configuration and implementation of sap r_final (1)

7/29/2019 Configuration and Implementation of Sap R_final (1)

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Chapter 1

PROJECT OVERVIEW

Background of the Study

Enterprise Resource Planning (ERP) systems have been

extensively used by many multinational companies worldwide.

Recently, many institutions of higher learning have replaced

their legacy systems to ERP systems as a means for integration

advantages. The investment in ERP represents the biggest ICT

investment for institutions of higher learning, they invest

millions of dollars and the time taken for the implementation

sometimes takes two to three years, or even more (Othman and

Mukhtar, 2011).

Enterprise Resource Planning (ERP) was created in order to

eliminate the tedious process of developing a custom code

requiring many programmers who needed to be retained for the

maintenance of custom programming and as significant end-user

involvement.These systems provide a single source of data with

designed integration between different functional modules.

(Bhagwani, 2009)

SAP controlling module (CO)which SAP refers to Managerial

Accounting. Controlling module provides information for

management decision-making. Controlling facilitates

coordination, monitoring and optimization of all processes in an


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organization. This involves recording both the consumption of

production factors and the services provided by an organization.

The main advantages of ERP system for institutions are to

improve information access for planning and managing institution

of higher learning, improve services for the faculty, staffs and

students. Enable higher availability of administrative systems,

increase income and decrease expenses due to improve efficiency

and integrated workflow of the institution (Bologa, R., Bologa,

A.-R., & Sabau, G., 2009.)

Integration of all business functions in Institutions of

Higher Learning environment representing academic,

administration, human resource and finance. Previously it is

used and supported by separate application systems. Single

integrated database shared by different business function and

consequently, different business models of a single integral

information solution is a key importance. Transferring of data

can be between individual processes and various users in real

time. The usage of the advancement technology of ICT (Web based

Technology, wireless, cellular and satellite) is an additional

advantages for institution communities.

Implementing the SAP software will often involve business

process re-engineering. This is because SAPs R/3 ERP package

is organized by the business processes of financial, human

resources, supply chain management, and marketing as opposed to


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conventional functional areas such as production, sales, and

accounting. This leaves a company desiring to implement SAP R/3

with two basic options: either reorganize itself to agree with

the components of the software, or modify the software to comply

with the current organization of the company. The structure of

the R/3 package is extremely complex and not particularly

flexible, so a significant challenge with changing the software

is that it will likely adversely affect performance across the

entire system if not done properly (Raja Mohd Tariqi Raja Lope

Ahmad, 2011).

Proper implementation of ERP systems in the institution is

extremely important and it is often described as difficult,

risky and expensive, it is also sometimes unsuccessful or

ineffective. The significant costs of acquiring and successfully

implementing an ERP system indicate that it should be considered

as a long-term investment, with careful planning to obtain all

the available benefits of improved data processing.

Chief Information Officer at George Washington University,

stated that; Institutions, which are unlikely to switch to

integrated information solutions, will find it difficult to

retain their market shere of students. They will, sooner or

later demand services, offered by other institutions(Benjamin

Bae and Paul Ashcroft, 2004).

The main components of SAP CO module are:


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The Cost Element Accounting component provides information

which includes the costs and revenue for an organization. These

postings are automatically updated from FI (Financial

Accounting) to CO (Controlling). These are the base for cost

accounting and enable the User the ability to display costs for

each of the accounts that have been assigned to the cost

element.

Cost Center Accounting provides information on the costs

incurred by your business. Within SAP, you have the ability to

assign Cost Centers to departments and /or Managers responsible

for certain areas of the business as well as functional areas

within your organization. Cost Centers can be created for such

functional areas as Marketing, Purchasing, Human Resources,

Finance, Facilities, Information Systems, Administrative

Support, Legal, Shipping/Receiving, or even Quality.

Moreover, Internal Orders provide a means of tracking costs

of a specific job, service, or task. These are used as a method

to collect those costs and business transactions related to the

task. This level of monitoring can be very detailed but allows

management the ability to review Internal Order activity for

better-decision making purposes.

Activity-Based Costing allows a better definition of the

source of costs to the process driving the cost. Activity-Based

Costing enhances Cost Center Accounting in that it allows for a


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process-oriented and cross-functional view of your cost centers.

It can also be used with Product Costing and Profitability

Analysis.

Horngren et al. (2009, p.170) explained activity based

costing (ABC) as a method best suited for improving a cost

system and is used to identify the cost of a product or service

within the activity, Williams et al. (2010, p. 779) on the other

hand defines ABC as an overhead allocation method that uses

multiple overhead rates to track indirect costs by the

activities that consume those costs. ABC is perceived to be a

better method for costing a product or service based on the use

of resources required to produce the product or service

Activity-based budgeting (ABB) has been defined by Ayvaz &

Pehlivanli (2011, p. 150) as the budgeting of sources according

to target activities. The application of this type of

budgeting system is easy to use, as it focuses on the activities

within the process rather than cost objects. Its primary

purpose is to collect all costs within the process which

includes materials, setup time, number of hours worked and

manufacturing overhead that is to be included in the budget.

The comparative advantage of Activity-based budgeting over

activity-based costing is that Activity-based budgeting is

perceived to be more comprehensive and precise, since it gives a

full breakdown of the costs to be expected.


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Product Cost Controlling allows management the ability to

analyze their product costs and to make decisions on the optimal

price to market their products. It is within this module of CO

(Controlling) that planned, actual and target values are

analyzed.

Profitability Analysis allows Management the ability to

review information with respect to the companys profit or

contribution margin by business segment. Profitability Analysis

can be obtained by the following methods:

Account-Based Analysis which uses an account-based

valuation approach. In this analysis, cost and revenue element

accounts are used. These accounts can be reconciled with FI

(Financial Accounting).

Profit Center Accounting provides visibility of an

organizations profit and losses by profit center. The methods

which can be utilized for EC-PCA (Profit Center Accounting) are

period accounting or by the cost-of-sales approach. Profit

Centers can be set-up to identify product lines, divisions,

geographical regions, offices, production sites or by functions.

Profit Centers are used for Internal Control purposes

enabling management the ability to review areas of

responsibility within their organization. The difference between

a Cost Center and a Profit Center is that the Cost Center


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represents individual costs incurred during a given period and

Profit Centers contain the balances of costs and revenues.

Along this area, Drury et al. (1993) has defined budgeting

as an important tool for forecasting and controlling the

activities within an organization and for allocating the

entitys resources so as to achieve its objectives and goals.

They have also highlighted that there are different forms of

budgeting such as activity-based budgeting

(ABB) and activity-based costing (ABC).

Company Profile

This part of the study presents the Universitys essential

information.

The colorful history of Cagayan State University Sanchez

Mira Campus started in 1947, when the people felt the needed for

a strong secondary education, two years after a devastating war.

Thus, with the help of civic-spirited people, the then Sanchez

Mira High School was born and in 1960 it was converted into an

agricultural high school by the virtue of RA 2398, it was named

into Rural Vocational School. In 1967, the agricultural school

appeared like a small city nestled in the middle of a mountain,

with its sprawling land of 100 hectares, only 14 of which were

used for crop plantation and infrastructure. Many income-


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generating activities were established that development became

very fast.

After a decade a half, authority of the Director of

Vocational Education opened a two post-secondary curriculum.

Said curriculum grew fast and by virtue of the authority from

the Ministry of Education, Culture and Sports, BS in Agriculture

and BS in Agricultural Education courses were offered. On May

1992, the new campus then started to flourish offering other

courses to include Secondary Education Curriculum sponsored by

the DOST-SEI. Later, it started to offer courses in Elementary

Education, BS in Mathematics, BS in Information Technology and

the Graduate Studies program.

After almost 25 years, CSU-Sanchez Mira is now cradled in a

wholesome campus, linked with various entities and other member-

SCUs and GOs as well as NGOs, meeting the challenges for the

Computer Technology Age.

The Cagayan State University at Sanchez Mira envisions of

recognizing the uniqueness and multidimensionality of human

intelligence and aspires to form intellectually inclined

researchers and educators who are deeply rooted in innovations,

appreciative of the worth of others, socially responsible,

creative, and professionally competent and who are Filipino

ideals.


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The University is committed to produce learner-centered

teaching methodologies and relevant service-oriented programs to

the academe, industry and government, as well as in building a

just, humane and progressive society.

The Campus Life. Apart from its comprehensive scholastic

training, CSU at Sanchez Mira nurtures the academic experience

of a true CSU a through extra-curricular activities that are

sponsored or coordinated by the departments/organizations of the

campus. It supplements the classroom-based education with

seminars, lectures and gatherings that promote local and

national affairs awareness, cultural upliftment and spiritual

growth.

There are also university-wide student organizations that

encourage camaraderie and discipline among its members. These

affiliations include: University Student Government, Campus

Student Government, The Communicator, The Reaper, Music &

Friends, Campus Ministry, English Literature Majors Society,

Math Majors Society, Student Body Organizations and Batch of

Information Technology Students.


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Services and Facilities Offered. The following are the

service and facilities offered by CSU-Sanchez Mira to their

clients:

1) Campus Library. The CSU-Sanchez Mira Library contains e-

computer units for e-library in which student could access

journals and e-book, also a rich collection of books and

periodicals, listing hundreds of volumes in the catalogues, with

dozens of new materials added yearly. It also boasts of precious

collections of rare books and manuscripts, which are unique in

the locality. Located at second floor CICS building, consisting

of several sections namely General References and Information,

Science & Technology, Graduate School, Social Sciences,

Filipiniana and Humanities. This is supported by the DOST-ESEP

and it envisions of becoming one of the Region's best leading

library in the academe.

2) Computer Center. From its humble inception in 1992 with

the initial task of providing simple computerized services to

the campus' faculty and students, the CSU-Sanchez Mira Computer

Center has gradually evolved and branched out into two:

Instructional Purposes and Communication Services through its

Network.

Now housed in two of the rooms of the College of Arts &

Sciences, the center extends its services to the whole CSU-


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Sanchez Mira community; faculty and students, administrative

offices, non-academic personnel and outsiders. True and adherent

to its continuing commitment to provide optimum service to the

CSU community, the center constantly keep abreast on the latest

in computer trend and towards the cutting edge of today's

information technology.

3) Guidance and Counselling Office.The guidance, Counseling

and Health Offices assist students entering the university, both

Secondary and tertiary by providing them with information and

institutional set-ups policies and matters are pertaining to

their new environment through orientations. Counseling is given

to students with academic and personal problems, such as

interpersonal relations, motivation and difficulties that hinder

them from studying effectively.

4) Health Services Center.In this center, students, faculty

members, employees and administrators receive medical care. It

is a must for students who are sick and who are in need of

medical attention.

5) Student Residence.There is on-campus residence known to

as the Students' Dormitory. It is a duplex building that can

house 80 student dormitories. One building is for male

dormitories and other is for female dormitories.

Courses Offered. Cagayan State University, Sanchez Mira

Campus offers the following courses: Bachelor of Secondary


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Education (BSE) majors in: Biology-General Science, English,

Technology & Home Economics and Mathematics; Bachelor of

Elementary Education (BEEd) with concentration: in English,

Mathematics, General Science and Technology & Home Economics;

Bachelor of Arts in English; Bachelor of Science in Mathematics;

BS in Information Technology; and Bachelor of Science in

Agriculture majors in: Animal Science and Crop Science; Bachelor

of Science in Hospitality and Industry Management; Bachelor of

Science Business Administration major in Accounting Management,

Bachelor of Science in Criminal and Justice, Technology major in

automotive, electronics and drafting.

The institution maintains a business office where grocery

items, students uniform like PE, NSTP, Class A, Department

Uniforms, and OJT uniforms for Teacher Education, CAS, CICS,

Technology, BSA, HRTM, BSBA, Criminal Justice and SHS trainees

are available. The cash collection of the said office is

submitted to the accounting office in manual procedure.

Since the institution is an agricultural school, live

stocks like goat, pig, cow, sheep etc. were also being sold and

distributed. The purchase of such stuffs is being made in the

accounting office.

The Cagayan State University at Sanchez Mira is a fast

growing institution with about 3,804 students enrolled during

the first Semester of SY 2012-2013. There was an average


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increase of about 25% each year during the past three years.

This is due to the introduction of new courses in the system.

These students are the primary clienteles of the institution.

The Computerized Enrolment System functions as follows: in

the registrar where enrolment process starts, a student will not

be entertained unless an authentic signature of the person in

the advisement station is affixed. After encoding or posting the

subjects taken by the student, automatically the assessed fees

is created in the accounting station, after posting the payment

a certificate of assessment is issued, the cashier collects the

payment and issues receipt to the enrolee.

The Computerized Student Profiling System is being used by

the Guidance and Counselling office profiling purposes.

The Computerized Inventory System however, which is manage

by the supply office personnel assesses supply and stocks and

manually transacts with the accounting office whenever there are

supplies needed to purchase.

These systems used by the different departments were

developed from different programming languages that function

separately. There was no integration of processes from among the

departments especially when it comes to accounting. Financial

report from supply office manually submits to the accounting

department. The Computerized Enrolment system is developed with

the aid of Visual FoxPro 9.0 while the Computerized Inventory


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System is designed in Visual Basic 6.0. Every time the systems

need updates to meet changing needs of the business processes

and/or the systems encounter errors, developers will be notified

for them to modify the system.

As a whole, Financial Accounting of Cagayan State

University Sanchez Mira campus is being facilitated in different

offices with different systems involved, manual or computerized

for that matter.

These problems are common to the different levels of the

organizational sector. The university is still longing for an

improvement that will satisfy the needs of the students, staffs

and those persons aiming that CSU could compete with the demands

of the global market.

To help CSU-SM meets the great challenge of providing the

best and prompt services to the students and to the

stakeholders, the researcher has thought of configuring an SAP

R/3 Controlling.

The proposed SAP R/3 Controlling will integrate all the

individual departments or functions of Cagayan State University

at Sanchez Mira particularly Accounting Office, Supply Office,

Human Resource Office and the Business Office to a single

software application that will make it easier to track the work-

flow across various departments and reduce the operational costs


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involved in manually tracking, and perhaps duplicating data

using individual and different systems.

Furthermore, there is a complete visibility into all the

important processes across various departments of the university

with automatic and coherent work-flow from one department or

function to another to ensure smooth transition or completion of

processes.

This study is therefore serves as the basis in configuring

SAP R/3 Controlling of the Cagayan State University at Sanchez

Mira in response to the challenge by striving to identify

problems and well-defined that could improve functional areas in

the university particularly in the Management Accounting area.

Importance of the Study

The findings of this study will encourage and help the

administrators to redirect their department particularly in

procedures or processes for further innovations and changes.

This study will benefit to the following:

To the Institution.Through the customization of SAP R/3

controlling module, the school will help ensure the proper

tracking of different financial reports within an organization

and to give more accurate and faster services to its clientele

To the Accounting Staff. The ERP controlling module willfacilitate the accountant on efficient and accurate


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establishment of tables of accounts, and assigning entries to

proper accounts.Develop, maintain, and analyze budgets,

preparing periodic reports that compare budgeted costs to actual

costs.

To the Students.The CSU-Sanchez Mira students will benefit

from this study for they will be given faster and more accurate

services. Upon the implementation of the proposed system, it is

highly expected that students need not to wait for a long queue

for their turn.

To the Researcher. The development of the system will

allow the researcher to put into practice knowledge and skills

in configuration and system analysis of SAP. Likewise, from the

result of the study, he will gain more knowledge in the

integration of business process.

Future Researcher. The result of this study will serve as

ready reference for students who will pursue studies similar to

this type of research. This will likewise serve as a guide for

future program developers.

Statement of the Problem

This study aims to configure and implement the SAP R/3

controlling module for Cagayan State University at Sanchez Mira

Campus.


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Specifically, the study shall answer the following

questions:

1) What is the set-up of Managerial Accounting of the Cagayan

State University-Sanchez Mira along the areas on:

a. organizational structure;

b. processes; and

c. master data?

2) What are the issues and difficulties encountered in

Managerial Accounting of the Cagayan State University-Sanchez

Mira along the areas on:


b. processes; and

c. master data?

3) What are the configuration requirements that shall be

considered in the SAP R/3 Controlling module along the areas on:


b. processes; and

c. master data?

Objectives of the Study

Generally, this study intends to configure and implement

Controlling Module SAP R/3 for Cagayan State University at

Sanchez Mira Campus.


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Specifically, the study attempts to:

1) Identify the set-up of Managerial Accounting of Cagayan

State University-Sanchez Mira along the areas of:

a) organizational structure;

b) processes; and

c) master data.

2) Determine the issues and difficulties encountered in

Managerial Accounting of the Cagayan State University-Sanchez

Mira along the areas on:


b) processes; and

c) master data.

3) Determine the configuration requirements that shall be

considered in the SAP R/3 Controlling module along the areas on:


b) processes; and

c) master data.

Definition of Terms

For a common and clear understanding of the words used,

the following terms are operationally defined:

SAP R/3. It is the name of the enterprise resource

planning software produced by SAP AG. It is an enterprise-wide

information system designed to coordinate all the resources,
http://en.wikipedia.org/wiki/Enterprise_resource_planninghttp://en.wikipedia.org/wiki/Enterprise_resource_planninghttp://en.wikipedia.org/wiki/SAP_AGhttp://en.wikipedia.org/wiki/SAP_AGhttp://en.wikipedia.org/wiki/Enterprise_resource_planninghttp://en.wikipedia.org/wiki/Enterprise_resource_planning


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information, and activities needed to complete business

processes such as order fulfillment or billing.

ERP (Enterprise Resource Planning) - Single software

application that makes it easier to track the workflow across

various departments and reduce the operational costs involved in

manually tracking, and perhaps duplicating data using individual

& different systems.

Functional areas are the different offices in the

administration

Management Accounting - The process of

preparing managementreports and accounts that provideaccurate

and timely financial and

statistical informationrequired by managers to make day-to-

day and short-termdecisions.

Business Processes are the procedures in every department

Accounta statement of financial transaction

Accuracy it is considered as the correctness of output

from the processed input.

Development it is the process of making or creating the

software.

Ease of Use The easy use of the software by authorized

user.

End-user - The person who uses hardware or software

programmed or designed by another person.
http://en.wikipedia.org/wiki/Order_fulfillmenthttp://en.wikipedia.org/wiki/Bill_(payment)http://www.businessdictionary.com/definition/process.htmlhttp://www.businessdictionary.com/definition/management.htmlhttp://www.businessdictionary.com/definition/report.htmlhttp://www.businessdictionary.com/definition/accounts.htmlhttp://www.businessdictionary.com/definition/provide.htmlhttp://www.businessdictionary.com/definition/accurate.htmlhttp://www.businessdictionary.com/definition/financial.htmlhttp://www.businessdictionary.com/definition/information.htmlhttp://www.businessdictionary.com/definition/required.htmlhttp://www.businessdictionary.com/definition/manager.htmlhttp://www.investorguide.com/definition/day-to-day-dtd.htmlhttp://www.investorguide.com/definition/day-to-day-dtd.htmlhttp://www.businessdictionary.com/definition/short-term.htmlhttp://www.businessdictionary.com/definition/decision.htmlhttp://www.businessdictionary.com/definition/decision.htmlhttp://www.businessdictionary.com/definition/short-term.htmlhttp://www.investorguide.com/definition/day-to-day-dtd.htmlhttp://www.investorguide.com/definition/day-to-day-dtd.htmlhttp://www.businessdictionary.com/definition/manager.htmlhttp://www.businessdictionary.com/definition/required.htmlhttp://www.businessdictionary.com/definition/information.htmlhttp://www.businessdictionary.com/definition/financial.htmlhttp://www.businessdictionary.com/definition/accurate.htmlhttp://www.businessdictionary.com/definition/provide.htmlhttp://www.businessdictionary.com/definition/accounts.htmlhttp://www.businessdictionary.com/definition/report.htmlhttp://www.businessdictionary.com/definition/management.htmlhttp://www.businessdictionary.com/definition/process.htmlhttp://en.wikipedia.org/wiki/Bill_(payment)http://en.wikipedia.org/wiki/Order_fulfillment


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Management it is handling, controlling and managing of

information.

Software it is a collection of programs that work as one

to perform a task.

Controlling - represents the internal accounting entity as

it provides information for managers, that is, for anyone inside

an organization who is responsible for directing and controlling

its operations.


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Chapter 2

METHODOLOGY

This chapter discusses the systems development methodology,

scope and delimitation of the study, data gathering techniques,

and sources of the data in design and implementation of the SAP

ECC 6.0 Controlling module.

Software Development Methodology

The researcher shall develop the propose project using

Accelerated SAP (ASAP) as the software development methodology.

Accelerated SAP (ASAP) is a comprehensive solution for

efficiently implementing and continuously optimizing SAP

software. IT has a detailed, business-oriented structure and

allows to design implementation projects flexibly.

From the five general phases on the roadmap, the researcher

shall stop on the third phase or the realization phase.

The roles and responsibilities within each phase of the

ASAP roadmap will be described below.


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Figure 1

Figure 1 shows the Accelerated SAP Roadmap.

The implementation roadmap with the five general phases:

Phase 1: Project Preparation. The project is formally

initiated, and planned. Project goal, scope and objectives are

defined. Roles and responsibilities of the entire project team

are agreed upon and documented.

In this phase, upon the approval of the request letter to

the administrator of the University, the researcher gathered all

the information needed by interviewing the staff in charge,and

floated questionnaires to the staff who cannot accommodate for

interview.

2) Business Blueprint. The purpose of this phase is to

understand the requirements of the client through requirements

gathering. The resulting document is called the Business

Blueprint. This also helps to achieve a common understanding of

how the company intends to run its business within the SAP CRM


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system. The following would form a part of the Business

Blueprint:

AS IS Helps understand the existing business process.

TO BE Based on AS IS, we look at how the business process

can be mapped in SAP and if any changes have to be carried

out to the existing business process if required.

Gap Analysis This analysis is carried out to identify the

inputs or business processes that cannot be mapped in SAP. Gap

document is created to be analyzed further to identify a

solution to bridge the gap.

3) Realization. Prototyping solutions and testing is done

during the realization phase. In this phase we implement all the

business process requirements based on the business blueprint.

We define the test plans for system tests, data tests, data

access tests and authorizations tests. We also establish the SAP

CRM administration procedures.

4) Final Preparation. In this phase, we finalize the

activities to roll out the SAP CRM system to the end-user

community. The end-user training, final tuning and approval for

going live is obtained. Before the Go-live phase a Cutover

strategy is carried out which involves the migration of the

Master Data and the Transaction Data from Legacy system to SAP

system.


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5) Go Live and Support. The purpose of the Go-live phase is

to roll out the SAP CRM system to the end users in a live

business environment. All the transactions, data and the system

is monitored in the live environment. This phase also provides

up to 2 weeks of post Go-live support, which is dependent on the

agreement with the client. Any optimization that is required, is

taken care of during this support phase. Normally, large

companies have maintenance support contracts with SAP and get

support on a global scale, up to 24/7 based on the Service

Level Agreement (SLA).

Scope and Delimitation

The study will be delimited on planning and controlling

every business function happening at CSU-Sanchez Mira, the

system will cover the flow of business process particularly on

planning and tracking operating costs of the school,cost

accounting processing, analytical reporting, and audit-

controlling spectrum.

Data Gathering Techniques

In order to configure and implement a SAP R/3 Controlling

Module of the said University, the following techniques are used

to gather the necessary information.


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Interview. The researchers conducted interviews with the

cashier, accountant and the staff together with some of the

personnel in-charge in the supply office, business office,

research, extension office and in the accounting.

Forms and Documentation Analysis.The researchers also

examined forms and documents to get additional information

regarding the existing system. Through these documents and

forms, the researchers were able to visualize on how to

configure the proposed ERP system.

Questionnaires. The researchers distributed questionnaires

to some personnel in the different offices who were always busy,

and could not able to entertain interview.

Sources of Data

The primary sources of data in the documentation of this

study is information derive from interview with the key

personnel like the accounting staff, registrar, supply officer,

business officer and different department officer.

Documents and forms given by the accountant and supply

officer are analyzed to know the flow of the transactions happen

in the university.

Data of this study will be coming from the Campus Executive

Officer, the Campus Executive Assistant, the Deans of the

different colleges, the Registrar, the Accountant, the staff of


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the accountant, the Cashier, the staff of the Registrar, the

Administrative Officer, Supply Officer, Business Officer and

some IT faculty members of CSU-SM, the University Registrar,

University Accountant, Cashier and some students.