Integrate Service Vendors into Your SAP Time Sheet Process
- by Marco Jordy, Vice President of SAP Finance Consulting, ORBIS America, Inc.
- February 15, 2006
Many companies increasingly use service vendors to staff their projects. Integrating those contractors into your SAP processes reduces administrative tasks, cuts time-to-close, and increases the quality of your financial data. Many companies are not using the provided functionality to its full extent, some because they are unaware of it and others because of drawbacks generated by relatively small functional limitations. Understand the end-to-end process and hear about some functional improvements.
Integration of contractors into your processes has to be approached from two different angles. On one hand they are external resources to be managed using purchase orders, goods receipts, and invoice verification. On the other hand, they are similar to employees, required to record their time and to be part of the time sheet approval process. That’s why an end-to-end integration of contractors needs to link functionality from External Service Management (MM-SRV) and the Cross-Application Time Sheet (CATS).
Most companies use a basic approach to integrate service vendors into their SAP processes. They create purchase orders (POs) with account assignments and record incoming invoices with SAP’s invoice verification functionality. This approach covers the basic requirements to print POs and pay the vendors, but leaves a number of financial requirements unmet.
For example, how do you know which services were provided, but are as yet unbilled, allowing you to pinpoint a corresponding accrual at month-end? How do you allow your department or project managers to approve services rendered before paying the related vendor invoice? How do you enable a three-way check among the PO, services delivered, and the vendor invoice to enable efficient invoice verification? How do you allocate the hours worked to the correct projects and cost centers in case the contractor works on multiple projects at the same time?
You can answer all of those questions using SAP’s External Service Management (MM-SRV) component within the Materials Management (MM) module. By adding functionality from the Cross-Application Time Sheet (CATS), you can cut out unnecessary administrative tasks and reduce your time to close.
First I’ll give an overview of the integration process, which allows you to manage contractors as external resources yet still track their time via your regular time sheet process. Then I’ll describe how to adapt the functionality to overcome several limitations.
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