Using SAP HANA S/4 for Capex Management
November 4, 2020
Most enterprises already use SAP as their main Enterprise Resource Planning system (ERP) and SAP HANA S/4 is a new release of this already impressive software boasting a large-scale database where one can retrieve data faster, perform analytics and collect data patterns among other things.
SAP HANA S/4, like most reputable ERPs, does a tremendous job when it comes to managing day to day Opex and these form the bulk of the daily transactions for most companies, which makes it is an obvious choice. However, SAP HANA S/4 also has features like Project System and Appropriation Requests management.
So why are so many SAP customers still looking for capex software in order to remain compliant?
Firstly, lets address that Capex
vs Opex is quite different. There are many articles on the web including our blog that highlights the differences from a financial reporting perspective, but we would like to highlight the practicalities of managing Capex outside of this financial reporting world which goes beyond the Appropriation Request.
Secondly, the way companies manage Opex is consistent across the industry verticals and GAAP (Generally Accepted Accounting Principles) is well adopted irrespective of verticals or even company size. This allows ERP vendors to develop a single ERP software product that can be adopted across virtually all industries and even company sizes.
When it comes to Capex, GAAP may provide financial reporting guidelines for Capex
but it provides limited guidance when it comes to the lifecycle of a Capex project or the approval of the Appropriation Request. The reason is that the lifecycle of Capex varies so much between industries and company size that one size does not fit all, making it very difficult to add general capex capabilities to ERP systems SAP.
In some industries like Financial Services, Capex projects
are generally simple, they could involve purchasing of new office equipment or vehicle and can be approved via a simple Appropriation Request. However, in other industries like pharmaceuticals, mining or manufacturing, Capex projects can involve building a brand-new processing plant or a brand new mine requiring multi phased construction with staged approvals.
In the eyes of GAAP and most ERP systems and Appropriation Request forms, purchasing office furniture or building a new mine are both Capex project
and are managed in in a similar way but one can clearly see that the latter project requires more management, information and controls. Because of this, the capital-intensive industry has developed complex capital management policies and compliance is required. Such policies may dictate how capex is approved via Appropriation Requests and how detailed business cases need to be drafted which go beyond the simple Appropriation Request form.
Capex policies may also dictate how multiyear multi-disciplinary projects are handled though different stage gates with milestones. Now add your typical scope changes and budget overruns and we can quickly see how complexities develop.
The complexity and variability of the capex management policies differs dramatically from industry to industry and as there is no accepted standard, it even differs from company to company even in the same vertical industry. It is for this reason that the Appropriation Request form in SAP HANA S/4 is often not an option as it would require a tremendous amount of customization and cost for it to comply with capital management policies.
Fortunately, all versions of SAP including SAP HANA S/4 have integration capabilities allowing specialized Capex software
like Capex360 to extract data from SAP and provide customers with a best of breed approach. By using SAP HANA S/4 with Capex360, customers can easily manage the complex capex lifecycles in accordance to their policies and leverage SAP to provide the actuals and commitments for each project ensuring proper controls.
The benefits of using CapEx360™
with any SAP version including SAP HANA S/4:
- Easy integration with SAP HANA to obtain Actuals and Commitments data.
- Leverage SAP’s features for Internal Order, Investment Order or WBS codes.
- Leverage SAP’s ability to control spending
- Process Analytics and reports on Capex budget vs Actuals and Commitments.
- All Capex information in one location
- Link WBS and IO statuses to project phases and approvals.
- Secure and reliable
- Better CapEx decision making
- Reduced costs to align with your capital policies.
- Join us into the future of finance with CapEx360™ and SAP Hana S/4.
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Business Case for Purchasing CapEx360 Software
Can you capitalize our CapEx software?
Smart investment and effective management of capital are both critical components of sustaining success for capital-intensive companies. Companies that measure the value of their CapEx projects are implementing the kind of best practices that ensure they retrieve optimal ROI from their investments. Making every investment count can only happen when the CapEx process is optimized, and this involves focusing attention and resources on stakeholders who are involved in the review and approval process at all stages of decision-making.
https://www.caprivisolutions.com/2019/12/13/capex-software-for-business-growth/
There are ultimately two reasons why a company spends money on capital expenditures. The first is to pull it back into the business, the second - to maintain it. If you’ve determined that you need to make a CapEx investment, you need to decide how to pay for it: is it better to use cash or debt?
