Personnel Cost Planning

the past, the present, the future

Henny Claessens Universiteit Maastricht

International HERUG conference 26th - 28th March 2002 Melbourne, Australia

Agenda
1. Universiteit Maastricht
- Introduction of the university

2. The past
- HERUG 2001 development request # 13

3. The present
- Pecaso Cost Planner, add on solution

4. The future
- SAP White Paper Personnel Cost Planning

5. Summary

Introduction
7 faculties

Universiteit Maastricht

Faculty of Medicine Faculty of Health Sciences Faculty of Law Faculty of Economics & Business Administration Faculty of Arts and Culture Faculty of Science Faculty of Psychology
11.000 students 3.000 staff SAP modules implemented: - HR - FI, CO, MM, SD, AM - Cost Planner (integrated add on; not SAP)

1974 1980 1982 1984 1991 1992 1995

1999

2001 2002

Introduction Students and staff

14000 12000

Universiteit Maastricht

Students

10000 8000 6000

Staff

4000 2000 0
1980 1985 1990 1995 2000

UMs mission

Universiteit Maastricht

Educational innovation Problem Based Learning Curriculum

International orientation Geographically situated in a tri-lingual region (Dutch, French, German) Growing part of Curriculum is offered in English

You cant manage what you cant measure

Peter Drucker

Extremely true in a growing university !

The process
UMs Personnel Cost Planning (2 cycles)
1. Monthly rolling forecast within the year

Months within the year (cumulation YTD actuals + planned months) Increasing YTD actuals/decreasing planning period within the year:

Actual YTD 2002 Jan-Apr Jan-May Jan-Jun Etc. Planned months 2002 May-Dec Jun-Dec Jul-Dec Etc. Total xxx yyy zzz .

2. Yearly rolling forecast for next 5 years

After current year:

Planning period 2003-2007 2004-2008 2005-2009 Etc. Total XXX YYY ZZZ .

The past (I)

UMs requirements for Personnel Cost Planning
1. Planning occupied positions

(P)

Periodic pay increases starting from . (dd/mm/yy) Change in working time starting from . (dd/mm/yy) Change in PSgroup/level starting from . (dd/mm/yy) End of employment contract starting from . (dd/mm/yy) Change in cost distribution starting from . (dd/mm/yy)

2. Planning vacant positions

GPL based (Gemiddelde Personeels Last) In English: APC based (Average Personnel Cost)

(S)

3. Rolling forecast within the year

Months within current year; actuals YTD + planned periods

4. Rolling forecast for next 5 years

Beyond current year

The past (II)

1986: Personnel Planning System UM

Stand alone/tailor made legacy system Central registration of personnel & vacancies High accuracy rate
Planned-actual comparisons: <2% Sets the tone for everything that will follow .

1999: SAP HR productive

Decentral registration
Starting point: registration at the source

Interface from SAP HR to PPS

Planned-actual comparisons: >10% Organisation UM was not ready for this Decentral registration of vacancies did not take off Recruitment module not used consistently Matter of: Organisational change !

The past (III)

2000: Preliminary study standard SAP/PCP

Projected Pay
Alternative I: based on Jobs (C) Alternative II: partly based on Jobs (C); partly on Positions (S) Alternative III: based on Positions (S)

Basic Pay
Alternative I: generic percentage raise for employers costs Alternative II: dummy wage type for employers costs

Payroll Results
No alternative: because of external (non SAP) Payroll

2000: Findings of preliminary study

Not flexible enough for UMs personnel cost planning

In particular soft future oriented changes (starting from)

Reason for: HERUG development request # 13

Next major release; R/3 enterprise; wont wait for this . Temporary solution: Cost Planner (ROI 2-3 years)

The past (IV)

2000: HERUG development request # 13

Description
Personnel Cost Planning in standard R/3 (release 4.6) is not flexible enough for our needs. We would like to use Personnel Cost Planning as follows: Basic Pay for employees (Infotype 0008) Projected Pay for vacant positions (Infotype 1018) More flexibility is needed with regard to: Employee specific scheduled payments Expiration date of the job assignment For planning purposes these data have to be manipulated separately without causing changes in real basic pay data (Infotype 0008)

Business motivation
Personnel Cost Planning in standard R/3 does not meet the business needs of the university. Personnel Costs typically represent 70% of total costs of the university. So relatively small differences tend to have substantial financial impact

The past (V)

2001: Pilot Cost Planner

Flexibility occupied positions

Additional Infotype 9008 for planning purposes only Limited customizing during pilot

GO-decision (July 2001)

Completing the customizing Developing tailor made enhancements Drill down functionality from Cost Planner to HR Scheduled pay increases for 72 months rolling forecast

Post pilot finding (December 2001)

No decentral use because of Chart of accounts structure..

Findings of the pilot:

Cost Planner meets all essential functional requirements Additional programming required for:
Drill down reports from Cost Planner to HR Scheduled pay increases for 6 year period Simulating 72 consecutive RPITUM00 runs in just one run

PERSONNEL COST PLANNING basic pay for occupied positions (P) projected pay for vacant positions (S)

IT 0014
fixed additional pay

95%
PA
(occupied positions)

Wage elements: additional pay

IT 0015
variable additional pay

Wage elements: additional pay

IT 0001
organisation

P
3000

IT 0008
basic pay

Wage element: basic pay (PSgroup/period)

HR
150

CO
OM
(vacant positions)

O
detailed info?
yes no

K
700

OD

2000

IT 1007
vacancy

C
27

IT 1015
cost planning

IT 1018
cost distribution

5%

E.g..: work schedule GPL direct valuation ...

S
3000

IT 1011
work schedule

IT 1015
cost planning

Cost distribution: internal orders (OD)

Wage element: GPL (average personnel costs)

The present (I)

Integration HR
Wage-type Infotype 0008 Infotype 0014 Infotype 0015

Cost Planner

CO

HR
UM specific development of drill down functionality (two steps): 1. K or OD S or P 2. Detail of S or P

Wage-element Infotype 9008

Cost Planner
Cost element

Drill down functions within standard Cost Planner: cost center (K) request (OD) object (O, P, S, C)

CO

The present (II)

Standard Cost Planner functions

Cost Planner

Plan Scenario Administration

The present (III)

Personnel Cost Planning finalized when transferred from Cost Planner to CO .. (HR Plan Version)

The present (IV)

UM specific drill down functions from Cost Planner to HR
Step 1. Drill down at large
- Cost Center (K) - Cost Center (K) - Internal order (OD) - Internal order (OD)

Step 2. Drill down detail

- Person (P) - Person (P) - Vacant Position (S) - Vacant Position (S)

The future
2002: R/3 Enterprise (4.7a)

Ramp up (first shipments): start in July 2002 Far superior to the previous SAP Personnel Cost Planning solution
Based on separate planning Infotype Data transfer to SAP BW for detailed analyses SAP BW contains Personnel Cost Planning InfoCube Continious improvements: web, portal, workflow

Install on DEV; install on PRD ?

2003: R/3 Enterprise (4.7b)

Unrestricted availability: in the beginning of 2003 Install on PRD; expected to be mature www.sap.com/solutions/hr/factsheets.asp

White Paper: see download section SAPnet

Agenda
1. Universiteit Maastricht
- Brief introduction of the university

2. The past
- HERUG 2001 development request # 13

3. The present
- Pecaso Cost Planner, add on solution

4. The future
- SAP White Paper Personnel Cost Planning

5. Summary

Planning run
1. View of cost center (K) 2. View of requests (OD) 3. Detailed view of requests (cost objects: persons, vacant positions, organisational units) 4. Detailed view of personnel costs (wage elements)

2 4

Questions ?

E henny.claessens@bu.unimaas.nl T +31 43 388 2510 F +31 43 388 4890 W www.unimaas.nl