So now we’ve established that SAP Profitability and Cost Management (PCM) is scheduled to reach the end of mainstream maintenance in 2020. I’ve talked through the options available to you if you are running SAP PCM here. But whilst it’s all very well knowing what the options are, how do you make your choice? Here are ten considerations you should make when assessing the possibilities.
There’s still at least three years left for PCM (maybe more, if SAP recant). This gives you time to plan an elegant transition, so that changes can be managed effectively. Additionally, it gives you the opportunity to make the change at a time that suits your strategy – do you want to jump to a new software platform immediately, or do you want to leave it as late as possible? Or somewhere in between?
You need to have a budget for this, and the budget should reflect the value that the initiative brings to the organisation.
I can’t emphasise enough that undoubtedly it’s not advisable to try to do this on the cheap! A few times in my career I’ve had people tell me that cost allocations are straightforward and “we’re going to build it ourselves”. The first couple of times I heard this, I didn’t argue forcibly enough against it, but I soon learned: homebrew solutions don’t scale, and can’t be maintained. You need to leverage a software solution.
Related to the budget are the resources that you’ll need. You’ll need to get the right people together to implement this project, and it’s imperative to heavily involve your existing PCM project team. Ideally the PCM team will play a large part in the transition to your replacement system, partially because they’ll bring their experience with them and partly to give them a stake in the success of the project.
You may also need to seed the project team with skills in the new solution. You can either train up your existing team, hire new permanent staff with the new skills, or engage with partner organisations.
Be very clear about the features that you need from whichever solution you choose. For instance, PCM’s iterative reallocations are great if that’s what you need, but if a simple one-step reallocation is all you need, don’t let it colour your judgement. Similarly, FS-PER offers more types of allocation than just activity-based costing, but if activity-based costing is what you need then it’s irrelevant.
How are you going to consume the results of the allocation? Most of the available products have basic reporting facilities, but usually organisations export the results to the corporate reporting tools. Make sure that you know how easy or difficult that is for any allocation solution that you’re considering.
Are you going to have to export data to your reporting tool or a data warehouse, or will the results be reported on directly from the allocation solution. Either way, you’ll need to have the appropriate skills in place.
If you can, estimate what volumes of reporting data the allocation solution will produce. This may affect whether you decide to transfer that data somewhere else for reporting, or report on it in situ.
6. Data Capture
Similarly, make sure you know how the data is going to be loaded into your solution. If complex ETL is likely to be necessary, you’re going to want to have the technical skills on hand. Generally speaking, the more systems you need to load from, the more complex the job of data capture is going to be. Check whether the proposed solution can easily capture the source data.
To what extent do you want your solution to be automated? At one end of the scale you could conceive of a solution that automatically collects the data from source, performs the allocations, and sends the output to your reporting solution. At the other end of the scale, someone might spend considerable time loading data, checking for errors, entering manual data, kicking off the calculation, checking again, and then producing reports.
The first case is more efficient, but usually more expensive to develop. The pay-off comes in medium-term ROI. The second case usually occurs when an organisation is less confident in the process and wants to hand-hold it for peace of mind (or if the software doesn’t include automation features).
The detail to which you want to model your business should be considered. FS-PER, being HANA-based, has the ability to model right down to the account level.
Think about your own appetite for risk. Using a mature product usually represents the low-risk option, as the product has been extensively road-tested for many years, but from other perspectives the risk might be higher. In the case of PCM, consider the risk of continuing to use the product as SAP reduces its level of support at the end of mainstream maintenance.
Make sure that the support model is in place. This includes making sure that the skills are available in the employment market, and that the software vendor can offer the support you need.
Still got questions?
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Whilst 4 years may seem a long way away, 2020 will be upon us before we know it. With clearly defined planning, aligned to your overall strategy you can make the move from SAP PCM a successful one, both for you and your organisation.