of meaningful rewardsand incentives that have beenrequested by them.

10. Conduct business in such away that people can achievea sense of balance in theirlives by pursuing flexiblework schedules, telecom-muting, providing alterna-tive scheduling, etc.

A happy lion is an effective lion.All the better to do your bidding.

To take your company’s ITfunction to the next level, you’llneed to be able to get things donethrough your people. Hopefully,when you delegate to them, howthey handle themselves will be apositive reflection on you.Character and values matter agreat deal more than superficialskills and attributes, as anyonewho’s been married for more thanfive years can attest.

In conclusion, consider this: In arecent study of manufacturing firmswith $1 billion-plus in revenue,Forrester found that companiesplanned to spend $35 billion onsupply chain investments, but thatmost of that amount would gotoward improving supply chainprocesses internally and with exter-nal partners. In fact, technologywas not considered a major obstacleto supply chain performance—only19% of the respondents ranked it asa significant impediment. A sizable46% named difficulty in changingprocesses and people behavior astheir main roadblock to better sup-ply chain planning.

Forrester’s statistic offers a finalreminder of the importance ofhuman "intangibles" to yourcompany’s viability. Learninghow to leverage your humanassets is the greatest single thingCIOs can do to improve their own"professional net worth."

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Attracting young

lions is only

half the battle

Harry Joiner, Global IT Network.With more than a decade of provenleadership in domestic and inter-national business development inmultiple industries, Harry does anoutstanding job of consulting withCIOs and Sales Executives oneffective internal and externaltechnology sales strategies. Harrywas Director of Trading Operationsfor Global Food Exchange, wherehe built a B2B trading site that ledthe food industry in both numberof online transactions and inpounds transacted.

Harry holds a Masters inInternational Business from theUniversity of South Carolina. He isa noted speaker and writer on busi-ness development and e-commerce.

[email protected] �


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SAPtips Associate Editors

Advanced Planning (APO) . . . . . . . . . . . . Dan Sulzinger, eConsulting Group

Logistics . . . . . . . . . . . . . . . . . . . . . . . . . Jim O'Day, Nassau Technology Group

CRM/Demand Chain . . . . . . . . . . . . . . . . Scott Cameron

Financials . . . . . . . . . . . . . . . . . . . . . . . . Rohana Gunawardena, Exium, Inc.

Financials . . . . . . . . . . . . . . . . . . . . . . . . Russ Hardy, Data2Info Inc.

HR and Payroll . . . . . . . . . . . . . . . . . . . . Greg Robinette, Robinette Consulting

Business Warehouse (BW) . . . . . . . . . . . . Arthur "Pat" Pesa, arthurpesa, inc.

Basis . . . . . . . . . . . . . . . . . . . . . . . . . Joey Hirao, Jotech LLC

ABAP/Java Development . . . . . . . . . . . . . Krishna Kumar, Enterprise Horizons, Inc.

Technical Architecture/EAI . . . . . . . . . . . . Jaihar Murli, Ajilon Consulting

CIO Corner. . . . . . . . . . . . . . . . . . . . . . . . Harry Joiner, Global IT Network

We are always looking for outstanding SAP® consultants and subject-matter experts who want to write for us on a regular or semi-regularbasis. Get involved with the SAPtips editorial team today, by emailingManaging Editor Jon Reed at [email protected].

Our SAPtips publisher, Andy Klee, has been

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about creative ERP solutions) for 14 years. His

vision is to create the leading information

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Through shared tips and techniques, and mas-

tery level knowledge of the software and busi-

ness processes, he is committed to returning

many times the investment of our clients. Andy

is also the publisher of JDEtips (since 1998). Andy can be reached at

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SAPtips is published six timesper year. Copies are availableonline to paid readers. Previewall content at: www.SAPtips.com