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Accelerating Your Close leveraging

SAPs Closing Cockpit


Balaji Krishnaswamy
PwC
SESSION CODE: FI 1071

LEARNING POINTS
Understand the current challenges with Close Process
and our approach and methodology to improve the close
process
Improve your understanding of how SAP Financial
Closing Cockpit (FCC) can help to gain complete visibility
into close process
Advance your knowledge of identifying and optimizing
processes and tools automation to improve future closes
Learn how the features of FCC enhance monitoring
controls around the close process

AGENDA

Introduction
Current Challenges
Close Acceleration Approach & Methodology
Leading Practices
Tool enablement using SAP Closing Cockpit
Key Learnings
Wrap Up

Todays environment
Companies face increased pressure to provide higher quality information faster
and more efficiently.

External Pressures

Higher expectations of transparency from banks, venture capital firms and other financing sources

Increased scrutiny from the investment community with larger penalties for restatements and/or material
weaknesses

Accelerated deadlines for certified results and greater complexities associated with multi-GAAP reporting

Internal Pressures

Greater need from the business to provide critical decision support with timely and accurate analysis

Increased responsibilities beyond traditional components of corporate reporting including planning, budgeting
and forecasting and business analytics

Expectation to deliver insight into how to interpret data to drive decision making and improved performance

Demand for automation and integration within financial systems for tax, management and operational
reporting

Cost Pressures

Executives looking to maintain profit margins demanding better value for the money from finance functions

Increasing pressure to do more with fewer resources without compromising accuracy and control

Significant overtime, higher turnover and increased resource replacement costs

Source : PwC Point of View- Close-to-Report (C2R)

Indicators and Common Challenges


There are a number of indicators that suggest there are opportunities to improve the close-to-report cycle.
Lack of Speed

It takes more than 5 days to close and generate consolidated results


Earnings release requires more than 30 days or lags your key competitors
Information is provided too late to support business and operational decisions
Perpetual fire fighting with limited focus on strategy and vision

Insufficient
Accuracy and
Control

Significant adjustments or corrections recorded after the books are closed


Difficulty balancing inter-company transactions
Material weaknesses or significant deficiencies
External financial reports differ from internal management reports

Dependence on
Manual Processes

Significant manual activities and reliance on off-line Excel spreadsheets


Disparate systems or multiple charts of accounts
Plans to implement a new consolidation and reporting tool
Poor coordination and communication

Ineffective
Decision Support

Too much time collecting data and not enough time on analysis and decision support
Limited standardization, complex reporting requirements and ad-hoc requests
Potential financial surprises are difficult to identify
Inconsistent data and limited performance measurement

Source : PwC Point of View- Close-to-Report (C2R)

Attributes of efficient close cycle


A smart, efficient close to report cycle creates a foundation for evaluating performance,
supporting business decisions and satisfying external reporting requirements.
Business benefits

Characteristics of a successful C2R cycle

Focus on discipline, control and accuracy as opposed to


speed

Gain earlier access to financial results and


spend more time analyzing information

Improve accountability and control

Simplify and standardize processes to eliminate unnecessary


complexity and inconsistencies

Reduce volatility in financial data and improve


confidence when certifying financial
statements

Streamline the close by appropriately sequencing work steps


and by eliminating bottlenecks, duplication of effort, and non
value added activities

Focus on process and effectively leverage technology

Align process with stakeholder needs to provide effective


decision support

Source : PwC Point of View- Close-to-Report (C2R)

Obtain more timely and accurate information to


support business and operational decisions
Automate consolidation activities and
minimize adjustments

Streamline the flow of information to support


disclosures, MD&A and other statutory and
regulatory reporting requirements

Improve credibility in the market and within the


organization

Respond to regulatory requirements and lower


overall compliance costs

Improve control and minimize the risk of


material weakness and/or restatement

SmartClose Methodology for SAP


Our proven approach focuses on maximizing the close process
across strategy, structure, people, process, and technology.
Project management & quality control
Strategy
Structure & people
Strategize
& mobilize

Analyze &
redesign

Test and
roll-out

Continuous
improvement

Process
Technology

Change management
The initial stage requires
a strategy and focus
dedication of a project
team to move forward.
Alignment of realistic
objectives needs to be
properly communicated
with stakeholders and the
project team.

A detailed assessment to
identify specific
bottlenecks in the closing
process highlight the pain
points and opportunities.
An evaluation of
proposed solutions
should be prioritized to
attain desired results.

Quick wins can be


implemented near-term.

Organization, process,
structural and information
technology changes
require testing and are
ultimately rolled-out
according to a plan
sequentially.

In the final stage. A


program to ensure
continuous improvement
procedures to ensure
that hard won gains are
not lost.

Change communication is
critical to the success of
the effort.

Close Acceleration - A holistic approachstiapproach


Achieving sustainable improvement in the close-to-report cycle requires a holistic
approach that considers factors across all business dimensions.
Dimension

Approach

Strategy
Is the companys financial strategy aligned
with the overall vision of the organization?

Review key drivers to monitor performance


Determine consistency with planning, reporting and analysis
Look for corporate leaders, not silver bullets
Consider opportunities throughout the close and reporting cycle
Identify known strategic gaps

Structure
Are the financial organization structures
meeting the needs of internal and external
stakeholders?

Evaluate alternative operating models


Review alignment of your structure to meet specific stakeholder needs
Determine effectiveness of collaboration throughout the organization

People

Are the resources and financial talents of the


organization high performing?

Evaluate roles and responsibilities in the organization


Review closing calendar, determine whether defined milestones support
accountability
Evaluate workload distribution and resource alignment
Determine effectiveness of communication throughout the organization
Measure performance and rewards

Process
Are financial processes streamlined,
simplified and standardized throughout the
cycle?

Determine effectiveness of sequenced activities and whether work is performed away


from the close
Evaluate appropriate use of estimates and materiality thresholds
Review issue resolution process and determine effectiveness of root cause analysis
Assess the quality and value of the monthly C2R cycle

Technology
Are the capabilities of systems and tools
properly leveraged?

Identify opportunities to further leverage technology


Evaluate employee technology proficiency for the current systems or applications
Determine whether intensive manual activities are automated
Evaluate the use of data to appropriately meet organization reporting needs
Leverage tools to track status real-time and promote accountability

PClose Question # 1i1Closeng


Question#1
What is the average number of days to close the
books?

Answer # 1 estion#1 Results

What is the average number of days to close the


books?

7.0 days
PwC Global Practices Benchmark

PClose Question # 2i1Closeng


Question#1
Since Sarbanes Oxley added rigor to the Financial
Reporting Process, has the number of days increased or
decreased?

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Answer # 2 estion#1 Results


Since Sarbanes Oxley added rigor to the Financial
Reporting Process, has the number of days increased
or decreased?
Our data suggests, on average, it takes longer to
complete the Financial Close Process

PwC Global Practices Benchmark

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PwC Global leading practices on Close to Report ices


close to report

Benchmark group: Number of days (close to report)


Average days

Min

Median

Max

Monthly

8.2

1.0

5.0

7.0

10.0

30.0

Quarterly

12.2

1.0

6.0

10.0

15.0

66.0

Yearly

28.9

1.0

10.0

16.0

33.0

270.0

Full cycle average is 8.2 days.


PwC Global Practices Benchmark

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Leading practices to achieve a 5-day close


Common SAP close practices
Common 5 day close

Common characteristics

Close activity

Day activity
complete

Intelligent use of accruals and estimates

Production/Process Order Closure

-1

Payroll

-1

Inventory

-1

Automation or elimination of manual entries

Material Close

Elimination of non-value-added activities

Accounts Payable

Fixed Assets/Depreciation

Cash

SG&A Accruals

Utilization of materiality thresholds

Revenue

2-3

Workload distribution away from period-end

Operational Costs

2-3

Accountability and enforced deadlines

Accounts Receivable

2-3

Intercompany

Legal Entity Ledger Close & Review

3-4

Consolidation Activities & Review

4-5

Clear and regular communication

Management Reporting

6-7

Continuous process improvement

Proactive issue resolution and error correction


Streamline transaction processes

Automation of reconciliations
Elimination of duplicate data entry

Publish the closing calendar and track status

Cross-trained finance personnel

Source : PwC Point of View- Close-to-Report (C2R)

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Close Acceleration tools


Opportunity

Potential Benefits

1. Financial Closing Cockpit

Improve effectiveness of close process communication and evidence completion of


sequenced tasks through technology
Enables improved accountability for financial closing tasks
Improved visibility to close activities throughout close cycle
Enables sequencing or change in sequencing and alignment of triggers
Allows for scheduling of batch jobs or reports within close process

2. New General Ledger

Enable multi-GAAP or financial reporting requirements through common book of record and
use of parallel ledgers
Improve integration with document splitting reducing intensive manual reconciliations
Maintain audit trails and book to report differences in common ledger
Balance sheet across multiple dimensions

3. Business Planning and


Consolidation

Enable fully integrated financial planning and consolidation


Improve analysis and cause of change between plan vs. actual results
Enable single source of the truth for planning and consolidation

4. Improved Analytics through


HANA , BI Accelerator,
Xcelsius and Crystal

Improve performance of reports or processing using in-line memory computing


Enhance availability and reduce run-time for transaction intensive reports
Improved reporting capabilities from executive dashboards to ad-hoc reports

5. Optical Character
Recognition and Data Entry
tools

Enhance entry of data intensive transactions such as vendor invoice entry or manual entries
Scan invoices and reference originating financial transactions
Improve compliance and preserve audit trail by tightly integrating financial postings and
documents

6. Disclosure Management and Improve report format and explanation of cause of change
XBRL
Reduce time and effort required to generate XBRL reporting
Eliminate XBRL outsourcing services
7. Mobility

Improve presentation layer enabling mobile devices


Enables on-line transaction processing or approval through mobile device

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SAP Financial Closing Cockpit What is it?


An integrated SAP Business function or Add-on to plan,
automate, execute and monitor period end activities in SAP, as
well as with other systems.
The Closing Cockpit enables business to standardize the close
process globally and automates wherever possible.
It increases visibility into all steps of the close, allowing
analysis of bottlenecks and time spent for each action.
Provide email notifications to the next stakeholder after the
dpendent task is updated.

Source : SAP

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SAP Financial Closing Cockpit - Overview


HOW DOES IT WORK?
The Closing Cockpit provides a central template that includes:

Tasks to be executed as part of the close and a timeline for the tasks (e.g., Run payroll on key
date -1 day, Run allocations on key date +1 day)

Users responsible for executing and monitoring the tasks

Enforcing any dependencies between tasks (e.g., Do not run allocations until Payroll data is
available).

The template is repeatable as it is copied to task


lists;

The responsible users access this task list to initiate


their tasks (both manual and automatic), monitor the
task status and document the progress of close;

When the close is complete, this task list is used for


compliance purposes to provide documentary
evidence concerning what close tasks were
executed when and by whom.

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Entity Close Process in SAP FCC


Corporate Controller

Local Controller

Shared Service Center / Local Accountant

Local Controller/
CFO

Plan the close centrally


Original template is created for the local close
The template contains all tasks relating to the local close
and a default schedule
Task dependency settings are completed within the
template
The template is repeatable as it is copied to Task Lists

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Entity Close Process in SAP FCC


Corporate Controller

Local Controller

Shared Service Center / Local Accountant

Local Controller/
CFO

Generate and Release Local task list


The task list contains all tasks relating to the local close
and the calendar for the tasks
Schedules the task execution based on monthly or factory
calendar.
The task list contain scheduled tasks for automatic
execution, manual transaction execution or just manual
task to update status and documentation.
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Entity Close Process in SAP FCC


Corporate Controller

Local Controller

Shared Service Center / Local Accountant

Local Controller/
CFO

Tasks can only be executed from the Task List.


Task list owner can re-schedule task as required
Task owners can add comments and explanations for
review.
Once the task is updated, relevant audit trail is available for
compliance tracking
Job log, Spool and change documents are available at task
level

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Entity Close Process in SAP FCC


Corporate Controller

Local Controller

Shared Service Center / Local Accountant

Local Controller/
CFO

The status and progress of the local close can be


displayed as BI queries that provide realtime access
to the close figures.

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Monitor and Metrics Status of Close Close

Optimize

Gain Insight

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BI Queries Monitor and Control Close process


Used to monitor tasks and how the process is tracking against

plan.
Do not contain any financial data instead they display the statuses
of tasks in a Task List.
Can be accessed only via the Enterprise Portal and access can be
provided to most financial users by default.

Use Direct data access to read the data from the live system
rather than data replicated to BI.
At the start of each close, the task list structure (hierarchy of tasks)
need to be extracted once to BI.

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BI Queries Monitor and Control Close process cont.


Close Status Overview - Provides an
overview of the closing status of each task
list.

Queries delivered for Reporting on the


Local Close.

Close Schedule Overview - Provides an


overview of the planned start and end times
and the actual start and end times for each
task.
Close Schedule Monitor - Monitors the
tasks# implementation status for tasks not yet
executed.

Close Schedule Analysis - Analyzes the


tasks# completion status.
Close Status by Unit - Provides an overview
of the closing status by company code..
Designed for controllers who are monitoring
the status of each company code assigned to
the close..
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Financial Closing Cockpit - Benefits


Automates the close by making it possible to schedule all jobs
associated with the close centrally and automatically passing the start
parameters for the relevant task to each job.
Accelerates the close by making dependencies and bottle-necks
transparent; by providing a tool in which all parties involved can monitor
progress.
Ensures a compliant close by providing a central data repository for all
documents, logs and comments relating to the close.
Provides key figures that allow management to understand in which
tasks time is lost in the close process
Provides* email notifications to inform the responsible person/processor
about the task status i.e Task over due, Pre-requisite task completed .
* Feature available with Closing Cockpit Add on version

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SAP FCC - System Landscape


SAP GUI

SAP ECC EhP7 with


Business function for
Closing Cockpit
activated
(FIN_ACC_LOCAL_CL
OSE 3 ) *

SAP ERP 6.0

SAP Enterprise
Portal

SAP BI

SAP CPS
(Central Process
Scheduling)

ORACLE

JD Edwards

Other Systems

* FIN_ACC_LOCAL_CLOSE 3 is the business function for activating closing cockpit as part of


SAP ERP Enhancement Package 7 for SAP ECC. However business function for activating SAP
Closing Cockpit is available from SAP ECC Enhancement Package 3.

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FCC Add-On features

Email notifications and Custom scenarios


Template Export and Import
Time Zone at Task Definition
Cross Template Monitor
Change documents monitor
New Task Types
Background job Monitor
Paused Status for Task Lists

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FCC Features Evolution


SAP ECC EHP 3 *FIN_ACC_LOCAL_CLOSE

SAP ECC EHP 5


*FIN_ACC_LOCAL_CLOSE_2

SAP ECC EHP 7 *FIN_ACC_LOCAL_CLOSE_3

SAP Financial Closing


Cockpit Add-on 2.0**

Comprehensive and
user-friendly WEB UI
Ability to add comments
to tasks through Portal
Operation across SAP
clients or systems as
well as non-SAP
systems
Advanced grouping of
tasks into phases and of
task lists by status
Integration into SAP Net
Weaver Portal or SAP
Net Weaver Business
Client

Mass change for Closing


Template and Task list
Maintenance of
Dependency
Multiple calendars at folder
level in same template
Responsible assignment,
support document upload,
list, new closing
organization: Plant, etc..
Improved integration with
SAP CPS and workflow
Simultaneous multiple
access of task list

Adding customer fields


and documents to a task
Setting the current
template or task list as
the default
Time zones are
supported
Easier ways of creating
and releasing task lists
Defining multiple
destinations for SAP
CPS in the cockpit

Template Export and


Import
Time Zone at Task
Definition
Email notifications and
BADI for custom
scenarios
Cross Task list and
change documents
monitor
Paused Status for Task
Lists
Storage of Spool list and
Job Log

Business function activation or Add-On installation is a pre-requisite for using


Closing Cockpit.
** Add-on includes features of business function available as part of SAP EHP7.
*

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KEY LEARNINGS
Leading Practices and approach to accelerate the Close
Process.
Designing the Global template is key to successful
implementation of SAP FCC.
Finance team should be responsible for the template and
task list maintenance.

SAP FCC integration with BI and Enterprise Portal


provide greater value to enhance close process.
Monitoring of the Prior Close process and updates to the
Template need to be an ongoing activity.

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KEY LEARNINGS
FCC supports closing tasks from multiple transaction
systems and integrates the Close Process.
BI Queries help to monitor and control the close status
and improve the future close.
Leveraging FCC Add on features provide more
opportunities to enhance the close process.

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STAY INFORMED
Follow the ASUGNews team:
Tom Wailgum: @twailgum
Chris Kanaracus: @chriskanaracus
Craig Powers: @Powers_ASUG

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THANK YOU FOR PARTICIPATING


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SESSION CODE: 1071
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