May 12, 2017 | Written by: Shivesh Sharma
Categorized: Events | Thought Leadership
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We wanted to provide a preview to our Sapphire session being jointly presented with Ambuj, Helene and Alicia from Schlumberger on May 18th. In the presentation coming next Thursday, we will provide Schlumberger specific challenges related to Asset Accounting and how SAP S/4 HANA toolset helped simplify the business processes and developed a tighter integration between Enterprise Asset Management and Financial accounting for assets.
The key is to understand the entire Acquire to Retire value chain of how you use your revenue generating assets and then design your asset accounting processes in conjunction with the Equipment Definition, Activation, Reception, Job Demand to Job Completion and finally Equipment Deactivation.
Understanding the overall End to End process view allows you to streamline the processes, which in turn Increase the Operational Reliability of the assets and Increase the Asset Utilization directly impacting the bottom line.
It is also pertinent to note that SAP manages the Plant Maintenance/Enterprise Asset Management processes through “Equipment Master” and transactions which are captured against the equipment master like repairs, activation. All the Financial processes are driven by the Asset Master Data which then drives the depreciation posting and asset values in General Ledger. For organizations which use revenue generating assets, we need to synchronize Equipment master and Asset Master. You will learn in the session how we automagically synchronized Asset and Equipment master at Schlumberger.
Now let us understand how SAP has typically linked the Asset Master Records to Asset Classes, which are then linked to Asset Classes which allow you to define the General Ledger accounts for posting depreciation and acquisition value. And it has been like that for the last 20 years.
Along came S/4 HANA which now gave us the bountiful “Single Source of Truth -Universal Journal”- ACDOCA. This allowed us to have General ledger and Asset accounting in perfect harmony. And by Golly, how wonderful it was to now not have the Asset Accountant and General ledger accountant stop their quibbling over the numbers.
Lot of new functionalities were also introduced at the same time with S/4 HANA introduction.
Now you can enter Accounting principle (i.e. Ledger) at the time of posting the depreciation, which was not possible earlier in SAP ECC.
In addition, due to the new architecture of Universal Journal, depreciation was posted by Cost Center and the Asset number. So now the Cost center manager knew which assets hit their cost center. Otherwise there was always your number and my number, which never matched.
Another major improvement was getting rid of Delta Depreciation Areas. Using multiple parallel documents, values are posted correctly from the beginning and Periodic Postings are eliminated, thus avoiding manual reconciliation.
In Summary, there were significant improvements in S/4 HANA which we will discuss in detail in the session:
- Reconciliation between General Ledger and Asset Accounting is not required
- Clean and transparent assignment of depreciation areas to the Accounting Principle
- Acquisition and Production Costs posting run are not required
- Balance carry forward is not required by design
- Planned values are updated online with master data and transaction to assets
- No need of the delta areas as separate single valuation area per valuation
- Optional display of Asset view of journal entries
- Period Close is possible even if there are errors on assets
- Depreciation values posted in Real time – efficient and faster depreciation run.
- Depreciation posted for the individual asset and Cost center
- Depreciation posting run, detailed log option provides information on individual assets level along with cost centers.
Things that I wish we will get to in the next 5 years
We do have a single version of truth as far as Asset Accounting and General ledger is concerned and S/4 HANA helps a lot. But we have miles to go before we sleep. If you are like Schlumberger and move your assets very frequently, then you will need to add “Material” as the third dimension which needs to be now synchronized with Equipment and Assets. Oh, what fun it is to develop these enhancements so that we can do accounting right!! I am kidding, it is just crazy and probably does not meet all the business requirements when you want to go the last mile.
Maybe we should petition SAP to just have Asset and Equipment as a Material Type and then do the accounting based on the Material Type. Would that be not interesting?
Looking forward to meeting you all to sign my petition, at our session on 18th May @ 11 am in Room 330B. We will do the signing at the end of the session!!