An insight in ECC data issues impacting Financial Results

Eric Brink, CEO, ERPmenu
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Eric Brink, CEO, ERPmenu

Introduction

In the day and age of Big data and Business Intelligence (BI) one thing stays the same; data quality, which is a pre-requisite for good reports and management informations. When the data in your SAP ERP system is inaccurate, any further analyses of this data in BI solutions is inaccurate and can lead to wrong decisions or worse need of restatement of your company’s financial result.

SAP systems accumulate a lot of data in a short time frame. Data migrations issues, system setup problems, staff turnover, and the time pressure under which books need to be closed or unclear, user procedures can result in data problems. Especially, when companies go-live on SAP there is a learning curve for the users causing mistakes to happen that often sit in the system for a long time.

Fact is that, these data problems are inevitable even for companies that have been on SAP for years or decades. In the over fifteen years of working on SAP systems and assisting clients get the best outcome out of their systems, is one thing stands out for me. Data quality is a concern for each client I have worked with and deserves attention. Are you ready to take on this often less exciting, but vital topic?

What are Areas of Concern

Data issues can occur in all modules of the ECC system. When your company runs SAP ECC for manufacturing, service management, procurement, sales and/or project systems the integration with these modules and data flow to finance is causing dependencies on data quality on transactions executed upstream.

  Your ECC system is the source of your SAP Financial data and you need to keep records up to date in there and reconciled 

For financial controllers knowing what impacts the financial records outside of his own domain and ultimately impacts financial result is critical to understand. In general areas of concern in ECC are:

High volume transactions, as they are harder and more time consuming to analyze. Issues can hide easier, for example,tucked away in job logs and can sit unnoticed for years. With high volume transactions small fractions of errors add up to significant amounts impacting your results. Correcting those can be a daunting task.

Examples are the purchasing data like goods receipts/invoice receipts matching, accounts receivable analyses, order aging where sales orders, or production orders, can carry balances that did not get cleared.

Results Analysis (RA) is one of the more complicated functionalities in SAP Controlling used to calculate results on orders, projects, and sales orders. Auditors are always looking to reconcile this due to the direct impact RA has on the financial result, but again volumes are high and data sits in various modules making reconciliation and transparency hard.

Intercompany transactions occur via automated invoice exchanges that can fail, but often manual too. Transactions can happen within the SAP platform or between systems. Lots of companies are struggling with keeping this organized and reconciled. Again, this is a focus of auditors due to the impact on the group results.

Inventories lock up a big part of a company’s asset value. Reserved stocks (called special stocks in SAP) for Projects or Make to Order jobs can hide a lot of leftovers. Each company ends up building some kind of solution for slow moving and obsolete items, but price inaccuracy has a major impact too. Again volumes are high making automated analyses necessary to get insight.

Finance to controlling reconciliation is needed especially when multiple submodules in Controlling are used like CO Profitability Analyses (COPA). SAP has strong integrations and validations build in making it harder to cause discrepancies, but incomplete closing activities or system set up flaws can still cause FI and CO to be out of sync with COPA being the most error prone. Even though Simple Finance is going to address some of this, there are still many hand-offs between FI and CO.

Solutions

Staying on top of the data quality in your ECC system is good housekeeping and pays off tremendously in terms of reporting reliability and easy audit approvals. Having a plan and the tools in place to manage it is the first step, having the discipline to stay on top of it and adding it to your KPI reporting is the second.

My recommendation is that in finance data quality analyses should be part of the monthly cycle and incorporated in the closing schedule. Keeping up is much better than infrequent big clean up exercises. Standard SAP offers standard reports, but often these are complicated, narrow focused and require configuration. Business Intelligence companies offer various data clean up services too. However, your ECC system is the source of your SAP Financial data and you need to keep records up to date in there and reconciled. Linking and reconciling the financials to data in other modules gives you full insight and the confidence the financial reports represent the state of the business.

DQM stands for Data Quality Monitor and consists of a suite of solution focused to cover all FICO areas your auditors will look at each year. Closing validation is vital for reliable Income Statement reporting in SAP and offers great value for (SOX) audits.

Solution in the DQM suite are:

DQM FICO FLOW: Financial closing validation solution for Income Statement with COPA reconciliation feature.
DQM RAR: Financial tool to perform Results Analysis reconciliation between GL balance and the CO calculation by cost object.
DQM GRIR: Offers a swift overview and breakdown of multiple facets of your GR/IR balance and items.
DQM ICR: Tie out your Intercompany balances and drill down into your out of balance records.
DQM AR: Look at your AR aging in the most comprehensive way.
DQM-MV: Find what hides in your inventory.
DQM-ORD: Find aging orders, order balances and easy mass close.
DQM-PPV: Break down your Purchase Variances on your PPV account and in inventory.

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