Kehinde Eseyin's Weblog

Project Scope Creep (PSC): An ERP Implementation Pitfall!

2006-09-07T01:56:00.000-01:00

Project Scope Creep (PSC), often times is a fallout of poor business requirement definition. It is a concept that if not properly managed can result in failed ERP implementation. PSC occurs as a result of new business requirements springing up from the end-users while system implementation is already started - ongoing. The end product of course is uncompleted ERP implementation. Also, project owner - client non readiness can be the cause. Unavailabity of infrastructures on client site can be responsible for PCS. These infrastructures can include, but not limited to hardware and remote connectivity.

However, is an ERP implementation ever completed? It is debatable topic and can represent a subject for another discussion. The emphasis here is that work - customization and configuration of the system must terminate (if temporarily) at a certain predefined time so that the system can be used for processing live transactions.

The cause of PCS is double-faced. The system owner(s) or the consultant can be responsible. It is understandable and of course pardonable when the system owners are the cause of PCS as opposed to the consultants. This is prevalent in an environment where users are not ERP system savvy. The more they get to know about the system offerings and capabilities, the more their demand for additional functionalities. I have learnt that additional system/business demands are made during process and task trainings.

Consultants too can be guilty. A number of consultants don't know where to put a full stop on a project. This might be as a result of not properly understanding the system to be configured or spending more time than necessary on customization or reconfiguration. It's not a matter of bowing out when the ovation is loudest but when due and timely.

The implication of this phenomenon, irrespective of the initiator is that it is expensive in terms of time, value, resources and ROI for both parties. Furthermore, the downside (if it has any upside at all) can be grave. This is because the more the end user keeps seeing the consultants on site more than expected, they tend to feel insecure, uncomfortable and lack confidence. The perception will then be "will the system work after all" or "there are still issues".

By and large, it is expedient to prudently manage PCS. The list of steps that can be taken to guide against PCS is inexhaustible, the following recommendation represents a few.

1. Have a clear cut project plan and implementation model.
2. Carry out and document comprehensive business process definition and requirements.
3. Carry out and document objective business process re-engineering.
4. Adopt a clear cut strategy for handling additional business process requirements, preferably a post go- live strategy.
5. Carry out process workshops for process owners prior to start of system implementation. Processes can include Quote to Cash, Procure to Pay, Plan to Produce, Goods in - Goods out and financial management
6. Identify system limitation and inform end users via project owner.
7. Objectively align your consultant's expertise with the business needs especially as it relates to complex customizations.
8. Develop a realistic timesheet to monitor progress of activities.
9.Ensure that all necessarily infrastructures are in place at client site before moving to site.
10. Be proactive to problem solving

Managing SAP Business One on Microsoft SQL Server

2006-08-29T16:53:00.000-01:00

Introduction
SAP Business One is an application that sits on a database engine. The supported databases are Microsoft SQL Server, IBM DB2 and Sybase. Clearly, SAP's relationship with Microsoft is not juvenile. It dates back to the early 90s. It is a debatable fact(if you like) that most SAP Business One system sits on Microsoft SQL Server (henceforth referred to as MSSQL Server). On a broader view, an estimated 46,000 SAP application installations run on Microsoft Windows®. This can be attributed to the "Microsoft feel" concept - simplicity of usage! With the latest offering of Microsoft's SQL Server solution: Microsoft SQL Server 2005, the system is well poised to compete with any database system in terms of functionalities.

MSSQL Server offers uparalleled benefits such as high scalabilty, high avaialability, support for large databases, ease of installation, high productivity development environment - SDK, and ultimately low total cost of ownership, especially when bundled with SAP Business One.

It is my intent to make this posting in phases. In this posting, I shall be covering three topics as it relates to managing SAP Business One on MSSQL Server. They include Installation of SAP Business One on Microsoft SQL Server , Backup and Recovery and Security. In subsequent posting, I'd be exploring other manageability features of MSSQL Server for SAP Business One.

Installation
As asserted in the opening paragraph, SAP Business One sits on a database system, hence, it can be deduced that a database system like MSSQL Server must be installed prior to installing SAP Business One. The supported platforms for SAP and MSSQL Server includes 32-bit, x64 and Itanium 64. Typically, SAP Business One supports two editions of MSSQL Server namely, enterprise edition and standard edition. The installation of SAP Business One based MSSQL Server 2005 can be done implicitly or explicitly. During implicit installation, no user input is required while for explicit installation, the user has to enter installation settings. Talking about implicit installation, a number of default settings are used. These default settings are copied from the local system or the installation CD. Worthy of note is the authentication mode selected. Windows and SQL Server authentication are used with the "B1Admin" password for the "sa" usercode.

At this junction, it is expedient to say that, these default settings can be changed using the service manager or the SQL Server management studio. Also, NTFS file system is recommended for the installation of MSSQL Server. This is because it is more stable than the FAT 32 file system. It is important to state that the set-up files created during the installation process should be securely archived because it contains information about the system configurations registered during installation.

Backup and Recovery
A laudable and tested backup and recovery strategy must be adopted to guarantee access to the copy of a company database at a point in time incase of data loss. This is so important because data loss of some sort is inevitable in a production environment. There are two ways of performing backup in an SAP Business One system. The first option is to use the backup tools available in MSSQL Server via the SQL Analyzer or the Enterprise Manager. The second option is to use SAP Business One generic backup service. The difference between the duo is that while the latter tool backups the database and other directories like Microsoft word and Bitmaps, the former only backs up the database. This represents a performance benefit over the MSSQL Server backup tool. Also worthy of note, is the fact that, the SAP Business One backup service uses a temporary folder for database backup from where the backups are transferred to a permanent directory.

Aside the backup of the normal company databases, transaction logs backup is recommended. This is because it allows you to perform point-in-time recovery. Because transaction logs grows fast and may affect system performance, it is good idea to backup transaction logs regularly or shrink them. Also, the SBO Common database should be backed up before and after maintenance activities such as installation and upgrades.

The restore process involves copying a database that was backed up on another database or same database. Typically, the essence of backup is to be able to restore in case of system crash or breakdown. This task at the moment is only possible within the MSSQL Server. The enterprise manager offers good flexibility for achieving this task with ease. Additionally flexibility is offered because the system does not distinguish between a backup that was made in SAP Business One and that made in MSSQL Server as it were for the restoration process.

Security
Security is one concept that can't be compromised no matter what. Securing fat client - two tier architecture based system can be a daunting task. This is because the client performs data manipulation and onward transfer to the database server, thus, a single point of attack. The database server is where all company data reside, hence it is important to guide it as a jewel (of which it is).

Two database types resides on the SAP Business One server. They are the company database and the common database. The common database contains objects that are needed for the system initialization of company databases. Aside the functionalities of SAP Business One, MSSQL Server provides additional security offerings. A complex password for the "sa" user account offers unparalleled authentication and authorization at the database level. Leveraging the trusted connection functionality is laudable especially as it guarantees security at the user level. In like manner, Microsoft SSL encryption offers security for TCP/IP connection, hence securing the networks.

Depending on the job functions of users, it is important to create user accounts with database creators role and db_owner access privilege for the SBO_Common database and the company database. Because MSSQL Server supports many multiple company databases and application, it is important to adhere to the following recommendations.
1. Create and clearly distinguish between regular user account and super user account. While the normal user account allows maintenance activities to be carried on a single company, the super user account allows cross company maintenance and management activities
2. Deactivate data access rights for guest on the MSDB database
3. Ensure that you create SBO_SP_Role in every database. This role permits execution of SBO stored procedures in a particular company.
4. Audit user access to the MSSQL server at regular intervals.
5. Leverage the Microsoft Baseline Security Analyzer to detect weak configuration on your MSSQL Server.

SQL Server Price Change: Increase or Decrease?

2006-08-01T15:46:00.000-01:00

I was just surfing through the SAP Partner portal and saw a news caption - Microsoft SQL Server Price Change . Microsoft SQL Server is one of the three database systems supported by SAP Business One. Other supported database systems are IBM DB2 and Sybase. In most cases, this software - MS SQL is bundled together with SAP Business One, hence, it impacts on the total cost of ownership of the SAP Business One system.

In view of this, SAP deemed it right to alert Partner companies on a proposed change to the price of Microsoft SQL Server. According to the press release: "The purpose of the communication is to inform all SAP Partners of a pending change to Microsoft SQL Server pricing effective October 15th, 2006. This change is as a result of Microsoft's decision to introduce a new licensing model for their SQL Server 2005 product."

In the meantime, no indication was given as to whether it's an increase or a decrease in price. What do you think? Your guess is as good as mine!

SAP® Business One to Feature New Capabilities Through Acquisition of Praxis Software Solutions

2006-08-01T15:44:00.000-01:00

WALLDORF, Germany - July 10, 2006 - Increasing its breadth of integrated applications designed specifically to help small and midsize enterprises (SMEs) generate revenue, increase sales and boost efficiency, SAP AG (NYSE: SAP) today announced that it will introduce new e-commerce and Web-based capabilities to SAP® Business One. The new capabilities enable companies to set up online stores easily and to deploy customer relationship management (CRM) software quickly and simply via the Internet, extending the reach and accessibility of SAP Business One to a new set of users. Addressing increasing demand among SMEs to make e-commerce and CRM core parts of their businesses, the new features will further the SAP solution's unique ability to provide a unified view of business-critical information across sales, financials, manufacturing, reporting and customer-facing activities in a single, easy-to-use software solution.

SAP is incorporating the new e-commerce and CRM capabilities through the recently completed acquisition of Praxis Software Solutions, a privately held software company and long-term SAP Business One partner based in Minneapolis, Minnesota. Through the acquisition, SAP will integrate the acquired technology and Praxis employees into its SAP Business One operations. Terms of the deal were not disclosed. The transaction continues SAP's strategy of targeted, fill-in acquisitions that add superior functionality to its broad solution portfolio while continuing to grow its business organically.

For the concluding part of this publication, visit http://www.sap.com/solutions/sme/newsevents/Press.epx?PressID=6490

July Certification Diet

2006-07-26T18:34:00.000-01:00

1. You are using special prices in SAP Business One and you observe blue rows in the special prices window. Blue rows shows that
A. The item rows are not in stock.
B. Special discount groups are the row items.
C. No special prices were defined for the item rows.
D. The item rows have validity/quantity based special prices defined for them.

Answer: D

There are business requirements in which you do not want special prices to depend directly on the business partners, but on the items and associated price lists. If a customer buys an item, and neither a special price nor a discount group has been defined for the customer or this item, the special prices for the price list applies. This is setup under Inventory > Price Lists > Hierarchies and Expansions. When the lines for special price are expanded, the special price is displayed in blue in the Hierarchies and Expansions window.

2. Commission can only be calculated for the following except

A. Sales Employee
B. Item group
C. Item
D. Customers

Answer: B
During system setup, under Administration > System Initialization > General Settings, BP Tab, you can define how commission is calculated. Commission can be awarded based on the sales employee, item or customer specified in the document. This setting influences where you can specify the sales commission percentage, but does not automatically calculate any commission transactions. This setting is not static; it can be changed at any time. Commission calculation cannot be defined for Item group.

3. You want to use the Pick and Pack manager in SAP Business One, what are the statuses available?
A. Open
B. Picked
C. Released
D. Blocked

Answer: A, B, C
The Pick and Pack Manager is used to handle the picking process. The process starts with the creation of a pick list, then to the reporting of picked quantities, and ends with the packaging and delivery of the picked items. The possible Pick and Pack statuses are Open, Released and Picked.
Open - Displays the open Sales Order or Reserve Invoice rows.
Released - Displays the released quantities ready to be picked that exist in the pick list
Picked - Displays the picked quantities.
Blocked is not valid status.

4. What happen when you define the opening balances function and the system currency differs from the local currency?

A. An error message appears
B. You must manually convert the balances
C. The balances are converted automatically
D. It is not possible to enter opening balances when different system and local currencies are used in a company.

Answer: C
When using the opening balances functionality, enter opening balances in the local currency in column OB (LC) only if data is to be entered in the local currency. If the system currency is different from the local currency, the system automatically calculates the opening balances in the system currency and displays the values in column OB (SC). Hence, it is possible to enter opening balances even when the local and system currencies differ and an error message is not displayed as a result. If a foreign currency has been defined for an account, the OB (FC) field will be active. The system automatically calculates the amounts in the local and system currencies, using the valid exchange rate on the value date. It is important to state that opening balance for a multi currency account can only be entered in local currency

5. Which of the following is/are true about the Data Transfer Workbench when it encounters an error?

A. Rollback occurs and all data records that are already imported are removed from the system
B. An error message is displayed and nothing happens.
C. The import process stops after a number of errors, yet to be imported records are stored in an error file
D. The import process stops after a number of errors and all records that have already been imported are retained in the system.

Answer: A, C, D

The Data Transfer Workbench is a tool for data migration. Another functionality that can be used for importing data into SAP Business One is the native import functionality. SAP Business One has a number of ways of handling errors while importing data into the system. When error is encountered while data upload is in progress, a rollback occurs and all data records already imported are removed from the system. Alternatively, the Data Transfer Workbench stops the import process after a certain number of errors and does not rollback. All records that are yet to be imported are stored in an error file while the records that are already imported remains in the system.

6. Which of the following are true about the uses of user defined fields in SAP Business One.
A. It is used for integration into document templates
B. It is a tool used to generate SQL statements
C. It is used to find objects
D. It is used to format data records

Answer: A, C
User defined fields can be used for document template integration, search objects, store additional information such as pictures and files and reporting. It is not a tool for generating SQL Statements. The Query Wizard and Query generator are tools used for generating SQL statements. However, user-defined fields can be displayed in the print layout designer or in the Query Generator window. Also, it is not used for formatting data records.

7. What are the levels of authorization available in SAP Business One?
A. None
B. Read Only
C. Full
D. Peer

Answer: A, B, C
SAP Business One has it's own in built authorization levels. Authorizations allow users to view, create, and update documents and you assign them according to data ownership definitions. This is to enforce some sort of data security and controlled access. By default, a new user has no authorizations. The three possible levels available are None, Read Only and Full.
None: the user has no access to that functionality.
Read Only: the user can only view, but not change data.
Full : the user is able to display and modify data for that functionality per module.
Peer is solely related to data ownership concept in which the user and the owner share the same manager on their corresponding employee records.

8. The types of Balance Sheet accounts includes the following except
A. Asset
B. Equity
C. Liability
D. Cost of Sales

Answer: D
A typical Chart of accounts is made of two major types of accounts, namely the balance sheet accounts and profit and loss accounts. For the balance sheet accounts, three types of accounts are available. They are Asset, Liability and Capital and Reserve, otherwise called equity. Cost of sales is a typical Profit and Loss accounts and not a balance sheet account.when a balance sheet report is processed, the asset account is displayed on the active side while the liability and equity accounts are displayed on passive side.

9. Where in SAP Business One is the system and local currencies configured.
A. Administration > System Initialization > Company Details
B. Administration > System Initialization > General Setting
C. Administration > setup > Financials > Currencies
D. Financials > Chart of Accounts

Answer: A
SAP Business allows you to manage your accounts using system currency, local currency and multi currency. These definition can be made under Administration > System Initialization > Company Details, choose Basic Initialization. The system and the Local currency can be the same or different, however, the reporting currency is the system currency. This definition is not made under Administration > System Initialization > General Settings. All currencies used in a company are defined under Administration > Setup > Financials > Currencies. The chart of accounts is accessed under Financials > Chart of Accounts. The chart of accounts is an index of all general ledger accounts; hence, system and local currencies are not defined there.

10. Is it possible to have a negative balance in a credit field? True or False.

Answer: True
It is possible to display credit balances in negative. This is setup under Administration >System Initialization >Company Details >Basic Initialization tab. By default, the debit balances are displayed with a negative sign. The system displays a credit balance with a negative sign because the credit balance depicts liabilities in an asset account. This setting is sensitive because it impacts on Opening balances for G/L account and business partners. Furthermore, the settings cannot be changed after transactions have been posted.

MRP in SAP Business One: A Business Scenario.

2006-07-20T18:29:00.000-01:00

Introduction
MRP – Material Requirement Planning in SAP Business One creates recommendation for purchase orders and production orders based on some inputs such as Purchase Orders, Sales Orders, Inventory Status, Forecast, Bill of Material, Lead time, Minimum Order quantity, Parent dependent requirement, Parent Production Order, etc.
Essentially, MRP works like an expert system, which determines how much would be purchased for a purchase item and produced for a manufactured item at a particular point in time.
It can be said that it is an intelligent system!

In this posting, I will concisely explain the SAP Business One MRP Run, Result and Recommendation. This I intend to achieve by using a simple business scenario detailed below. A number of screen shots are provided to better analyze the concept.

Business scenario
Company ABC produces and sells item X. Item X is a produced (make) not a purchased (buy) item and it is managed by MRP. It is assumed that the components needed to produce Item X is in stock. It has a lead time of 6 days and a minimum order quantity of 10. As at today, the inventory status of item X is shown below.
1. 40 quantities of item X are in stock.
2. 60 quantities of item X are ordered as a result of a production order raised with due date in one month from today.
3. 30 quantities of item X are committed as a result of a sales order received with delivery date in two months from today.
4. 70 quantities of item X are available. This can be calculated from this formulae:
Available = in stock – committed + ordered
= 40 – 30 + 60 = 70
(see Figure 1 and Figure 2)

Figure 1

Figure 2

The planner knows from his prior knowledge of how the demand for item X flows, hence, he forecasts that, there will be a demand for 100 and 8 quantities of item X in the next 4 months and 6 months respectively. He also wants to plan for the next 8 months starting from today at an interval of 2 days. Furthermore, the MRP run for item X is designed to consume the forecast, existing stock, production orders and sales orders.

Forecast Definition
The forecast for the business scenario can be defined by accessing the path below.
MRP > Forecasts (See Figure 3)

Figure 3

Enter FORECAST 4/6 in the Forecast Code
Enter FORECAST 4/6 in the Forecast Name
Start Date: Today’s date + 4 months
End Date: Today’s date + 6 months
Item No: X
Today’s date + 4 months: 100 (See Figure 4)
Today’s date + 6 months: 8 (See Figure 5)

Figure 4

Figure 5

The MRP Run
The MRP wizard in SAP Business One has 5 major windows.
The following figures show the windows and information required or transactions performed on each window.
The functionality can be accessed under
MRP > MRP Run

Figure 6

Click Next in Figure 6 above, Figure 7 displays

Figure 7

Enter values for the Scenario Name and Description
Scenario Name: SCENARIO X
Description: SCENARIO X
Then click Next. Figure 8 displays

Figure 8

Enter values for the scenario details
View Data in Periods of: 2 Days
Start Date: Today’s date
End Date: Today’s date + 8 months
Item Code From: X
Item Code To: X
Choose Save Scenario
Choose Next, Figure 9 displays

Figure 9

Enter values for the data source
Select Existing Stock
Select Sales Orders
Select Production Orders
Select Min. Inventory Level
Forecast: FORECAST 4/6
Select the Warehouses

Click Run, Figure 10 displays. This is the MRP Result screen

Figure 10

MRP Result
Typically, MRP result is made up of four major parameters: Initial stock (for the period), Receipt (for the period), Gross requirement (for the period) and Final stock (net requirement for the period).

Using our business scenario, two due dates are worthy of note as it relates to the MRP result.
1. 18.8.06 (After one month)
2. 19.9.06 (After two months).
See Figure 11 below.

Figure 11

As at (1) above, there’s an initial stock of 40 (from today’s stock), a receipt of 60 and the final stock is 100.
As at (2) above, initial stock is 100 (a summation of today’s stock of 40 and receipt of 60 from the purchase order). Gross requirement is 30, from the sales order. The final stock therefore is 70, which is initial stock – gross requirement.

The MRP Recommendation report
As earlier stated, MRP creates recommendation for purchase order and production order depending on whether the item in question is a purchase item or production item. Item X in our business scenario is a produced item, hence the order recommendation report for the business scenario will contain two lines of production orders as shown in Figure 12 and 13 below.

Figure 12

Figure 13 - Order Recommendation Report

The first line will be a recommendation for 30 quantities of item X while the second line will be for 10 quantities of item.

Reason
Line 1. Remember that we have 70 in stock for the gross requirement from the first forecast quantity (next 4 months) of 100.
Line 2. Remember that we designed a gross requirement of 8 quantities of item X from the second forecast (next 6 months). However, item X has a minimum order quantity of 10. Take note that the due dates picked by the system is calculated from the dates defined for the forecast.

The pegging Information
The pegging information in SAP Business One can be analyzed by checking the quantity displayed in either the receipt row or the gross requirement row of the MRP result window.
When the quantity for the receipt row is clicked, the source of the receipt is displayed. The source can be a purchase order or/and production order. The pegging information for gross requirement displays the source of the requirement, which can be open purchase orders, sales orders or forecasts.
The pegging information for the MRP result of our business scenario are shown in the figures below
Pegging information for receipt of 60 – 18.8.06 (see Figure 12) Note: I chose 2 Days interval

Figure 12

Pegging information for gross requirement of 30 – 19.9.06. (see Figure 13)
Figure 13

Colour Attributes
The MRP result has some “graphics sense”. Pale gray cells depicts periods where due date can not be met as a result of long lead-time. The values in these cells are displayed in red. Yellow cells depict periods in which receipt or gross requirement takes place.

Conclusion
Conclusively, there’s more to just running an MRP system. Been able to critically and objectively analyze the MRP is key to the success of an MRP system, especially when it is dependent on the ERP system – SAP Business One. This is because; the flaws in some definitions like lead-time, due date and even forecast, can impair on other modules like inventory, which can rubbish, not only the MRP system but also the ERP system.

The Procure - to - Pay Cycle

2006-07-18T09:46:00.000-01:00

Introduction

SAP Business One has the capability to meet the procurement process needs of SMBs - small and medium scale businesses. In a typically organization, there's usually a purchasing department. The responsibility of this department is to handle the procurement of materials. However, this process impacts on other departments - inventory, material requirement planning, production and Financial. Suffice to say that, at any point in time, you are either impacting on stock quantity and/or stock value.

In this posting, I shall be explaining the procurement process in SAP Business One as it relates to inventory and of course financial. Ideally, the process starts with a purchase requisition is created and then purchase order. A goods receipt that is based on the purchase order is then created. Based on the goods receipt, an invoice is then created upon which the outgoing payment transaction is based. However, in SAP Business One, purchase requistion is not catered for.

Figure 1.

At this juncture, it is worth mentioning that SAP Business One leverages the draw document wizard to facilitate the creation of a target document (e.g Goods Receipt PO) based on a source document (e.g purchase order). During the copying process, options as to how the inheritance of definitions should be carried out can be customized if need be. It is important to state that the A/P Invoice is the only document that is mandatory in order to register a procurement process. Base documents such as the purchase order and the goods receipt PO are optional.

The Purchase Order
The purchase order is a document used to request a supplier to supply goods or services. This document usually contains strict conditions on which the supply is based. A purchase order can be tied to cost centers or projects. The essence is to allow for better analysis as to what it's actually meant for. Goods receipt and invoicing ideally references the purchase order.

You can minimize data entry by duplicating an existing purchase order. Also, when purchase order data such as the vendor and items are entered, default values are displayed based on the definition in the relevant master data. For example, the address of the vendor, the payment terms and payment systems, price and item description are copied from the corresponding master data.

The purchase order contains the header part, line details and the footer. The header part contain information about the entire purchase order such as document currency, document date and due date. The line item level contains information about the items ordered such as item code and name. The footer also displays general document information such as payment due and total discount value.

When a purchase order is created, no entry is made in accounting; however, the inventory status is updated based on the quantity ordered. This is reflected in the ordered and in stock fields in the inventory tab of the item master data and the inventory report. The Purchase Order can be accessed under:
Purchasing - A/P > Purchase Order

Figure 2 shows the Purchase Order screen.

Figure 2

Goods Receipt PO (GPO)
The second step in the procurement process in SAP Business One is the creation of goods receipt that is based on a purchase order. Ideally, referencing a previously created purchasing order creates this document. However, it can be created without referencing the purchase order. When you record the receipt of goods, the system updates the open item for the purchase order.

At this stage, it is pertinent for the appropriate department to check whether the correct items are delivered and whether the actual quantity has been delivered, over delivery and under delivery is also ascertained at this level. In more complex situation that involves perishable items like pharmaceuticals, the expiration date can also be validated at this stage.

It is possible to create several goods receipt by referencing a single purchase order especially when batch delivery is practiced. When a goods receipt is created based on a purchase order, the information entered in the purchase order is inherited. Hence, the elimination of the need for double entry. However, some of these definitions can also be edited or modified when creating the goods receipt.

When goods receipt PO is created in the system, the inventory status is updated by the quantity received. Also, if stocks are continuously managed, relevant accounting information is updated in financials. The Goods Receipt PO can be accessed under
Purchasing - A/P > Goods Receipt PO

Figure 3 shows the Goods Receipt PO screen.

Figure 3

AP Invoice
After purchase order and goods receipt creation, comes invoicing. When you reference a purchase order or goods receipt when creating an invoice, the system copies the data defined in the preceding document(s). This information includes vendor details, item code, item description and quantity. These inherited values can be modified, for example, installment payment. However, the system verifies if there are irregularities between the purchase order or goods receipt and the invoice. System messages are displayed accordingly depending on the business rule defined in the system and invoices can be blocked as a consequence. Basically what happens at the background is that when an invoice is based on a purchase order and goods receipt, the system copies the order prices from the purchase order document and the received quantities from the purchase order document. Furthermore, the system determines the quantities that are yet to be invoiced by calculating the difference between the quantity delivered and the quantity that was invoiced earlier. The system also calculates the expected value for the items, which is a product of the quantity to be invoiced and the order price. This value is not static. It can be modified accordingly. When an invoice is created, the corresponding vendor accounts is updated accordingly. The AP Invoice can be accessed under this path:
Purchasing - A/P > AP Invoice

Figure 4 shows the AP Invoice screen

Figure 4

Outgoing Payment
Most times, outgoing payment is based on account payable invoices. When a vendor is chosen, a list of all invoices awaiting payment is displayed. You simply click on the particular invoice to be paid and effect the transaction. When an outgoing payment transaction is created, corresponding journal entry is created. Payment could be made in check, bank transfer, credit card or cash. If you create outgoing payment for a vendor that has a pre-defined consolidating business partner, the journal entry is created against the consolidating business partner.

It is possible for outgoing payment to be based on one or more invoices that were fully paid. In such case, the transaction of the paid invoices and the outgoing payment are automatically reconciled. Furthermore, the amount due and the paid/credit fields in the paid invoice are updated accordingly and the status of the invoice changes to closed.
The outgoing payment can be accessed under this path:
Banking > Outgoing Payments > Outgoing Payment

Figure 5 shows the Outgoing Payment screen

Figure 5

It is important to state that workflow - approval procedures and document reversal - Goods Return and Credit Memo are not discussed here.

June Certification Diet

2006-06-30T05:34:00.000-01:00

1.When you activate purchase account posting system, the G/L account determination contains additional accounts namely:
A. Purchase Account
B. PA receipt account
C. PA return account
D. PA offset account

Answer: A, C, D
Three accounts are added to the G/L account determination when purchase account posting system is activated in the system. They are Purchase account; PA return account and PA offset account.
Purchase Account: This is recorded in the journal entry along with the same amount that is recorded for the stock account when an A/P invoice or a goods receipt PO is created.
PA return account: This is recorded in the journal entry along with the same amount that is recorded for the stock account, when a goods return or an A/P credit memo is created.
PA offset account: This account is used to offset the purchase or purchase-return account, thus maintaining journal entries created by balanced purchasing documents
Purchase accounting posting system is activated under Administration > System Initialization > Company Details. Then select the Use Purchase Accounts Posting System indicator in the Basic Initializations tab

2.What are the two possible payment means in a payment wizard run?
A. Cash
B. Check
C. Bank Transfer
D. Credit Card

Answer: B, C
The payment wizard automatically creates payment documents based on open invoices (payables and receivables) in the system. The payment wizard run supports two types of payment means namely Check and Bank Transfer

3.Can a down payment request be changed? True/False

Answer: True
A down payment request is like a draft posting that shows that a payment is expected from a customer. A down payment request can be changed as long as its status is open. The down payment closes the down payment request.

4.You are implementing SAP Business One for a client, what is the minimum number of databases that should be created during the project implementation phase.
A. 1
B. 2
C. 3
D. 4
Answer: C
At least, three databases should be created during the implementation of SAP Business One. They are Demo, Production and Test databases.

5.What are the two types of SDK in SAP Business One?
A. Implementation
B. Development
C. Configuration
D. Testing

Answer: A, B
SDK is an acronym for software development kit. It is a tool used to further enhance the generic SAP Business One system. SDK is provided in two versions in SAP Business One. They are Implementation SDK and Development SDK. The former is used to add individual client requirement like form redesigning which does not necessarily require coding while the latter is used to develop add-ons to interface with SAP Business One.

6. Company XYZ uses continuous stock system, what are the costing methods that XYZ can use to manage its stocks.
A. FIFO
B. LIFO
C. Moving Average
D. Standard Price

Answer: A, C, D
Three valuation methods are available in SAP Business One. They are FIFO, Moving Average and Standard Price. These options are only available if stocks are continuously managed in the system. The system calculates the moving average price by dividing the total value of the stock through the amount in stock. In FIFO, the system stores every goods receipt in a separate layer. When goods issue is posted, the system uses the price of the item from the oldest layer, from the second layer and in that order. For standard price, a static price is specified.

7. Where do you set up G/L account determination in SAP Business One?
A. Administration > Setup > Inventory > Define warehouses
B. Administration > System Initialization > Company Details
C. Administration > Setup > Inventory > Define Item group and choose the Accounting Tab
D. Administration > Setup > Financials > G/L Account Determination

Answer: A, C, D
G/L Account determination can be setup under A, C, D above. It is not set up in Company Details (B). Essentially, G/L Account determination can be set up at the item level, warehouse level and item group level.

8. You are using the print layout functionality in SAP Business One, which field is used to define field labels or headings for the repetitive area.
A. Variable field
B. Calculation field
C. Data field
D. Text field

Answer : D
Text field is used to define labels or headings for the repetitive area. The calculation field is used to perform both defined and predefined calculation. The Data field prints the content of the master data and warehouse data. The variable field is used to print data that is not stored in any table but is calculated by certain procedures.

9. The default roles in SAP Business One Human Resources are
A. Purchasing
B. Sales Employee
C. Technician
D. Manager

Answer: A, B, C
The default role in SAP Business One Human Resources are purchasing, Sales Employee and Technician. Other roles can however be added as the need arises.

10. The three types of production orders in SAP Business One are
A. Standard
B. Special
C. Sales
D. Template
E. Disassembly

Answer: A, B, E
Three types of production orders are available in SAP Business One. They are Standard, Special and Disassembly production orders. The standard production orders are copied from the bill of materials. The special production orders are not necessarily based on the bill of materials. The disassembly production order is used to report the disassembly of a standard production order.
Sales and Template are not production order types but bill of materials types.

Importing Master Data from Microsoft Excel File

2006-06-19T06:49:00.000-01:00

Business Requirements

A. You are implementing an SAP Business One system for a client. You have given the client the appropriate import excel templates for the item and business partner master data. The client has returned the spreadsheet with over 10,000 records for both the item and business partner master data after a thorough clean up. Because of the large volume of data involved, you don't want to enter it manually into the system. Furthermore, you want to upload it in the least possible time with minimal or no error at all.

B. You already have your item master/business partner data in the SAP Business One system, however, due to the dynamics of the business, you have to update some fields in the master data, e.g. the prices of item in the item master data.

Business Solution
The SAP Business One import utility can be used. This import tool can be used to add new master data and also update existing master data.The import utility is one of the efficient tools that can be used to upload data from an excel sheet into an SAP Business One system. Essentially, only two types of master data can be imported using this tool. They are the item master data and business partner master data. This functionality can be accessed under
Administration > Data Import/Export > Import Data > Import from Excel

Golden Rules
1. The business partner and item codes must not contain the following characters: ! < > * ? % { } =
2. The Microsoft excel sheet must not contain a title row.
3. The Microsoft excel sheet must not contain a blank row.
4. The Microsoft excel sheet must not be open during import.
5. The Microsoft excel sheet must be saved using the .txt file format - Text file.
6. The number of character in the cells of the Microsoft Excel sheet must be less than or equal to the length of the corresponding field in SAP Business One. It must not be greater.
7. No user must be logged on to the system during the import process in a networked environment.
8. Make sure you back up the company database before import.

The Import Process
1. Follow this path in the company where import is to take place in order to access the import functionality
Administration > Data Import/Export > Data Import > Import from Excel.
2. From the data type to import drop down field, choose the master data to import
3. When the master data type (BP or Item) is chosen, you can then choose the fields you want to import. These fields correspond to the fields in the Microsoft Excel document. E.g. BP Name
4. After choosing the relevant fields and appropriate option, click the OK button
5. A screen then appears that allows you to locate the file to be imported.
6. Choose OPEN
7. The importation starts. This may take several minutes depending on the volume of data involved. The progress of the import process can be tracked on the status bar and interrupted, if need be by clicking the STOP button.

Import Status Report
A system message window is displayed after the import process. This notifies you if the import was successful or not. As a check mechanism, the number of rows imported is also displayed. This is to allow you cross check with the actual row in the excel spreadsheet. It is good practice to save the system message, especially when the import process is unsuccessful. This allows you to know and understand the cause of the failure and make amends.

Common Import Errors
Following are common errors that can be displayed and their solutions.
1. The number of the business partner or the item contains an invalid character.
Solution: Remove any of the following characters from the number of the BP/Item field in the excel sheet. ! < > * ? % { } =

2. Error 47: The Microsoft excel sheet is open
Solution: Close the Microsoft Excel sheet and try again

3. Invalid entry
Solution: Make sure that no field in the excel sheet is greater than the defined field length in the corresponding field in SAP Business One.

At this point, it is important to note that:
1. When the update existing record check box is marked, the system overwrites the prior entry in the corresponding fields. However, it is also important to state that the BP/Item codes cannot be modified. Furthermore, the type of the BP cannot be updated as long as transactions have been made against it.
2. In order to modify the items account (expenses & revenue) previous entry, the Update Accts in Existing Items checkbox is marked.

Garbage In … Garbage Out: An Implementation Pitfall!

2006-06-16T17:04:00.000-01:00

Hi Guys! I got home late on Tuesday this week. What’s on your mind? Hmmmm, Kenny (as I’m fondly called) was busy configuring an SAP Business One system or doing some kind of remote support. Nope! I was engrossed in a discussion with my Managing Partner, Deola. The crux of our discourse is why implementation fails. Deola attributed failed implementations to “Data” and he said, Kenny, when you put in garbage into the system, what you get is garbage. I nodded my head in agreement. He gave an example of how a CEO lost confidence in the accuracy of his financial reports as a result of incorrect data loaded into the system barely two weeks after go-live. And you know what? Your guess is as good as mine. The multi-dollar project was thrown into the bin! And the implication is bad referral.

At a very high level, I’m discussing the following tasks as it relates to data management during project implementation: Data Definition, Data Collection, Data Clean up, Data Analysis, Data Testing, Data Re-engineering and Data Migration.

Data Definition: The first thing to do is to have a clear-cut idea of the data needed for the system to work. These data forms the bedrock of the master data. This is important so that right from the start, you know what data you are looking at. This is also an eye opener into the size of the data you are expecting to get. Furthermore, a proper definition of data needed can serve as a guide when planning for your hardware, especially the server and backup tools.

Data Collection: Identification of the people to meet for the required data is important. You must be ready to put them on their toes. This can be a daunting task, especially if the company you are implementing for is coming from a non-system environment. It is even possible that the data needed are not readily available or difficult to extract. Hence, the need to do some forms of “pushing”. The data collected could be in hard copy or soft copy or even both.

Data clean up: This is where the bulk of the job is. Cleaning data can be challenging. This involves filtering i.e. separating the shaft from the wheat. In most cases, the data that you get irrespective of your definition contains lots of junks. It’s important that these data be filtered, so as to identify the ones you need and the ones you don’t need.

Data Analysis: It’s important to analyze the data collected, especially when batch loading will be carried out. It is at this stage that coding (material no, business partner no and employee ID) and grouping (item group, customer group) conventions are carried out. This has to align with the supported templates provided (something like the data migration templates in SAP Business One). The customer should be guided in choosing and adopting a naming convention. At this stage, it is important to ensure that all mandatory (primary) fields are filled. As much as possible, ensure that no fields are left blank in your template.

Data Testing: It is also important to test the data before go-live. Test database can be created to simulate what the live system will look like. During training, the test/training database should be used to test all possible business scenarios. Task oriented testing and process (integration) testing should be carried out. Ensure you stretch the limit of the testing. If possible, exceed the elastic limit!

Data Re-engineering: After data testing, as it is expected, updates need to be made to the data. This may require “throwing out” and “bringing in” data. This can be done in parallel as the need arises or after the full testing.

Data Migration: Final migration of data to the live system should only be done after the data has been thoroughly tested. It is pertinent to note that, before final data migration, both the consultant and the client must sign off.

Thus, we can say that, data is an important determinant of whether a project will succeed or not. Right from data definition to collection and then to final data migration, lots of work has to be done to ensure that the right data are loaded into the system. Each state of data management is important as the others. This is because the output of a stage is the input to another stage.

A Chat with the CEO: Yves Néron of IDIT Corp, Canada.

2006-06-15T20:02:00.000-01:00

Yves Néron is the President of IDIT Corp. IDIT Corp is a SAP Business One reseller based in Canada. Join me as we explore the world of the gentle man that paddles the affairs of this dynamic company. Enjoy!

Yves Néron

1.Tell us about yourself

I have started in IT 24 years ago. At that time pc were not in offices yet.I was learning IT the rough way, punch cards, Cobol, mainframe, timesharingto compile programs, green screens.I got out of school with a college diploma and almost no chance to find ajob. In 1982, interest rate went up to the roof at 20% per year. There wasno employment anywhere. It took me almost a year to find a job ofprogramming on CP-M and Basic at minimum wage.I worked later in large corporation, then in IT consulting, up to the time Irealized, my IT skills were good but not my business knowledge.I did a Business Admin bacc. To complete my business knowledge. I believe Iam a proper mix of IT and business. The time is over for techies in ITmanagement. Companies need guys that can align the IT with the businessneeds, not the opposite.We know see real business managers driving IT dept and giving back theproper tools to companies that demands more and more information.

2.Tell us about your company

All through the years, I always had been an entrepreneur. When young I hadmy business of painting and renovating. Later I started a small business ofprogramming. Not making enough money, I decided to try working for somebodyelse as a programmer. I did great at it, I am a team player and I align mypersonal objectives with the business goals, so working under someone elseis not a big issue.I ended up as an IT director at IDfoods around 1995. This company wasflying, sales were up every year. People were opening their taste toanything good coming from all over the world, and IDFoods was delivering itto them.Surprisingly, many business partners of IDFoods (vendors, customers) werenot really IT equipped to play in this industry.We started offering our IT knowledge and services. Again, the soul ofentrepreneurship was taking over. Not to mention the king of entrepreneur,the IDFoods owner itself !Slowly but surely our small IT shop was acquiring customers in manydifferent industry, even outside the food industry.In 2001, we registered ID-IT and acquired a division of another company thatwas distributing the ERP used by IDfoods and some other local customers.We supplied services and software in the Unix world for few years. Recently,we wanted to move on something new and exciting, we knew our Unix stuff verywell, but market demand was on Windows products.This is how we got into the SAP Business One adventure.

3.How would you compare SAP Business One with other ERP products for smallandmid size companies?

One of the main advantage from my point of view for SAP is, its ease ofinstallation and configuration. It is very fast to install and make it workfor a customer, installation is much more efficient than any other software.Users defines tables and fields, SQL query in fields, all this to ease thecustomization without the need of a programmer.If you do need a programmer, all work done through the SDK will becompatible with later releases. It was impossible with previous ERP on themarket.The integration with Microsoft desktop tools is impressive and veryefficient.

4.If you were to add or change an SAP Business One functionality, what wouldit be?

I hope, SAP will add to its core program, all major and popular add-ons.This way, integrity and support will be better.We need a standard WMS, we need integrated EDI, we need B2B in the package,exactly like they did for the excellent XL reporter tool.I am not saying that add-ons are not good, They are very good, my concern ishaving more than one point of support and development.

5.What do you enjoy doing that doesn't involve work?

I enjoy extreme sports. I really need to vacuum my brain once in while.Heavy windsurfing sessions does it very well. I am a fan of everything thatis wind powered, kitesurfing, icesurfing, etc. Winter is also great to dosnowboarding.

To learn more about IDIT Corp
Web site: http://www.iditcorp.com
Email : informations@iditcorp.com

Management Accounting in SAP Business One

2006-06-13T19:16:00.000-01:00

Management Accounting, other wise known, as Cost Accounting (in SAP Business One) is one of the functionalities that can be leveraged in SAP Business One. Management Accounting is important for not only SMBs, but also large corporations because it drives internal reporting. Irrespective of the size of a company, the ability to be able to manage the internal flow or trend of expenses and revenue is key to success. More level of details as to the performance of individual business units can be seen and reviewed accordingly.

The bottom line therefore is that, internally consumed reports are used for critical decision making.Management Accounting in SAP Business One is made possible by four major concepts namely: Projects, Profit Centers, Budget and Purchase Accounts Posting System (PAPS).

Projects
SAP Business One allows you to track expenses and revenues of your projects. In a typical company, project differs in shapes and sizes. As a matter of fact, project doesn't have to be a physical or construction activity before it can be used. It could come in some form of "soft form" e.g. Letter of Credits (LC) and special orders. A company that does importation of goods can use projects to track the profitability of individual LCs. Also, a paper manufacturing industry can use projects to track the profitability of a particular special order against another special order for a given product.To create projects in SAP Business One, access the path below:Administration > Set up > Financials > Define Projects

Projects can be attached to a document both at the header level and line level. In whichever case, the corresponding journal entries created inherit the project definition. Furthermore, projects can be tied to business partner and general ledger accounts, thus you don't have to manually assign projects to transactions that relates to the BP or G/L account. The Transaction report by Project allows you to analyze transaction posted for project(s) based on defined criteria.

Profit Centers
In SAP Business One, profit centers and cost centers are jointly managed by the profit center functionality. Ideally, an organization has varying sections or business units where costs are incurred or revenues are generated. For example, the admin departments in most firms do not really generate revenue, but incurs expenses. The sales department on the other hand, generates revenue and also incur expenses e.g. transportation fee. Hence, the profit center feature allows you to track the profitability or otherwise of these departments or cost centers In profit center management, two important phenomenons are worth mentioning namely: Direct expenses/revenue and Indirect expenses/revenue.

Direct expenses/revenue is the expenses/revenue that can be wholly linked to a business unit or department while the indirect expenses/revenue cannot be wholly assigned to a business unit or department. For example, electricity bill. The number of departments in an organization shares the bill. The sharing formula is based on defined parameters like size area. SAP Business One uses the distribution rule feature to enforce this sharing automatically and it can be updated when business rule changes. You can define and manage distribution rules under Financial > Cost Accounting > Define Distribution Rules. Profit centers can be defined in SAP Business One by accessing the path below.Financials > Cost Accounting > Define Profit Centers

Furthermore, for more detailed or summarized level of reporting, sort codes can be used to group profit centers together. The architecture generated in this case is like a parent - child relationship. Profit centers can be assigned to revenue and expense accounts so that when transactions are posted in the system, these accounts are automatically updated. Profit and loss statement can be generated for profit centers.

Budget
Budget is another management accounting tool that can be used in SAP Business One. Budget can be defined by accessing this path: Financial > Budget > Define Budget. The budget functionality is used to control corporate expenses. This implies that budget can be defined for a G/L account or project as the case may be. Depending on the maximum amount specified in the definition of the budget, transaction could be blocked, with or without warning when budget is exceeded. Budget scenarios can also be created in SAP Business One. This allows you to do some kind of budget comparism between say, optimistic, pessimistic and main budgets. Furthermore, budget distribution methods can also be set up in the system. The Profit &Loss Statement Budget Report can be used to track planned balances against actual balances.

Purchase Accounts Posting System (PAPS)
The Purchase Accounts Posting System allows you to better manage a company's budget and expenses. It is a sensitive definition in the sense that once it's activated and journal entries have been created it cannot be updated.Purchase accounts posting system can be activated under:Administration > System Initialization > Company Details.Check the Use Purchase Accounting Posting System box on the basic Initialization tab.On activation of this feature, three accounts are created in inventory tab in G/L account determination namely: Purchase Account, Purchase return Account, Purchase offset Account
Administration > Set Up > Financial > G/L Account determination - Inventory tab

Purchase account: When an A/P invoice or a goods receipt PO is created, the purchase account is recorded in the journal entry along with the same amount that is recorded for the stock account.
Purchase return account: When a goods return or an A/P credit memo is created, this account is recorded in the journal entry along with the same amount that is recorded for the stock account.
Purchase offset account: This account is an offsetting account for purchase account or purchase return account.

The PAPS is a fantastic cost accounting tool because it allows you to define purchasing budget since a purchase account can be made an expense account. Furthermore, if objects such as item groups and warehouses belong to profit centers, purchase account can be linked to their G/L account determination and distribution rule can also be defined for the purchase accounts.

By and large, to drive internal reporting, objective and critical decision making, these functionalities can be leveraged in SAP Business One. The flexibility of report generation is great and if need be, these reports can be exported into external systems for better data analysis.

Costing Methods in SAP Business One: An Overview - Part 1

2006-06-13T18:42:00.000-01:00

Inventory valuation is an integral part of a business, especially when stocks are involved. It has direct effect on the cost of sales, which is the summation of initial stock and inventory purchase less final stock. Hence, it is a sensitive phenomenon because it impacts on your financial reports - Balance Sheet and Profit/Loss and even Tax reports. From the foregoing, it can be said that, inventory valuation is one of the metrics for determining the profitability of a business.

SAP Business One supports only three types of costing or inventory valuation methods namely: Moving Average, FIFO and Standard Price. The golden rule is that, continuous stock management must be activated before this functionality can be leveraged. Continuous stock system is defined under: Administration > System Initialization > Company Details > Check default valuation method box (see figure below).

Irrespective of the costing method leveraged, prices are calculated in local currency.

Moving Average: Inventory is valued using the cost price of the items. On receipt of goods, the value is automatically updated. A stock receipt transaction that affects accounting, debits the stock account while a release transaction that affects accounting credits stock/sales return account based on the cost price of the item.

Standard Price: When standard price is used as the costing method, a static price is defined for each item. On stock receipt, it is not automatically updated. The standard price method is advantageous in cases where you produce the items yourself. A stock receipt transaction that affects accounting debits the stock account based on the standard price defined for the item. Very often than not, variance does occurs, thus the difference between the standard price and the receipt document price will be posted to a variance account. A stock release posting on the hand, credits the stock account according to the standard price defined for the item.

FIFO: The FIFO inventory valuation method uses a "First- In- First Out" methodology.This methodology ensures that when goods are received, a step-like arrangement or layer that is based on cost, quantities and entry date is created. And during goods release, the goods from the first layer (open) and their corresponding cost are used.

Thus, the choice of which of the costing method to use is a function of the objective to be achieved. Good enough, SAP Business One allows so much flexibility as it relates to costing system. Different costing method can be defined for different items and you can change the costing system of your items globally. However, it is important to note that continuous stock system cannot be deactivated after stock posting have been made.

In this posting, I have only given an Overview of the costing methods in SAP Business One. In my subsequent postings on the subject matter, I'd concisely analyze the journal implications of each of these methods for sales, purchasing, inventory and production transactions.

Cycle Counting: Inventory Audit in SAP Business One

2006-06-08T07:55:00.000-01:00

Introduction
Cycle Counting is a necessary action in inventory management. The implication of wrong inventory can be grave for a company. It not only mislead in the available stock quantity, but also in the actual stock value - accounting. A number of practices can be leveraged when auditing inventory, however, in this paper, I intend to explore cycle counting as an inventory audit tool. This subject topic will be discussed in the following parts: The Concept, Why Inventory Audit, Frequency of Audit, When to Audit, The Process in SAP Business One and Recommendations.

The Concept
A few months ago, my colleague and I went for a management demo of SAP Business One for a leading bookshop in Nigeria. And you know what? The Chief Financial Officer asked a fundamental question: What happens if I've got some stocks physically in my warehouse and the system displays zero stock, will I be able to sell? What's on your mind, negative stock management? Well, that concept is a topic for another posting. Well, for me, what struck me was inventory record inaccuracy. The nightmare of an entrepreneur among other things includes the correctness of his stock record, hence the need for a stock auditing infrastructure like Cycle Counting. This kind of system is provided in SAP Business One.

Thus, it is expedient that inventory be counted at defined intervals and if variances occur, it should be reconciled. The process of inventory audit follows some sequential steps as detailed below.
1. Print out the inventory status from the system
2. Perform the physical count of the item and record your findings
3. Ascertain the correctness of the count by recounting
4. Record the count result in the system
5. If variances occur, post the stock difference.

As a matter of fact, inventory records are not always 100% accurate. Variances do occur, depending on the item type, volatility and frequency of movement. Hence, tolerance (in %) can be defined to cover this lapse. However, as much as possible, 100% accuracy should be the target.Why Inventory Audit The need for inventory audit is enormous. Broadly, inventory audit is of great interest and importance to two sets of people in a firm - the Financial Controller and the Planning Manager. While the Financial Controller is concerned about the accuracy of the stock value, the Planning Manager is concerned about the accuracy of the stock quantity. In whichever way you look at it, the stock quantity is the driver of the stock value. For the Financial Controller to know the correct stock value, the stock quantity must have been duly counted and multiplied by the cost of the item.

From the foregoing therefore, we can safely attribute the aim of inventory audit to the following factors:
1. Stock record accuracy.
2. Early discovery of inventory problem and immediate resolution.
3. Gross to net calculation accuracy.
4. Effective customer service as a result of on-time order fulfillment
5. Better planning based on accurate stock status

Frequency of Audit
How often inventory counting occurs is termed cycle frequency. As asserted earlier, auditing is quite important to the Financial Controller and the Planning Manager. The Financial Controller can be pretty comfortable with auditing inventory records annually. The planner is most likely to perform inventory audit more often - daily, weekly, monthly or annually.When to AuditIt is good practice to define cycle frequency for an item in the system. The challenge is, when should inventory be counted?

The following can be used as guidelines in facing the challenge.
1. Before an order transaction is created.
2. On receipt of an order.
3. When inventory level is zero.
4. After a defined number of transactions have been carried out.
5. When an emergency count is needed.e.g questionable negative stock.

The Process in SAP Business One
The inventory counting system in SAP Business One is feature rich enough to meet the auditing needs of small and medium scale businesses. With SAP Business One, controls can be set up to eliminate errors that might arise as a result of inventory posting activities during physical counting. This can be achieved by activating the locking feature of an item or warehouse in the item master data - check the Locked indicator. Alternatively, you can disable the document numbering functionality - Administration > System Initialization > Document Numbering - check the Locked field.SAP Business One adheres strictly to due process of inventory counting (see 2nd paragraph - The Concept). This transaction can be achieved by accessing the following path. Inventory > Inventory Transaction > Beginning Quantities, Inventory Tracking Stock Posting.

SAP Business One and Inventory Differences
In most cases, after inventory count, discrepancies often occur between the supposed stock value and the actual stock value, hence the need to reconcile the inconsistencies. As a matter of fact, SAP Business One requires you to post the variance in order to modify the stock value in accounting. This functionality is achieved by accessing this path: Inventory > Inventory Transactions > Beginning Quantities, Inventory Tracking Stock Posting. Select the stock posting Tab. The screen displayed is shown below.

For increased flexibility, SAP Business One provides three options in which the value of an item can be calculated, namely: Price List, Last Revaluation Price and Cost Price. What is more? Only the quantity of an item will be modified when Allow Inbound Posting without Price field is activated. It is important to note that, when the cost price list is chosen in the Price Source for Whse Stock Posting field, the current cost must be recalculated before the variances are posted in the system using the inventory valuation report.

SAP Business One and Cycle Frequency
SAP Business One allows you to define the frequency, alert date and time for your inventory count. This can be achieved by accessing this path: Administration > Setup > Inventory > Inventory Cycles.The following frequency can be defined: Daily, Weekly, Every 4 weeks, Monthly, Quarterly, Semi-annually, Annually and One-time. Furthermore, a comprehensive report recommendation for all scheduled inventory count can be generated in SAP Business One. The alert integration serves as a reminder functionality based on predefined time.

Recommendations
By and large, we have critically analyzed the concept and features of cycle counting and how SAP Business One can be leveraged in this direction. Irrespective of the effectiveness of an inventory counting system, whether in-built in an ERP system or standalone, the human factor is key to the accuracy of inventory records. The following points are recommended steps to be taken, especially as it relates to the human factor.

1. Comprehensive numbering and item description system. This will go a long way to drive correct and easy identification of items
2. Quantity Verification and Price: Considerable time should be spent in posting transaction fields, especially the quantity and price. Basically, the stock quantity affects the stock level and stock value at any point in time
3. On-time transaction entry and execution: It's not enough to just record transactions into the system. Transactions should be recorded as at when due and the physical movement of the goods must be carried out accordingly.
4. Use trained expert: Personnel concerned with stock taking and counting must be highly skilled in the field. It's not a job for dummies!
5. Warehouse safety and security: Wharehouses must be locked and protected at defined time, especially when transactions are not taking place, say at night. This is to prevent stock damage, inventory pilfering and theft.

Approval Procedures: Line Level and Header Level - Part 2

2006-06-07T16:03:00.000-01:00

In the Part 1 of this entry, I treated the set-up for approval procedure at the line-level. The set-up for the header level can be found at http://blogs.ittoolbox.com/sap/kehinde/archives/approval-procedures-line-level-and-header-level-part-2-9689.

Regards!

SAP Business One on Oracle: Still a Mirage!

2006-06-06T19:52:00.000-01:00

A Service firm recently approached my company and they require us to support their SAP Business One system that runs on MS SQL and has an external billing system that runs on Oracle database. What do you think? It'd have been great if SAP Business One supports Oracle database. Better integration I believe!

Clearly, SAP Business One can only be deployed on three database systems: Microsoft SQL Server, IBM DB2 and Sybase. I have managed large Oracle database systems, so I know from experience that Oracle is extremely robust. Therefore, I would not know why SAP does not consider Oracle as one of the database systems for SAP Business One, even though Oracle and SAP have been working together since SAP R/3 was first developed in the late 1980s.

From the foregoing, I have made some assertions why SAP Business One on Oracle is still a mirage. I may be wrong. I stand to be corrected.

1. Cost: An average individual tends to see Oracle as an expensive database system. And since SAP Business One is targeted towards small and medium scale businesses, it might increase the total cost of ownership of SAP Business One, if companies get to use Oracle as the database system upon which their system sits. Hence, the reason to partner with less expensive database system vendors because small and medium scale companies are not buoyant enough to afford such cost. However, Oracle too supports small and medium scale businesses with one solution or the other that uses Oracle database.

2. Database Management: With due respect, it's more technically challenging to manage an Oracle database system when compared to MS SQL, IBM DB2 and Sybase. Small and medium scale businesses might not be able to afford the technical experts needed to manage such database - Oracle. The cost of hiring technical personnel to manage an SAP Business One on Oracle database system can also increase the total cost of ownership somehow and small and medium size companies are not cut out for this.

3. Database Size: Experience has shown that in choosing the database system for SAP Business One, the maximum expected database size is a critical consideration factor. Oracle no doubt, is designed to supports large databases. As a matter of fact, the current release of Oracle, Oracle 10g supports database size of up to 8 exabytes - about 8 million terabytes. However, SAP Business One is meant for small and medium companies. May be it is assumed that its (SAP Business One system) database size cannot be really large as to require an Oracle database.

4. Corporate Feud: The first thing that comes to mind when you mention Oracle is database management system and SAP, enterprise resource planning system. However, over time, Oracle has gone into ERP system development. This singular action has created serious competition in the market place and the quest for market dominance has paved way for open conflict between the two software giants. Hence, can it be said that it's this corporate tussle that is responsible for SAP not partnering with Oracle (or vice versa) as it relates to SAP Business One?
May be yes. However, on a closer look, one can say No. This is because; Microsoft who even poses more threat to SAP, especially in the SMB market space has a database system (MS SQL) that is supported by SAP Business One.

5. Corporation Readiness: Another reason that comes to my mind is probably the readiness of either (or both) company at the time of rolling out SAP Business One. May be Oracle or SAP has not technically finished work on the supporting features that will make SAP Business One on Oracle work. However, SAP Business One has been around for a number of years now. One would have expected work to be have been finalized. Are they still working on it? Am just thinking…!

I believe that SAP Business One on Oracle will provide more functionalities and flexibility for SAP Business One users. Anyone with information on why Oracle is not a supported database system for SAP Business One should drop me some lines or are you thinking too?

Approval Procedures: Line Level and Header Level - Part 1

2006-06-02T17:04:00.000-01:00

I have read a number of postings on the SAP Business One Discussion Forum saying that approval procedures can't be defined on line level i.e. for line tables. It's not true! What is true is, the $[Tablename.Fieldname] syntax doesn't work for line tables. I would use a similar challenge I once had and which is similar to a question posted on SAP Business One Discussion Forum to explain how you can set up approval procedures at the line level and the header level.

Statement of the challenge: (as posted on the forum)
I need to set up approval for two scenarios.
1. When creating a PO and I attach it to a project, I want approval to be triggered for the approval of the project head and then the Managing Director.
2. When creating a PO and no project is chosen, the approval should be triggered for the approval of the Head of Department and then the Managing Director.
Note: Two approval templates are needed: A and B
Two approving authorities per template.
It's like an If-then-else thing:- if project is chosen, then project Head+MD (A); otherwise
HOD+MD (B)
Ideally, the query should start with "SELECT DISTINCT 'TRUE'.....
Projects can be attached in the line item (activate 'project' using form settings) or header (accounting tab of the PO document).

Understanding the challenges
The crux of the question is not just how to set-up approval for a purchase order, but to direct/redirect the approval to separate approving authorities if project is picked or not picked at
(1) Line level
(2) Header level.
Suffice to say that Project can be picked on both line level and header level as shown in Figure 1 and Figure 2.

Figure 1

Figure 2

The first part of this paper will address the Line level set up while part 2 will address the Header Level set up and conclusion - business rule recommendation.

Procedure
- Open the purchase order.
- Click on View (on the menu bar) > System Information to get the Field's item number, Field's column number or press Cltr+Shift+D

Field's item number =38
Field's column number = 31

Using the syntax $[$Field's item number. Field's column number. NUMBER/CURRENCY/DATE/0]

The query syntax for when project is picked is as follows

if (SELECT $[$38.31.0]) > ' '
select 'true'

Save this query as LPROJ=YES

The query syntax for when project is not picked is as follows:

if (SELECT $[$38.31.0]) !> ' '
select 'true'

Save the query as LPROJ=NO

Create approval stages for each of the approving authorities: Project Head - SPH, Head of Department - SHOD and Managing Director - SMD.
A sample approval stage for Project Head - SPH is shown in Figure 3 below. (This should guide you through that of the Head of Department and Managing Director)

Figure 3

Create two approval templates namely
LPROJ_Y and LPROJ_N

Administration > Approval Procedures > Approval Templates

LPROJ_Y
Name: LPROJ_Y
Description: Line Project = Yes
Originator: Purchasing Officer - PO
Active Box: Checked
Documents: Purchase Order - Checked
Approval Stage: 1. SPH and 2. SMD
Terms: Check the radio button When the Following Applies and attach the LPROJ=YES named query to the template.

Sample approval template - LPROJ_Y is shown in Figure 4

Figure 4

LPROJ_N
Name: LPROJ_N
Description: Line Project = No
Originator: Purchasing Officer - PO
Active Box: Checked
Documents: Purchase Order - Checked
Approval Stage: 1. HOD and 2. MD
Terms: Check the radio button When the Following Applies and attach the LPROJ= NO named query to the template.

Test the Set up
Log on to the system as the Purchasing Officer - PO.

Action 1: Attempt to create a Purchase Order and choose project on the line level.
Result 1: Request for approval (LPROJ_Y) is triggered.
See Figure 5

Figure 5

Action 2: Attempt to create a Purchase Order and don't choose project on the line level
Result 2: Request for approval (LPROJ_N) is triggered.
See Figure 6

Figure 6

Are you now convinced? It does work for line level.

I'd like to appreciate Riaan Bester of Silverhedge Solutions, South Africa for his contribution.

Note:
1. Ensure that Activate Approval Procedure is activated -
Administration > System Initialization > General Settings > BP Tab
2. Users are defined in the system appropriately.
3. Ignore the error messages that you get in the Query Generator or Wizard (if you save your query via the tool)
4. You must be a member to access the forum link
5. Paths and field names may differ depending on the version. The version used here is 2005.

Independent Demand Vs Dependent Demand: MRP is a Calculator!

2006-06-01T14:42:00.000-01:00

The MRP system in SAP Business One takes in a number of parameters as inputs and performs some level of analysis and generates recommendations that can either be accepted or rejected by the planner. One of the inputs of MRP is the bill of material, which is a list of all components (and in what quantity) needed to produce finished good(s). For example, the bill of material needed to produce a dinning set is 6 chairs and 1 table (supposedly). The demand for the dinning set here is independent while that for the chairs and table are independent.

An independent demand is a demand that is not based on the demand for another item while a dependent demand is based on the demand for another item. Hence, it can be concluded that the demand for the 6 chairs and the table is based on the demand for the table. Thus, you can forecast an independent demand while dependent demands are calculated based on the independent demand item. The role of the MRP therefore is to perform this calculation. Hence, is it right to say that MRP is a calculator? May be yes...

Tribute To My Dad: Your Candle's Burned Out Long Before…

2006-05-31T10:59:00.000-01:00

It is my wish to dedicate my posting today to one person that was instrumental to my success in life. Today (May 31st) makes it 7 years since I lost my beloved Daddy – Bode.

I was greatly shocked; when on June 2nd or 3rd, my Uncle (Paul Omokore) told me about the demise of my father. Ever since, a vacuum has been created in my life. However, God has remained faithful. No wonder why my twin sister, Taiye, sent a text message to my phone in the dead of the night and it read thus: “Oh! Are we not blessed? Are we not favoured? Are we not great? God has been our shield and buckler, all praises and honour be to him. It’s 7 golden years that Dad went from us but God didn’t leave us”

After reading the message, I sent this sms to all the members of my immediate family:
“I can’t believe it! It’s 7 years now that we lost our beloved BODE. God has been faithful. This is to thank you for your support ever since.”

BODE was a man of great courage and influence, a loving and caring father indeed.

Elton John, permit me to conclude with an excerpt of the lyrics of your tribute song to Lady Diana who died on the 31st day of the month - August, almost 9 years ago. And it seems to me you lived your life like a candle in the wind... your candle's burned out long before your legend ever will.

Increasing Profitability through Inventory and Financial Reports Analysis: A Case for SAP Business One

2006-05-29T14:40:00.000-01:00

Although inventory report and cash flow report are seen as independent reports to some extent, they are however interwoven. The perception of most SAP Business One users is that the cash flow report is a product of just "current cash transactions". Yea, to some extent this assertion is true; however, there is another leg to it.

The cash flow report gives the balances of cash accounts and accounts that are subject to cash flow in the future. Inventory (Stock) itself can be perceived as money that is tied down because asset increases when stock is procured. The purchased stock can be raw materials for a finished good(s) that will yield revenue in the future. At production stage, it is classified as work-in-progress (WIP). A number of journal entries are created during the production process in SAP Business One. When components are issued for production, the WIP account is debited and the stock account of the component is credited. When the production order is completed, receipt from production is created. The stock account of the product is debited by the actual value of the finished product and the WIP account is credited. In case variance occurs, the system debits the WIP account with a negative value and credits the WIP variance account.

From the foregoing, it can be deduced that the stock value increases by the cost of production tied to the production process. On receipt from production, it becomes a sales item that is expected to generate revenue. Inventory is also updated accordingly. However, the costs incurred during production represent payables. These payables need to be settled somehow, hence the need for cash flow report, which is a critical analysis of "money - in and money - out".

The Chief Financial Officer (CFO) is not interested in high inventory (over stocking) based on the premise that it is "money tied down". Keeping high inventory is not cost effective. This is because additional costs (such as carrying costs) are incurred especially while these stocks last in the warehouse. This is not to say that inventory should be kept so low as not to meet demands or orders.

Although, the amount of inventory to be kept at any point in time is ambiguous, the inventory turn ratio is a metric for determining inventory usage. Inventory usage is calculated as a ratio of the annual cost of goods sold to the average inventory.

For the purpose of illustration, let $1,000,000 be the annual cost of goods sold and $500,000 be the average inventory; obtained from profit and loss statement and balance sheet report.
Inventory Turn = Annual cost of goods sold/Average Inventory
= $1,000,000/$500,000
= 2

If through better inventory management and financial analysis, the inventory turn is increased to 10.Average Inventory = Annual cost of goods sold/Inventory Turn
= $1,000,000/10
= $100,000

Reduction in inventory = $500,000 - $100,000
= $400,000

The implication therefore is that you can generate same sales with only $100,000 of average inventory.

Furthermore, if the carrying cost (which is based on weight/volume carried) is 20% of the average inventory, the savings will be
Savings = Reduction in Inventory x 0.20
=$ 400,000 x 0.20
= $80,000

Cross analysis of Inventory report and Financial reports such as Cash Flow, Balance Sheet and Profit and Loss Statement can lead to cost saving and ultimately, profitability. Hence, it would be nice to have a detailed and generic business intelligence report (that makes this analysis and more) like this by default in SAP Business One. What do you think?

May Certification Diet

2006-05-29T13:38:00.000-01:00

1. Which of the following about installments in SAP Business One is correct?
A. Installments can only be defined when posting the Invoice
B. Installments can only be defined in the payment terms window and cannot be changed in the invoice.
C. Installments can be defined in the payments terms window and can also be altered when creating the invoice
D. Installments can only be defined in G/L Account Determination.

Answer: C
Installments are defined as independent objects in the No. of installments field within the payment terms window. Furthermore, after installments are defined, they can be modified in the invoice. Installments are not defined in G/L Account Determination. When setting up installments, the installment rates, month and days are defined and added to the whole invoice to determine the due date for the individual installments.

2. Your company uses the Withholding Tax functionality in SAP Business One, at which point can withholding tax be calculated?
A. When posting the invoice
B. When posting the invoice and when posting the payment
C. When posting the payment

Answers: B.
The category field of the Define Withholding Tax window in SAP Business One has two options, namely Payment and Invoice. If Payment is chosen, the withholding tax is posted when payment is made and if Invoice is chosen, the withholding tax is posted upon invoice.

3. Which of the following is/are the component of the SAP Business One Software Development Kit (SDK)?
A. Data Interface Server (DI Server)
B. Data Interface Application Programming Interface (DI API)
C. User Interface Application Programming Interface (UI API)

Answers: A, B, C
The SAP Business One SDK is used to develop additional functionality applications in SAP Business One. The applications developed are called Add-ons. The DI Server supports the integration with non-SAP systems. The DI API facilitates access between add-ons and the SAP Business One database. The third component which is the UI API facilitates access between screen elements in the SAP Business One client.

4. The Due Date for a business partner is calculated based on the metrics defined in the payment system for the business partner.
True or False?

Answer: False.
The payment system tab of the business partner master data contains payment information such as house bank details and payment methods. The payment terms contains payment data which are inherited by default in corresponding marketing documents. Such data includes due date and total discount allowed.

5. Where in SAP Business One are control accounts defined and/or managed?
A. Administration > System Initialization > General Settings.
B. Administration > Setup > Financial > G/L Account Determination
C. Administration > System Initialization > Company Details
D. Financials > Chart of Accounts

Answers: B, D
Control accounts link the business partner accounts to the general ledger. A control account must be entered for every business partner in the system. Examples of control accounts are Account Payables and Receivables, Down Payment payable and receivables, Open debts. Default control account can be entered under Administration > Setup/Definitions > Financials > G/L Account Determination. You can define a G/L account as a control account under Financial > Chart of Accounts; then check the control account box. Control accounts are not managed or defined under A and C.

6. A company is solely involved in the sales of 2 years warranty items. Which of the following is correct for a Customer Equipment Card to be created automatically for all sold items?
A. Create a service contract template with the type "Serial" and assign it to all sales items (warranty managed) in the item master data.
B. Create a service contract template with the type “Customer" and assign it to all Customers in the business partner master data.
C. Create a service contract template with the type “Item group" and assign it to all sales items (warranty managed) in the item master data.
D. Create a service contract template with the type "Customer" and assign it to all sales items (warranty managed) in the item master data.

Answer: A
Service contract can be created for serial number managed items, special customers and item groups. The implication of creating service contract for serial number managed items in the item master data is that, when a delivery note or A/R Invoice is created for that item, the system automatically creates customer equipment card and service contract of the warranty service type. Assigning service contracts of the customer and item group types to the item or business partner master data will not achieve this aim.

7. You are trying to reference a customer equipment card and you keep getting an error message. The status of the customer equipment card is likely to have been set to
A. Active
B. Loaned
C. In Lab
D. Closed

Answer: C
When the status of a customer equipment card is set to returned, terminated or in lab, an error message is displayed when you try to access it. However, a customer equipment card can be accessed if the status is set to active or loaned. Closed is not a valid status for customer equipment card.

8. The SAP Business One Duty Manager is a telephone support service that is used instead of the SAP Business One Hotline support service when critical business processes area affected due to system abnormalities.
True or False

Answer: True
The Duty Manager Support service is used when critical business processes are affected as a result of system abnormalities. The answering machine for this number is checked regularly, even outside working hours. The hotline on the other hand is used basically to contact SAP support when the SAP portal cannot be accessed.

9. A User Defined Table in SAP Business One is identified by which prefix
A. ?
B. U_
C. @
D. $

Answer: C
User defined tables are identified by the @ prefix, followed by a unique code and then a name description by default. SAP Business One stores the user defined field under the description U_ (title). $ is closely associated with query syntax in SAP Business One e.g. $[Tablename.Fieldname]

10. Which of the following databases are supported by SAP Business One?
A. Oracle
B. Microsoft SQL Server
C. IBM DB2
D. Sybase

Answer: B, C, D
SAP Business One can be deployed on Microsoft SQL Server, IBM DB2 and Sybase. Oracle is not a supported database system.

SAP Business One Solution Consultant Certification/Interview Questions.

2006-05-29T10:13:00.000-01:00

Sequel to my posting on Becoming an SAP Business One Solution Consultant, I have decided to introduce a monthly posting of 10 certification/interview questions for SAP Business One Solution Consultants.

This is coming in the wake of the acknowledgement of the newness of SAP Business One as a solution and the need to raise quality consultants.

As an SAP Business One Academy trainer (also Certified), you can be sure to get a real feel of certification/interview questions on this blog. It is important to note that, the questions treated on this blog are not the actual certification questions, but proper understanding of the concept behind each question and answer is invaluable for success in the real exam. As a matter of fact, they take same pattern and methodology.

The postings (certification/interview questions) shall be tagged “Certification Diet”

Be on the look out for the May Diet!

Becoming an SAP Business One Solution Consultant.

2006-05-27T10:20:00.000-01:00

Two fundamental issues are involved in becoming an SAP Business One Consultant. The first is the desire to be a consultant and secondly, the choice of system to consult for – SAP Business One. After making up your mind to become an SAP Business One Consultant, the next question to ask yourself is “What really do I want to do as an SAP Business One Consultant?”

There are a number of areas of specialization as an SAP Business One Consultant. These include Solution, Sales, Support, Development and Integration. My advice is that “specialize first in the area of your interest and strength and then diversify/update your expertise as required later”.

The concern here is the solution consultants. The solution consultants are mainly charged with the responsibility of implementation and training which entails a lot of other tasks (It’s a topic for another posting).

The curriculum for SAP Business One Solution Consultant certification program is detailed below.

TB 1000: Logistics, Service and Human Resources
Fundamentals of SAP Business One, Master Data, Purchasing (Account Payable), Sales opportunity (CRM), Sales (Account Receivable), Inventory, Production, MRP, Document Handling, Cross Functionalities, Service(CRM) and Human Resources

TB1100: Accounting
Financial Accounting, Cost Accounting, Banking, Period End Closing and Reporting.

TB 1200: Implementation and Support
Installation and Administration, User Defined Fields and Table, Queries, Alerts and Approvals, Formatted Search, Designing the Print Layout, Data Migration, Support for SAP Business One and Implementation and Operation.

For more detailed information on this curriculum and the curriculum for other areas of specialization, visit https://websmp103.sap-ag.de/~sapidp/011000358700002412472003

Difference between SAP Business One Backup and Microsoft SQL Server Backup.

2006-05-25T17:08:00.000-01:00

As a database administrator, “Backup” is my watch word!
It is an important database management and maintenance task. Backup is an exact copy of a database/program at a point in time. Hence, a backup can be restored as the original database in case of disaster or database maintenance.
SAP Business One is an ERP system that sits on a number of database systems which includes Microsoft SQL Server, IBM DB2 and Sybase.
For the purpose of this discussion, the emphasis is on Microsoft SQL Server.
It is worth mentioning that SAP Business One has a traditional backup utility called the SBO Backup Service.

Microsoft SQL Server also has its own backup tool resident in the enterprise manager.

The crux of the matter therefore is the basic difference between using the SAP Business One backup tool and the Microsoft SQL Server Enterprise manager backup tool.
A distinctive capability makes the SAP Business One Backup service a preferred backup tool over the Microsoft SQL Server backup Engine.

The SAP Business One backup tool backs up the database and the directories defined in General Settings while Microsoft SQL Server backup tool only backs up the database as shown below

SAP Business One Backup Contents

Microsoft SQL Server Backup Content

Conclusively, it is important to state that, to restore either of the backup types, the Microsoft SQL Server Enterprise Manager is used and the content of the directories (SBO Backup) must be manually copied to the respective directories.

A Dozen Irreversible Actions in SAP Business One System Implementation

2006-05-06T09:13:00.000-01:00

Although, SAP Business One is a simple yet powerful solution, a number of settings once configured cannot be altered, especially after transaction have been posted. This inflexibility can however make it a complex solution. Hence, it is expedient that consultants and clients alike must have clear cut business requirements before initializing the system. In this regard, I have put together a number of settings that cannot be reversed once defined. Most of these fields grays out if some transactions have been made, especially transactions that impacts on financial.

1. Local Currency & System Currency
Once a master data record (Business partner and Item) and/or transaction has been created in the system, the local & system currency definition cannot be edited.

2. Currency Code
The Currency code cannot be edited once it is created. However, it can be deleted if a transaction or master data record has not referenced it.

3. Account Segmentation
Once an account is created in the system, account segmentation cannot be reset. Also, if you use a template chart of account, the segment settings are used by the system and cannot be edited.

4. Segments
You cannot add a segment; change the length of a segment and type of a segment. Also, once G/L accounts are created, segments cannot be deleted from the system.

5. Segment values
Segment value cannot be deleted from the system once it is linked to an account definition. The only flexibility is that you can rename segment values, howbeit it does not affect existing accounts.

6. Accounts Code Generator
The Account code Generator automatically generates valid combinations of different segment values. These combinations cannot be deleted once they are used in a journal entry.

7. Purchase Accounting
If you choose to use purchase account posting system, it cannot be turned off once transactions have been posted into the system.

8. Inventory valuation
If you decide to use continuous stock system, the inventory valuation by field is check marked. Once posting have been made into the system, it is not possible to uncheck or undo this definition.

9. Handle Price System by warehouse
The handle price system by warehouse box is checked when different costs are defined for individual item and warehouse. This field (box) cannot be unchecked once stock postings are made in system.

10. Allow Stock Release without a Cost Price
The implication of choosing this option is that stock will be released without a cost price. If this option is not activated initially, it cannot be activated after transactions have been created.

11. Display Credit Balance with Negative Sign
The implication of activating this option is that credit balance is displayed with minus in front. This definition cannot be changed once posting transactions have been made.

12. Allow changes to existing Order
Activating this option allows modification to be made to sales orders that have already been created. You cannot change this setting after a sales order has been created.

10 FAQs: Procurement Process in SAP Business One

2006-04-04T08:55:00.000-01:00

Q1. Can I create purchase requisition in SAP Business One?
A1. No. SAP Business One does not support purchase requisition.

Q2. What are the implications of creating a Goods Receipt (that is based on a Purchase Order)?A2. * As a result of the accounting effect of the Goods Receipt PO, both the purchase order and the Goods Receipt PO cannot be amended.* The Inventory status is updated.* When using the draw document wizard, items that are already copied in full or partial are displayed in light gray in the purchase order.

Q3. What are the implications of creating an A/P Invoice?
A3. * The A/P Invoice cannot be changed.* If the A/P Invoice is based on a Goods Receipt PO, then only the values gets updated; else stock quantity is also updated.* When using the draw document wizard, items that are already copied in full or partial are displayed in light gray in the base document.

Q4. Can I reverse a transaction that has already affected my stock quantity and value?
A4. Yes. A/P Credit Memo allows you to reverse transactions that you already created an invoice for and the Goods Return functionality allows you to reverse transactions that have only affected stock quantity.

Q5. Does SAP Business One allow for partial and over deliveries?
A5. Yes. When you create Goods Receipt PO from a purchase order document, you can choose to increase or decrease the quantity. The later is called Over Deliveries while the former is called Partial Deliveries.

Q6. Which functionality in SAP Business One allows you to create a pro forma invoice?
A6. The A/P Reserve Invoice.

Q7. What is Split Purchase Order?
A7. Split Purchase order is a functionality that allows you to split a purchase order into child purchase order especially when dealing with more than one warehouse.

Q8. What is Landed Costs?
A8. The Landed Costs functionality in SAP Business One allows you to calculate the actual cost price of an item based on added costs incurred such as custom duties, insurance, tax, etc. The base document for the landed cost process is the Goods Receipt PO.

Q9. What is the use of the allocation cost account as it relates to the journal entries created when goods are procured?
A9. The Allocation Cost Account is used to enforce control by checking if the goods receipts PO and the A/P Invoice are the same.

Q10. What is the accounting implication of procuring non-inventory item on the Goods Receipt PO?
A10. There is no implication. For non-inventory items, SAP Business One does not create postings for the Goods Receipt PO even if you explicitly create one.

MRP: Definitions of Technical Terms

2006-03-17T17:05:00.000-01:00

Material Requirement Planning (MRP) is one of the rich functionalities of SAP Business One. It allows you to plan materials required to meet future demands. Suffice to say that, it generates recommendations for purchase orders for purchased items and production orders for produced items.

The following are some of the definitions of technical terms related to MRP :-

1. Lead time: This is the time it takes to calculate how long it takes to produce or purchase an item.

2. Order Multiple: This defines the size of the lots for the MRP.

3. Parent Production Order: This is an expected receipt from a production order.

4. Parent Dependent Requirement: This is a requirement which has been generated through the bill of materials of a product.

5. Forecasts: This is used to plan purchase and production in advance before real sales orders are received.

6. Dead Periods: This is the period in the MRP report where if a requirement exists, timely procurement is not possible because of long lead time. It is depicted by dark gray cells.

7. Planning Horizon: This is the time defined for the MRP Run

8. Procurement Method: This is used to define an item as a produced item or purchased item. - (Make or Buy)

9. Order Recomendation Report: The Order Recommendation Report displays the list of all MRP recommendations according to the defined selection criteria.

10.Pegging Information: This shows the source of receipts and gross requirements for an item during a defined period.

The four Cardinal Ws of Change Management

2006-01-20T14:11:00.000-01:00

There is more to just configuring a system to suit the business processes of a company. End users attitude go a long way to determine if the system rollout will be a success. Many system implementation fail because of users resistance to change. This resistance is usually out of the “fear of the unknown”. Users tend to corroborate the dictum that says “the devil you know is better than the angel you don’t know”. Change management is a lot much easier when computer phobia as a phenomenon does not exist in a company i.e. users presently use a computer system for their business operations.

Consider a worse case scenario when people that handle core functional operations of a business do not make use of a system. Introducing an ERP system and getting them to use it can be a daunting task. Resistance can vary in degree depending on the extent of collaboration amongst the work force. The greater the number of opposing users, the more difficult will change management be. Irrespective of this degree, I intend to present a concise analysis of what I call the four Ws of Change Management namely:-

* Why the Change?
* What will change?
* When is the change?
* Who will change?

To guarantee successful implementation of a system, addressing the above mentioned fundamental questions is pertinent.

Why the change?
The aim of any organization is to make profit. To be profitable, organizations must streamline and optimize their business processes. The need for change to meet this challenge is thus inevitable. Change is further necessitated by the fact that organizations are continually looking for ways to run their business processes better.

What will change?
Ideally, everything will change. As a matter of fact, the phenomenon of business process re-engineering cannot be wholly separated from change management as a concept. The way business processes are carried out will change. Not only that, employee personal attitude to work will change. In some complex system transition, the corporate culture of an organization does change.

When is the change?
Change can be “total” or “in phase”. Thus, when the change will take place is ambiguous. However, the latter is more system transition specific. Employees attitude or if you like psychology must have been tuned (social and technical training) to the reality of an upcoming change. When the change will occur is also subject to the geographical and financial capacity of an organization. Suffice to say that, “total” change might not mean so much to organizations that don’t have disparate locations and more importantly, are financially buoyant to accommodate the total cost of such change.

Who will change?
Everybody! The truth of the matter is that, most changes are not one sided. This fact is more credible when the system bringing the change is an ERP system that integrates all the functional areas of an organization. In which case, the productivity of an individual is indirectly or indirectly linked to another individual. Thus, to optimize the change, everybody must change.

Why re-invent the wheel: Saving Documents as Draft

2006-01-18T17:05:00.000-01:00

Documents can be saved as drafts in SAP Business One. This flexibility allows you to post the document at a later time or date. For example, if you need to wait for your boss to give his conscent before you post a document into the system, you can save the document as a draft and then call it up later and consequently post it. Since documents that are saved as drafts are not deleted when they are eventually posted, they can be used as templates for subsequent postings. Furthermore, if you issue the same type of check regularly, you can create the check as draft using the check for payment functionality. The saved check - draft can then be used as template and transformed into a check for payment document when you need to post the transaction. Hence, you don’t have to “re-invent the wheel”.

Documents that can be saved as drafts
1. AR documents (Sales)
2. AP documents (Purchasing)
3. Stock transfer
4. Checks for payment

Methodology
Creating a draft document is easy. The document to be created as draft must first be displayed before it can be created as draft. However, documents that have been added cannot be saved as draft. For a document that have been added, the save as draft sub menu of the File menu is grayed out (inactive) as shown in the document below.

Same thing happens when no document is displayed. After the document is displayed, access this path: File Menu > Save as Draft to save documents as draft.
AR Document
AP Document
Stock Transfer
Check for Payment

It is important to note the following:

1. The document numbering does not increase (i.e. the next document number remains the current document number of the saved document)
2. Document posting controls such as alerts and blocks for deviation from budget and minimum stock level are not activated.
3. System verification is not performed. For example, when a document’s posting date deviates from permissible date range.
4. Adding the draft document does not remove the draft from the system.

Displaying the list of saved documents - - Sales AR, Purchasing AP and Stock Transfer
SAP Business One allows you to display the list of saved marketing documents.
A generic selection window is displayed for marketing documents when the following path is accessed.
Sales-AR > Documents Drafts
Purchasing > Documents Drafts

User: Click the drop-down button in order to pick the creator of the document.
Open Only: Check this box to display drafts that have the status open.
Unflag this box to display drafts with open and closed statues.
*A draft document is open if it has not been added while it is closed if it has been added into the system.
AR documents/AP Documents/Stock documents: Check this box in order to select the sales/purchasing/stock transfer documents drafts to be displayed. If the box is not checked, no sales/purchasing/stock transfer documents are displayed.
Ok/Cancel: Click the Ok button to display the list and properties of draft documents based on the selection criteria defined. Choose the Cancel button to close the screen.

Key: Every draft has a unique number.
Document No.: This is the number that the document would have retained if it was added. This number is not unique. Suffice to say that more than one draft can have the same document number. See the draft documents with no. 7 in the marketing document drafts screen.
BP Code/BP Name: These details are pulled from the business partner master data.
Creation Date/Creation Time: These fields contains the date and time the draft was created.
Document: This field contains the type of the draft document – sales order, AP invoice or stock transfers etc.
Posting Date: The day the draft was posted is displayed in this field.
Total: The document total is displayed in this field.

Double click a line item to display and manage individual draft document.

Displaying the list of saved documents -- Checks for Payment
As for check drafts, no selection window is displayed. The list of check draft is displayed when the path below is accessed.
Banking > Outgoing Payments > Checks for Payment Drafts
Date: The creation date
To order of: This field contains the business partner number or G/L account for the payment.
Total: The check total is displayed here
Bank/Branch/Account: The bank details are displayed in these fields.

Double click a line item to display and manage individual draft document.
Managing saved documents-- Sales AR, Purchasing AP and Stock Transfer
Delete: To delete a draft, highlight the appropriate row, right click and choose delete, then update.
Close: To close a document, highlight the appropriate row, right click and choose close, then update.
Restore: To restore a document (change the status from closed to open), highlight the relevant row, right click and choose restore, then update.

Managing saved documents— Checks for Payment
Remove: To remove a document, highlight the appropriate row, right click and choose remove, then update.
Printing draft documents
When a draft document is printed, the word "Draft" is inscribed diagonally on the document.

The Physiology of SAP Business One

2006-01-06T21:13:00.000-01:00

When I was putting this write-up together, a colleague of mine saw the topic and screamed: “when did Kenny (as I’m fondly called) become a medical doctor”. Don’t think in like manner. I’m not prepared to take you through the world of medicine. As a matter of fact, throughout my life as an undergraduate of computer science at the University of Ilorin, Nigeria; I didn’t take any medical/paramedical course, either as core or optional. However, I’m familiar with a number of medical buzzwords. I’d expect you to ask me if SAP Business one has a physiology. Yes of course, it has! That does not mean Henning Kaggermann assembled physiologists to put SAP Business One together.

I prudently chose this topic in order to critically explore and analyze an introductory article which will form the bedrock of subsequent publications and discussions on this weblog. SAP Business One is an ERP system specifically designed to meet the needs of small and medium size businesses (SMBs). The aim of this article is to identify and explain the basic functions (physiology) of SAP Business One.

The functional areas of SAP Business one includes Financial, Sales Opportunities, Sales, Purchasing, Business Partners, Banking, Inventory, Production, Material Requirement Planning, Service and Human Resources.

Financial: The financial module helps you to handle both cost and financial accounting. It is shipped with a number of country specific chart of accounts and it also allows you to define your own chart of accounts. The journal entry and journal voucher functionalities are used for manually entering and saving (temporarily) journal transactions respectively. Templates can be created for recurring postings using the posting template feature. Also, recurring posting allows you to configure journal transactions that recur on known dates. With the financial module, you can reverse journal transactions on defined dates.

The exchange rate differences functionality is used to automatically recalculate the account balance for customers, vendors and accounts when accounts are maintained in both foreign and local currencies based on set criteria. The conversion differences feature adjusts the differences between the account and the business partner balances in the system currency and the business partner currency via journal transaction recommendations.

Budgets can be set up in the financial module in order to exercise control on a company’s spending. The cost accounting functionality is used to critically analyze the revenue and expenses of a company’s business areas/departments via the definition of profit centers and distribution rules. Financial reports houses financial, accounting and budget reports that can be compared based on set criteria.

Sales Opportunities: SAP Business One supports a CRM functionality called Sales Opportunities. Sales Opportunities is used to track and analyze the whole activities involved in getting a customer. These activities include meetings, phone calls and so on. The sales opportunity feature thus allows you to add, modify and close sales opportunities. The sales opportunities report contains report on won, lost and open opportunities. Other reports contained therein are stage and forecast reports.

Sales: The sales module supports the standard “quote-to-invoice” process. Sales quotation allows you to create sales quotation, although it is not a legal document. The sales order feature is used for creating orders which can be based on quotations already created. Delivery notes are entered using Delivery. Goods Return is used to reverse delivery transaction that has not been invoiced. The A/R Credit memo on the other hand is used to correct delivery posting that has been invoiced.

The A/R Down Payment Request and A/R Down Payment Invoice are used for creating and invoicing down payment for customers respectively. A/R invoice is used for invoicing. The sales module provides support for “one-time customers” via the A/R Invoice + Payment functionality which prompts the full payment of invoice amount on creation. Pro forma invoices can also be created using A/R Reserve Invoice.

A user can generate rows from several base documents to one target document based on predefined criteria using the Automatic Summary Wizard. Sales documents can be created as drafts using the Document Draft functionality. This feature allows you to save sales documents for future posting in the system. The Document Printing program is used to cumulatively print sales documents based on defined selection criteria. The system is shipped with a functionality called Dunning Wizard. The Dunning Wizard helps you to manage customers with unpaid open invoices via letter sending and reminders. Reports provided by the Sales Report feature are sales analysis and open item reports.

Purchasing: The Purchase module caters for the entire “procure-to-invoice” process. The Purchase Order, Goods Receipt PO and Goods Returns are used for posting order, receipt and return respectively. The A/P Down Payment Request is used for creating down payment request while A/P Down Payment Invoice is used for invoicing down payment. A/P invoice is used for invoicing. In order to reverse a Goods Receipt PO document that has been invoiced, the system uses the A/P Credit Memo functionality.

Organizations that import goods can use the Landed Costs functionality to calculate the total cost price of imported goods by summing up all the costs (custom, transportation, taxes and insurance) incurred in the process of goods importation. Purchase documents can be created as drafts using the Document Draft functionality. This feature allows you to save documents for future posting in the system. The Document Printing program is used to cumulatively print purchase documents based on defined selection criteria. Reports provided by the Purchase Report feature are purchase analysis and open item reports.

Business Partners: The Business Partner module manages information about business partners – customers, vendors and leads. The Business Partner Master Data contains information that are used for all marketing documents and activities related to customers, vendors and leads. Sales activities and interactions with business partner are documented using the Activity functionality. Reports can be generated for dunning letters and activities performed.

Banking: The Banking module handles all financial transactions – incoming payment, outgoing payment and account reconciliation. The incoming payment functionality is used to create receipt for vendors, customers and G/L accounts. The outgoing payment on the other hand is used for issuing and printing checks for employees, vendors and creditors. The Deposit transaction allows you to post incoming deposits received by your bank. The Banking module contains a functionality called the Payment Wizard which is a payment engine defined to automate payment processes based on user defined criteria. Account reconciliation which is the harmonization of debit and credit postings with bank postings is important for a company. Support is provided for this requirement in the banking module using the Bank Statements and Reconciliations functionality. The Documents Printing feature of the banking module is used for printing documents generated in the module.

Inventory: Information about an item is stored in the item master data. This information includes item name, item group, properties and manufacturer. This information is used for transactions that affect items. The Item Management functionality of the inventory module allows you to manage items using serial numbers, batches and catalogue numbers. Inventory Transactions program is used to manage goods receipt and goods issue postings that are not based on orders. The functionality also supports stock counting and material revaluation. Price lists and special prices can be defined for different items using the Price Lists program. The Pick and Pack Manager allows users to see where an individual order is located in the system. Reports that can be generated in the Inventory module include price lists, inventory transaction and management report.

Production: The Production module is a robust system which is capable of generating multi-level bill of material for production orders. Different types (sales, assembly, production and template) of bill of materials can be created using the Define Bill of Materials program. The Receipt from production is used to report the completion of a product while Issue for Production transaction issues items to production orders. Reports can be created for bill of materials.

Materials Requirement Planning (MRP): MRP is a system that allows you to plan material requirement. It uses data such as forecasts, inventory, purchase order and bill of material as input and generates production orders and purchase orders as output. Define Forecast can be used to create forecast for production and purchase orders before the receipt of sales orders. The MRP Wizard functionality is used to automate the entire process – scenario creation to gross requirement analysis. The Order Recommendation Report is based on the MRP recommendation and allows you to post production and purchase orders automatically.

Service: The Service module enhances better customer relationship via speedy resolution of client complaints. The Service Call feature allows you to manage service calls for customer complaints. The Customer Equipment Card allows you to manage information about items that are eligible to receive service. The Service Contract functionality allows you to manage three types of service contracts namely serial number, customer and item group. The Solution Knowledge Base is a repository of solutions that can be referred to, in order to facilitate speedy problem resolution. Reports that are available in the Service Reports program include service call, service contract and customer equipment reports.

Human Resources: The Employee Master Data feature is used to create and manage employee data. This information includes employee address, education details, financial details and personal details. Three main reports are supported. They are employee list, employee absence and phone book.

Note: The physiology described above is for the 2004 version. I intend to provide a more detailed analysis of SAP Business One 2005 in subsequent publications. However, it is important to note that, additional functionalities of the 2005 version includes Microsoft Outlook integration, XL Reporter, Fixed Asset and ehancement to the print laoyout designer.

A Weblog is Born … Out of Lessons Learnt

2006-01-05T17:42:00.000-01:00

Blogging in my opinion is a career on its own. It has become a field of choice for a number of individuals especially software consultants. Maintaining a weblog is no doubt a tasking pursuit. This is because; it takes you from your core job functions to a “non-profit world of information sharing and dissemination”.

The addition of Kehinde Eseyin’s SAP Business One weblog to the list of bloggers is no doubt the birth of an unparalleled SAP Business One knowledge base. The objective of the weblog is to increase the knowledge base of the SAP Business One Users Community (SBOUC) via publications, users’ interaction and online collaboration. I intend to achieve this objective by providing concise information on matters bothering on the total subject areas that makes a complete SAP Business One Consultant with particular reference to solution consultants.

My decision to open a weblog is out of necessity, my passion for information sharing and above all, lessons learnt. In my IT career, I have worked with, trained and bagged certifications in some leading software products including SAP, Oracle and Microsoft. However, I have come to the knowledge of one simple truth – “to stay ahead, you need to keep learning”. To excel in this competitive IT world, one needs to change with technology. Suffice to say that, continuous pursuit of knowledge via information sharing is key to success.

Moreover, I have a number of web and newspaper publications to my credit. Of a truth, writing is not an easy task. As a matter of fact, it is quite challenging. However, I have learnt that the reward outweighs the challenges that come with it. It is rewarding because it sharpens your expertise the more. I recall with ecstasy, the first time I published an article on Mark Rittman’s Weblog, I got more than enough feedbacks and those feedbacks actually got me on my toes. Coincidentally, I was faced with one of the technical problems I helped solved in the course of my duty the following week. Resolution was speedy, courtesy of a prior analysis, understanding and resolution of the same problem.

By and large, learning, using and writing about technologies, especially SAP Business One is fun to me. However, it is more fun to me when I can share my knowledge and expertise proactively. Suffice to say that, tailoring users to the “how to do things” than reactively when I have to proffer solutions makes me fulfilled.

Kehinde Eseyin’s SAP Business One Weblog promises to be a weblog that will meet the needs of the SAP Business One Users Community. Your comments and feedbacks will be highly appreciated.

Enjoy!

Kehinde Eseyin