Project System Achieves Faster Closes When Using the Engineer-to-Order Process

  • by Marco Jordy, Vice President of SAP Finance Consulting, ORBIS America, Inc.
  • November 15, 2004
The Project System (PS) module has a functionality called project-related incoming orders that allows you to report on incoming order values for an engineer-to-order process. The PS module can calculate order book and backlog values throughout the project life cycle. It allows you to avoid negative backlog and remaining backlog on closed projects. Three examples show how it handles transactions.
Key Concept
The order book (SAP uses the term "incoming orders") contains the value of all orders placed in a certain time period. Changes to those orders (change orders) should be reflected in the order book in the period they occur. Orders that generate more or less actual revenue than planned should be stated in the order book with their actual revenue. The order backlog (SAP uses the term "open order values") represents the value of unfilled orders and therefore the outstanding amount of revenue on all orders (e.g., future revenues from contracts signed to date). Backlog calculations should account for the order book value and subtract the revenue amount that has already been realized.

Project-related incoming orders, the Project System (PS) functionality used for backlog and order book, is neglected for budget or time-constraint reasons in some implementations. Instead, the sales order and revenue values are exported to Microsoft Excel, where the order book and backlog calculation takes place.

Exporting increases your manual workload in each period-end closing. In addition, the routines used in Excel are often too basic to cover all aspects that have to be addressed for a successful calculation. I will show you how the PS functionality can streamline your close, and will lead you through the calculation process with three examples.

Introduced with Release 4.5A, project-related incoming orders takes the sales order values from R/3 Sales and Distribution (SD) into account as well as the results analysis data in PS. The functionality is part of the period- end closing procedures, which has the disadvantage that the order book and backlog values are only updated at month- end.

The SD module holds the order book and backlog values, key performance indicators that are based on information about sales orders and their invoices. Companies that have only make-to-stock processes like repetitive, discrete, or process manufacturing use the Sales Information System (SIS) within SD to report their order book and backlog values.

Marco Jordy

Marco Jordy is the vice president of SAP Finance Consulting at ORBIS America, Inc. ORBIS is an internationally active business consulting company with core competencies in consulting for customer-oriented management processes (CRM), internal management processes (ERP/PLM), and supplier-oriented management processes (SCM). Marco has more than 11 years of experience in SAP implementations in the US and Europe. He is a graduate of the University of Applied Sciences in Saarbruecken, Germany, with a major in finance and a specialization in informatics. Marco specializes in the integration between the finance and logistics modules as well as international rollout projects in multi-cultural environments.

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