8/16/2019 15462_02

http://slidepdf.com/reader/full/1546202 1/7

 

The functions currently offered in the Investment Management (IM) componentare honed particularly for planning and processing:

Capital investments in fixed assetsThese capital investments include assets your enterprise produces that will gointo operation after a long under-construction phase. It also includes assets

that you purchase and capitalize immediately.

Investments in research and development and projects that fall mainly intooverhead

Large-scale maintenance programs

The SAP R/3 System handles your investment process beginning at its earliest phases.In the pre-planning phase, you enter appropriation requests for your proposedinvestments into the R/3 System even before the appropriation has been approved.

The R/3 System provides tools for preinvestment analysis. Using these tools, youcan enter planned data that is relevant for assessing the appropriation request.Of primary importance are the costs and revenue planned up to the end of the life of the investment. Based on these planned values, the system then calculates thedynamic preinvestment analysis figures (net present value, internal rate of return,and payback period). The R/3 System captures the entire decision making processusing an approval workflow that allows you to set up an approval hierarchy thatreflects your particular requirements. You can include all appropriation requeststhat have a given approval status in a wish list for a group-wide investmentprogram.

8/16/2019 15462_02

http://slidepdf.com/reader/full/1546202 2/7

 

In R/3 investment programs, you can conduct investment planning and budgetingat a level independent of the concrete investment measures. For your investmentplanning and investment budgeting, you define a hierarchical structure based onany criteria you choose, such as the organizational structure of the areas of responsibility in your organization. The R/3 System rolls up planned values fromthe bottom up. You can distribute these collected planned values top-down with

 blanket reductions if you choose. Afterward, you can assign the concrete

investment measures to the different budget positions in the hierarchy. This methodguarantees that all available funds, your planned costs, and already incurred actualcosts – both in-house and external – are under your control at all times.

In the investment program, you can save blanket budgets for investments that arecapitalized immediately, such as those for office fixtures and fittings. The R/3 Systemcan then carry out an availability control for these direct capitalizations similar to theone it carries out for more complex investments. Using this method, you can prevent budget overruns and efficiently monitor budgets for smaller assets.

8/16/2019 15462_02

http://slidepdf.com/reader/full/1546202 3/7

 

At the earliest possible moment, the R/3 System provides you with an overview of the effects of depreciation on your investments. In the planning stage, theexpected depreciation amounts from your planned investments are alreadyincluded in the depreciation forecast for fixed assets, which is used for the profitand loss statement and in the Controlling (CO) component in the R/3 System. Assoon as planned values are updated, you can recalculate expected depreciation.These functions offer two advantages:

Budgeted balance sheets and cost planning are always based on the mostup-to-date values.

You can transfer values from the forecast directly and automatically toControlling for overhead planning at any time.

The transferred plan values can originate:

In the Asset Accounting (FI-AA) component for existing investments

From the planned values of investment projects or investment orders forinvestment measures that are still under construction

From the planned values of investment programs and appropriation requestsfor long-range investment planning

Extensive, large-scale investment measures that you want to monitor individuallyin Controlling can be represented in the R/3 System as investment orders orinvestment projects. As a result, they can use all of the R/3 System functions forinvestment measures. These functions include:

Numerous options for monitoring the planned and actual values of bothprimary and secondary costs

Management of commitments resulting from purchase orders, purchaserequisitions, material reservations, and funds reservations

Fully integrated (with your systems for materials management and capacityplanning) resources planning and cost planning

As already mentioned, these functions are available not just for capital investments.You can also use them for measures that are not investments in the strictest sense.Even measures that you must attribute completely to expenses can be linked to anappropriation request and an investment program position. This way you have amuch broader view of your various types of investments. Investments as seen byInvestment Management (IM) include not only expenditures that will be

capitalized, but also all measures that are subject to an extensive approval processand incur large expenses at the outset but promise to return profits at a later date.You can therefore include measures in your investment planning even if they donot result in assets being capitalized. For example, you may want to monitor aresearch and development project.

For the purposes of settlement, the R/3 System provides a structured overview of all internal and external activity that has been charged to an investment measure.This also applies to down payments for external activity for the investmentmeasure. The R/3 System provides functions for periodic settlement that ensurethe exact valuation of your investments, both for the balance sheet and formanagement accounting. During periodic settlement, the system automaticallysettles amounts that do not require capitalization, to cost center accounting and cost

element accounting. Amounts requiring capitalization are settled automatically to

8/16/2019 15462_02

http://slidepdf.com/reader/full/1546202 4/7

 

fixed assets. For the settlement, you can freely choose both line items and partialamounts you wish to settle. The advantage is that you receive a line item proof of origin for each asset that is created for the investment measure.

 

In addition, you can choose a different base value for valuation, depending on thepurpose of the valuation. For instance, you can choose a different starting value for

 book depreciation as opposed to group reporting, and you can choose still anotherdifferent value for internal accounting purposes. The system thereby enables you todetermine the capitalization value of your investments for different purposes withthe greatest accuracy. For the asset under construction and the ultimate completedassets, the R/3 System provides the comprehensive functions of the AssetAccounting (FI-AA) component. It gives you the utmost flexibility in valuation,

ease in representing special depreciation and investment subsidies, as well as directintegration with the general ledger. All of these factors guarantee the largestpossible degree of transparency and ensure that your data is always up-to-date.

The success of each R/3 implementation depends on the individual business condi-

tions and structure of the enterprise. Of primary importance are the organization of the implementation project and the early clarification of the needs of the enterprise.The essential information that forms the backbone of the project consists of thenumber and kind of R/3 solutions being implemented, the system functions thatwill be used and with what sort of volume, and the number of employees that will

 be affected.

The SAP Business Engineer provides an Enterprise Data Model, the Process Model,the Component Hierarchy, and the Business Navigator. These tools offer you a fullyintegrated overview of the individual system functions. On the basis of thesefunctions, you choose the subfunctions relevant for you. At the same time, theImplementation Guide (IMG) provides detailed activity plans for each function.The IMG displays the interdependencies and links between the closely integratedSAP components.

8/16/2019 15462_02

http://slidepdf.com/reader/full/1546202 5/7

 

This is especially important for the implementation of Investment Managementsince IM is highly integrated with the Controlling (CO), Project System (PS), andAsset Accounting (FI-AA) components. As a consequence, you can implementInvestment Management in a very short time if Controlling, Asset Accounting,and the Project System are already set up or are implemented at the same time asIM. It is also extremely important to carefully think through the organizationalaspects of the processes you will use. These considerations play a vital role whenusing IM, since it integrates:

Both management and financial accounting, which often belong to differentorganizational units

Both technical and accounting requirements, particularly in the structuring of 

project hierarchies

IM manages appropriation requests and their approval processes in theR/3 System.

Using modern workflow technology, you achieve efficient, paperless results.You assess investment ideas directly in the R/3 System. You assign scores tothe different variants for implementing a particular investment idea. You

create a wish list. You include appropriation requests directly and automaticallyin your group-wide investment planning. You create the projects  you wantautomatically – directly in the integrated R/3 System, not in separate PC files.

IM represents the group-wide budgeting process.

You plan all of your investment expenditures – not in isolation on your PC, butdirectly in the R/3 System. At the highest level, your decision makers see theoverall investment plan and can use it to create the budget for the followingyears. The R/3 System distributes this budget from the top down, according toyour organizational structure. The management of budget supplements andreturns remains transparent. You can take action at any time when budgetoverruns threaten. The R/3 System integrates the concrete investmentmeasures directly into your investment program. You can access multi-faceted

reports, such as the group-wide comparison of budget values with actualvalues that have already been incurred for most investment measures.

IM supports various budgeting philosophies.

Do you want long-running projects to be approved in each new year? Do youwant the unused budget to expire at the end of the fiscal year or to be carriedforward into the next year? Do you want the system to display new projectsseparately from running projects that were approved in previous years? Whatdo you generally want to happen to investment budgets that are not completelyexhausted? These are questions you can answer using the functions of IM.

8/16/2019 15462_02

http://slidepdf.com/reader/full/1546202 6/7

 

IM handles management and financial accounting simultaneously.

IM fuses the functions of a controlling object (cost collector, order, project) onthe one hand, and an asset under construction on the other hand, into oneobject: the investment measure. The investment measure collects and managescosts from a Controlling point of view. At the end of each period, the R/3 Systemsettles the amounts requiring capitalization automatically to fixed assets.The R/3 System correctly displays all amounts that require capitalization inthe balance sheet, in the asset history sheet, and in all legally required reports.You can also record special depreciation and investment subsidies withoutdifficulty.

IM produces a complete depreciation forecast.

IM calculates planned depreciation, not only for your current fixed assets, butalso for all of your planned investments. These planned investments can takethe form of investment measures, appropriation requests, or investmentprograms in the R/3 System. Simulation functions help you make optimaldecisions regarding various alternatives offered in tax legislation. In addition,you can transfer the results of the depreciation forecast to cost center accounting.

IM provides summarized reporting from any system.

Even if you manage your investment measures in a system other than theR/3 System, you can generate reports on the values of your measures in SAPInvestment Programs. Using open interfaces, you can report on data from other,nonintegrated R/3 Systems, from SAP R/2 Systems, or from non-SAP systems inthe Information System of Investment Programs.

IM provides transparent investment management.

Along with all the advantages listed above, SAP offers you a comprehensivemeans of viewing all the information you need for efficient investmentmanagement:

Which investments were approved in the past?

Which investments have to be approved this year?

What is the expected profitability of the planned investments?

How does return on investment look?

What maintenance measures will be carried out this year?

How do planned investments influence future depreciation?

Appropriation requests for managing investment ideas, capital expenditurerequests, assessment of profitability of planned investments, tracking of different variants for implementing the request

Investment programs for group-wide planning and budgeting your overallinvestment volume

Investment measures  for transparently managing large-scale assets underconstruction or maintenance projects

8/16/2019 15462_02

http://slidepdf.com/reader/full/1546202 7/7

 

Assets  for managing your current fixed assets, especially for calculatingdepreciation

Real estate objects for managing rental properties owned by your enterprise,including rental agreements, rent offers, service charges, and much more

Equipment objects for representing physical maintenance of your assets

If you are already using the Project System component you might ask yourself what additional advantages are offered by using IM. These include:

In the Project System, you can represent the planned and budgeted values of individual projects. Using the IM reporting system, you can report on all of your projects as a whole. In addition, you can represent your entire budgetingprocess from an organizational viewpoint in IM. Rather than individualprojects, your organizational units and their investment budgets take centerstage. Using the appropriation requests for your entire enterprise as a basis,IM can help you decide what budgets will be assigned to your organizationalunits. IM also helps you keep track of the budget amounts that you carryforward for projects that were approved in prior fiscal years and to organizethese according your organizational hierarchy.

Above and beyond the usual settlement functions, SAP investment projectsoffer additional functions to optimize your investment management. You cansettle to fixed assets both by line item and by entering specific amounts.

To meet your differing valuation needs, you can choose different base amountsfor depreciation for different purposes (for example, for book depreciation,tax depreciation, and so on) during settlement. In Asset Accounting itself, youreceive a detailed proof of origin showing each original line item.

In addition to investment programs, you can manage maintenance programsin the R/3 System. Maintenance programs possess all of the same functionsas investment programs. But instead of investment measures, the measuresyou manage using the maintenance program are maintenance orders ormaintenance projects.

The complexity and expense of implementing IM depends largely on whether youhave already implemented Project System, Controlling, and Asset Accounting. If these components are already running, the IM implementation is relatively simple,consisting of making a few Customizing settings, which are already familiar fromyour implementation of the Controlling component. The only additionalrequirement is the time spent for internal discussions to establish the lines of responsibility for the objects in investment management (investment programs,investment measures, appropriation requests).

For more information on the functions of Asset Accounting, Plant Maintenance,and SAP Real Estate, see the appropriate Product Information Kits.