WORKSHOP PARTICIPANTS

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1 MAGIC PROJECT WORKSHOP AGENDA FIN_01 OVERVIEW OF SAP FI MASTER DATA PROJECT IDENTIFICATION Project Name MAGIC CPI/Project Number Project Type (CBI, Implementation, CSS, Upgrade, Internal, other) Implementation Customer Name Customer Number Planned Start/Finish State of Mississippi SAP Customer Partner Project Sponsor Program Manager SAP Project Director Customer Project Director Partner Project Manager Bill Bevil Becky Thompson WORKSHOP DESCRIPTION Workshop Name Overview of SAP FI Master Data Workshop Purpose / Focus Understand the purpose of the different SAP Financials modules (including Finance General Ledger, Funds Management, Controlling/Project Systems and Grants Management modules) used in the public sector and their tight integration. The session will also review and agree on high-level Organizational data fields which are to be used, and introduce some of the master data that facilitates the integration across modules and the way it is organized in hierarchies within the module. The lower level master data will be covered in detail during the following Blueprint Workshops FIN_02, FIN_03, FIN_04 and FIN_05. Date Time Location 10/12/2011 8:30 4: Conference Room

2 WORKSHOP PARTICIPANTS Facilitators Mike Palvisak, John Cunningham, Simon Cherny, Janice Begin Scribe Tessa Turner Invitees Diane Langham Valerie Hill Sheila Kearney Donna McFarland Melissa Womack Robbie Coleman Frances Davis Nancy Jennings Sue Jones Bob Lowery Kay Martin Michael Martin Jessica Morris Dorothy Preston Carol Wilson Jim Hurst Margaret Jordan David Johnson Richard Ferrell Helen Barnes Debra Dixon Allison Brown Marcia Duncan (Dye Consulting) Teresa Hayes Joshua Tillman Janice Begin John Cunningham Jon Sanford Leisa Wood Wayne Liu Jack Ladhur Rene Montes Dan Harringer Bob Fritz Jeanna Stafford Shauna White Deb Biggers Priscilla Ware Sandra Lohrisch Leslie Smith Milo Crabtree Debbie Saxon Cheryl Lunsford Thomas Bounds Bill Dykes Ben Cohen 2

3 WORKSHOP AGENDA Time (min) Agenda Item Presenter/Facilitator OVERVIEW OF SAP FINANCIALS MODULES 20 Explain the purpose of each module and it s basis of accounting Financial Accounting (General Ledger, Accounts Payable, Accounts Receivable, Bank Accounting, Fixed Asset Accounting) Controlling Cost Accounting and Project Accounting Funds Management budget execution Grants Management grant accounting 10 The SAP financial document principle and related FI Document Types Mike, Janice, John Mike 5 Special ledger for Cash tracking Simon 10 SAP best practice for master data Each data element serves a separate and unique purpose Fund, GL account HIGH LEVEL ORGANIZATIONAL STRUCTURES 30 Proposed high-level organizational structures to be agreed on during the workshop Company Code and EINs FM Area CO Area Business Areas 10 BREAK Mike Simon INTRODUCTION TO LOWER LEVEL MASTER DATA 15 Introduction to integration and derivations All 15 Financials (General Ledger) Mike 5 Controlling and Projects Janice 15 Funds Management John 15 Grants Management John 3

4 ACTION ITEMS From previous workshops Action Item Assigned to Due Date None PRELIMINARY PROCESS INFORMATION None WORKSHOP DOCUMENTATION Item Description None ATTACHMENTS Item Description None 4

5 Workshop Presentation FIN_01 SAP Master Data Overview October 12, 2011 Department of Finance and Administration Office of the Mississippi Management and Reporting System 10/14/2011 1

6 1. Workshop Ground Rules 2. Workshop Guiding Principles 3. Workshop Objectives 4. Workshop Agenda in Detail 5. Workshop Roles 6. Workshop Content 7. Workshop Wrap-up AGENDA 10/14/2011 2

7 Workshop Ground Rules All participants should be familiar with the requirements and the topics to be covered; The workshop scribe is responsible for documenting the parking lot issues and follow up questions; The workshop facilitators are responsible for keeping the discussion centered on the topic being discussed. If an issue is determined that cannot be resolved during the workshop, the facilitator will note the issue for future resolution and enter it into the workshop output document; and Parking of discussion item if the required knowledge is not in the room. 10/14/2011 3

8 Workshop Guiding Principles Workshop Demonstrate how requirements are met using Standard SAP functionality Utilize standard SAP functionality (80/20 rule) Participant Be attentive and open minded Explore questions and answers Encourage input from other participants Avoid the what won t work mindset Essential to dos: Review Business Process Model Update/Create process Flow Diagrams WS Output Documents Identify RICEFW Objects Document process changes/implications Solution Manager: Create Business Blueprint documents Identify Issues and Risks Refrain from absolutes and mandates Focus on current issue being discussed Avoid war stories Manage cell phone, pagers & interruptions Keep the conversations to one at a time 10/14/2011 4

9 Workshop Objectives Understand the purpose of different SAP financial modules and how they integrate Review and agree on high level Organizational data elements Introduce master data elements for each module. (These elements will be discussed in detail in later workshops: Fin_03, FIN_04, FIN_5, and FIN_06). 10/14/2011 5

10 Workshop Agenda Part 1 Team Date Topics Deliverables Financials FI-GM October 12, Overview of SAP Financial Modules 1.1 Financial Accounting 1.2 Controlling 1.3 Funds Management 1.4 Grants Management 1.5 Document Principle 1.6 Separate Ledger for Cash Basis Accounting 1.7 SAP Best Practice for Master Data Section 1: None. (Preparation for decisions in section 2.) 10/14/2011 6

11 Workshop Agenda Part 2 Team Date Topics Financials FI-GM October 12, Proposed High Level Organizational Structures to be Agreed Upon During Workshop 2.1 Company Code 2.2 Business Area 2.3 Controlling Area 2.4 Funds Management Area Deliverables Section 2: Decisions for Financial High Level Organizational Structures 10/14/2011 7

12 Workshop Agenda Part 3 Team Date Topics Financials FI-GM October 12, Introduction to Lower Level Master Data 3.1 Introduction to Integration and Derivations 3.2 Financial Accounting 3.3 Controlling 3.4 Funds Management 3.5 Grants Management 4. Wrap-up (parking lot, decisions, action items) Deliverables Section 3: None. Detailed discussions and decisions in future workshops. 10/14/2011 8

13 Blueprint Workshop - Roles SAP Facilitator Customer Facilitator Janice Begin, Simon Cherny, John Cunningham, Mike Palvisak Teresa Hayes Scribe OCM Tessa Turner Joshua Tillman A successful workshop is the result of interaction and participation! 10/14/2011 9

14 1. Overview of SAP Financial Modules 10/14/

15 1.1 Financial Accounting Purpose Financial Accounting Org Unit(s) Company Code Business Area Master Data GL Account (Fund) (Functional Area) (Grant) 10/14/

16 1.2 Controlling Purpose Cost Controlling (Reallocations) Org Unit(s) Controlling Area Master Data Cost Element (Fund) Cost Center Internal Order / WBS Element (Functional Area) (Grant) 10/14/

17 1.3 Funds Management 10/14/

18 1.3 Funds Management Purpose Budgetary Control Org Unit(s) FM Area Master Data Commitment Item Fund Fund Center Funded Program Functional Area (Grant) 10/14/

19 1.4 Grants Management Purpose Grant Budgeting and Accounting Org Unit(s) (Company Code) Master Data Sponsored Class (Fund) Sponsored Program Grant 10/14/

20 1.5 Document Principle 10/14/

21 1.5 Document Principle FI CO FM GM 10/14/

22 1.6 Separate Ledger for Cash Basis Accounting Cash Basis Accounting (CBA) CBA uses a Cash ledger updated in parallel to GL Expenditures are posted when paid (invoice is cleared) Expenses, Inventory Restocking, Fixed Assets (direct) Revenues are posted when deposited (invoice is cleared) R/E is offset to a Cash account e.g. Warrants Out Clearing All lines to balance sheet cash accounts are posted Cash totals by Fund, Business Area (BA represents the Agency), and Grant if required Cash Control check cash balance per Fund + BA 10/14/

23 1.7 SAP Best Practice for Master Data Principle: Each data element should represent a single type or dimension of data Example: Do not combine organizational data and programmatic data into the same field, such as org. unit Instead, use separate data elements to represent organization and program. (Both fields might still be included a posting transaction.) 10/14/

24 2. Proposed High Level Org. Structures 10/14/

25 2.1 Company Code Company Code = Highest organizational Structure for financial accounting and control purposes. Highest organizational level for legal (external) reporting All structures within a Company Code have same: Chart of Accounts Fiscal Year Employer ID Number 10/14/

26 2.1 Company Code (continued) 10/14/

27 2.2 Business Area Business Area = Used to represent agencies, lines of business, or locations for which full financial statements are required. Commonly used for major organizational divisions Proposed for representing SoMS Agencies Opportunity to move to consistent SoMS-wide Agency numbering 10/14/

28 2.3 Controlling Area Controlling Area = Highest organizational structure for cost controlling. Defines organizational span for cost reallocations. Propose 1 Controlling Area for SoMS 10/14/

29 2.4 Funds Managment Area FM Area = Highest organizational structure for budgeting Defines organizational span for budgeting control All US public sector customers have 1 FM Area Propose 1 FM Area for SoMS 10/14/

30 Workshop Content BREAK FOR 10 MINUTES 10/14/

31 3. Introduction to Lower Level Master Data 10/14/

32 3.1 Introduction to Integration and Derivation Integration Example: 10/14/

33 3.1 Intro. to Integration and Derivation (cont.) Derivation Example: 10/14/

34 3.1 Financial Accounting GL Account Asset, liability, fund balance, expense, or revenue category in FI. Either mapped from another module, e.g. payroll or purchasing categories, or entered directly. Fund Represents source for funding. Derived where possible. FM Budget Period used with fund Functional Area - Represents internal missions or functions for GASB 34/35. Usually derived. Grant - Represents grantor s award. (Discuss in GM) 10/14/

35 3.2 Controlling Cost Element - Expense / revenue category in CO. Usually derived from GL account. Fund - Derived from CC/IO/WBS where possible. Cost Center Lower level organization structure. Numbered hierarchically. Internal Order / WBS Element - Non-organizational cost bucket. Functional Area - Represents internal mission or functions. Usually derived from CC/IO/WBS. Grant - Represents grantor s award. (Discuss in GM) 10/14/

36 3.2.1 Cost Center Assignments 10/14/

37 3.2.2 Project/WBS Assignments 10/14/

38 3.3 Funds Management Master Data Commitment Item Expense / revenue category in FM. Usually derived from GL account. Fund Represents source for funding. Fund Center Organization structure. Usually derived from cost center, and numbered hierarchically. Funded Program Non-organizational cost bucket. Usually derived from internal order or WBS. Functional Area - Represents internal missions or functions for GASB 34/35. Usually derived. Grant - Represents grantor s award. 10/14/

39 3.4 Grants Management Master Data Sponsored Class Expense and revenue categories required by grantor(s) Derived from GL account (usually rolled-up) Fund = SoMS fund. Funds per grant: 1 grantor, multiple SoMS Sponsored Program Program dimension from sponsor. Or if not, use for internal SoMS sub-division of grant. Always derived. 10/14/

40 3.4 Grants Management Master Data (cont.) Grant Represents grantor s award to grantee. Different grant types for grantor award to SoMS ( grant ) or SoMS award to sub-grantee ( subgrant ) All accounting combinations (spon class / fund/ spon program) of sub-grant mapped to grant(s) Often derived from internal orders / WBS (n:1 grant) Many attribute fields for status, posting control, indirect cost, billing, and reporting (see FIN_05) 10/14/

41 4.0 Wrap-up Let s verify that we are on the same page Clarify any Strange Jargon Validate Parking Lot Items Record Key Decisions 10/14/

42 Plus/Delta + s What worked well today? s What can we improve for future meetings and project activities? 10/14/

43 Questions 10/14/

44 Thank you! 10/14/

45 MAGIC Project WORKSHOP MINUTES/ OUTPUT DOCUMENT PROJECT IDENTIFICATION Project Name MAGIC CPI/Project Number Project Type (CBI, Implementation, CSS, Upgrade, Internal, other) Implementation Customer Name Customer Number Planned Start/Finish State of Mississippi SAP Customer Partner Project Sponsor Program Manager SAP Project Director Customer Project Director Partner Project Manager Bill Bevil Becky Thompson GENERAL INFORMATION Workshop Title Workshop Facilitators Process Owner Scribe FIN_01, SAP Master Data Overview Janice Begin, Simon Cherny, John Cunningham, Mike Palvisak Diane Langham Tessa Turner ATTENDEES Name (including Role/Organization) Phone Michael Martin Nancy Jennings Simon Cherny Tamara Hillary Frances Davis Jessica Morris Kay Martin Susan Dodder Bob Lowery JohnCunningham Tressa Hayes Sarah Prewitt Cindy Ogletree Greg Ramsey

46 ATTENDEES Name (including Role/Organization) Phone Loretta Sebren Melissa Womack Diane Langham Betty L. Smith Donna McFarland Dianne Sturgis Darryl Bowen Jennifer Little Robert Johnson Stephen Smith Rene Montes Nekeida McSwain Shauna White Princess Bender Joshua Tillman Gerry Joyner Carlos Galloway Lainette Johnson Sandra Peaches Kathy Piazza Lisa Dunn Janice Begin Sue Jones Valerie Hill Mike Palvisah Tessa Turner Jim Hurst Jeff Sanders 2

47 SUMMARY OF THE MEETING REFERENCE 1. Overview of SAP Accounting Modules 1.1 Financial Accounting (FI) is for external, legal accounting. Company code is the legal entity, smallest unit for a complete self-contained set of accounts. Example: The State of Mississippi Business Area is used to sub-divide the company code and still produce full financial statements. Typical uses of business area are agencies or regions/locations. Detail in FI provided by GL accounts (similar to object codes) for balance sheet and operating statement. 1.2 Controlling (CO) internal accounting All the Lego blocks that snap together to form the big structure, like different kind of cost collectors Cost Center static/ long term organizational unit that represents some sort of location, either physical or an area of responsibility. Ex. Cost center that represents a location, could be a small homeland security office in the state, and all the people who work within it belong to that cost center. All the people in health group belong to XXXX cost center Work Breakdown Structure (WBS)- a complex hierarchal structure, you can charge labor and expenses to it, or any type of cost. It is a project. Internal Order- a mini project, a small chunk of work that we want to track separately that we want to monitor the expenses and time for (ex. Training program you want to see how much expense is being charged to it) Cost Element- GL accounts for expense and revenue are synonymous with Cost Elements; there is a difference in the finance area hence the additional name. Example: GL account Physician Services ; when we look in the cost center we would see the cost element of 61640, it flows automatically into the cost element (Top Level) Controlling Area holds together all of the cost elements 1.3 Funds Management is the main budgetary ledger in SAP- This is the Budget Control System (Top Level) FM Area Fund - source of funding Fund center- used for organizational dimension, i.e. what s a division, a hospital Functional area used for activity or mission dimension, e.g. for GASB 34/35 functions. Funded program- cost or revenue collector that is not the organizational dimension 1.4 Grants Management Reflects your grantors rules; grantors view of everything- there is no grant area since every grant is different Sponsored class represents expenses and revenues by grantor s categories Sponsored program- represent what your sponsor thinks the program is Grant - captures all the terms and conditions and what you need to do to fulfill them 1.5 A business event with a financial implication creates a posting, which is tracked by a document number. Linked documents are posted automatically in each of the modules/ledgers described above. 1.6 Separate ledger for cash basis accounting. Main FI ledger is accrual based. Use a separate, parallel ledger to track cash flow. There will be the clearing of accruals when money comes in. 3

48 1.7 Each data element represent a separate dimension of data. Goal is to create these in SAP without combining them. Each of these data elements should be independent 2. High Level Organization 2.1 Company Code= highest organization structure for financial accounting and control purposes, e.g. State of Mississippi Chart of Accounts- your balance sheet and revenue objects (just the GL account itself) Why one company code? Eliminates redundancy 2.2 Business Area = used to represent agencies, lines of business, or locations for which full financial statements are required. Commonly used for major organization divisions, e.g. SoMS Agencies. 2.3 Controlling area= highest organization structure for cost controlling; defines organizational span for cost reallocations. Recommend one controlling area for MS is to have one controlling area. 2.4 Funds Management Area= Highest organizational structure for budgeting; span of control for budgeting. Bottom line- there is one of these- this is the entire organization. All US publis sector customers of SAP have 1 funds management area. SAP team recommends 1 funds management area for SoMS. 3. Introduction to Lower Level Master Data in each Module 3.1 Derivation: Will we have to enter in all these fields manually? No, SAP derives most of these automatically and populates codes based on a series of rules built into SAP. One of the requirements for Mississippi is to default as much as possible. 3.1 (note - duplicate numbering in slides) Financial accounting GL account- asset, liability, fund balance, expense, or revenue category in FI. Mapping will be a critical part in the implementation FM Budget Period- used with fund, comes into play during the lapse period of July and August 3.2 Controlling Project master data is typically maintained at the agency level. The required fields can be agency specific. 3.3 Funds Management Master Data Commitment Item - expense/ revenue category, typically derived 1:1 from expense and revenue GL accounts Fund- Represents funding source. Funds can be numbered to facilitate roll-up for reporting and budget control. Can also have attributes for consolidated reporting, e.g. CAFR. Raised question about difference between fund as used in SAP and current use of fund by SoMS. (Will be discussed in detail in workshop FIN_04.) Fund center- organizational structure, usually derived from cost center, and number hierarchically. 3.4 Grants Management Master Data Sponsored class- expense and revenue categories required by grantor(s). Derived from GL accounts. Fund same funding dimension used by other modules Sponsored Program- Occasionally a grantor wants you to report on a program that means something to them, this is the oddball dimension and we can break it up using this tool. It is very flexible, and not intuitive 4

49 Grant- represents the grantor s award to grantee. Includes financial transactions for grant (budget, enccumbrances, revenues, expenses, balance sheet) Further Discussion to Decide on High Level Organization Company Code SAP requires at least 1 company code Even the most complicated public sector businesses like UNICEF, which are managed in over 100 currencies, use one company code. Other states using SAP (AR, LA, SC) have 1 company code Reasons might have separate company codes (these don t apply to SoMS): o Different Chart of Accounts o Different Fiscal Years o Different Currencies for Legal Reporting o Different Employer ID numbers. Diane Langham dicussed goal to move to single EIN for o SoMS. Completely different organizations sharing 1 SAP system, i.e. to share costs, e.g. three counties sharing 1 software license / 1 system. SAP best practice for public sector customers is 1 company code, and that s what consultants recommend Controlling Area and FM Area Discussion similar to company code. 1 required by SAP. SAP best practice only 1 of each. Business area Can be used to sub-divide transactions within a company code, with full financials including balance sheet. Discussion of relationship between business area and funds. Both provide full financials, so can structure funds in various ways. Could support multiple agencies (as business areas) sharing common fund, or could have separte funds per business area, or both cases (e.g. government funds shared and proprietary funds per agency). Recommend SoMS agencies be represented as business areas in SAP DECISIONS ANSWERED 1. SoMS will have 1 company code, 1 controlling area, and 1 funds management area 2. Business areas will be used to represent SoMS agencies. REFERENCE DOCUMENTS FOR DETAILS REFER TO THE FOLLOWING KEY DECISION DOCUMENT ID ACTION/PARKING LOT ITEM OWNER DUE DATE FIN_01_1 Action: Explain how fund is defined in SAP. Fund in SAP seems different than current concept of fund at SoMS. (Will be discussed in workshop FIN_04.) Mike Palvisak, John Cunningham 10/20 5

50 FIN_01_2 FIN_01_3 Action: Department of Mental Health to provide business examples of performing cash check on expenditures at lower levels of accounting structure. Action: Provide any accounting dimensions that require full balance sheet (other than fund). Send to Diane and Teresa. Leslie Smith 10/17 All agency attendees 10/17 6