In this article, which is part of a series on Manager Self-Service (MSS), I will take a closer look at the various monitors that alert managers before budgets are overrun. MSS, as reported in the March issue of FI/CO Expert, is a standard Business Package that comes with your SAP Enterprise Portal.¹

Imagine this situation: In May your company decides to cut spending for travel. The order for all business units is to spend no more than 80 percent of the budget originally planned for the year. Hence, the business unit analyst—let’s call him Charlie—sends an email to all line managers in his unit asking them to closely monitor travel costs and not to overrun the new limit on their cost centers.

At every month-end, line managers receive their cost center report, check whether they are running out of travel budget, and try to forecast for the rest of the year. They attempt to remember last month’s forecast whenever they are asked to approve or reject a travel request. Quite a few managers keep forgetting to stick to the new rule—as staying within moving budgets is not their main focus.

With MSS, managers receive more assistance in putting company strategies into practice. An application called the cost center monitor visually alerts them to cost overruns, based on rules the finance department or managers define themselves.

After the new travel policy has been announced, Charlie creates a new rule for all line managers in his unit. This rule triggers an alert for every manager who exceeds 80 percent of the year-to-date travel budget. Now, besides receiving an email explaining the situation, managers are alerted of imminent budget overruns in time. They can call a graphical forecast for travel costs—just by a mouse-click—and they can easily estimate whether they will overrun the new limit before approving a travel request.

The Cost Center Monitor — Rule-Based Alerting

Let’s take a closer look at this cost center monitor (Figure 1).

It consists of two iViews:²

• Critical Variances on My Cost Centers monitors aggregated expenses on a manager’s cost centers and informs the manager when actual numbers reach certain conditions—either compared to planned costs or to a threshold value.

• Critical Line Items on My Cost Centers tells managers when a critical line item is posted to one of their cost centers. As with the other iView, certain conditions can be set to define alerts. For example, an alert could appear whenever a line item occurs for a cost element without a planned budget.

The rules that define alerts can be set up centrally for all managers by, for example, the finance department. Additionally, each manager can define personal rules. Centrally defined rules are typically set first. Then managers create rules, or adjust central rules, to meet their business needs.

Let’s take my example of the company that wants to define an alert for line managers when 80 percent of the travel budget has been spent. To set up the rule for the iView Critical Variances on My Cost Centers, you first select all your cost centers to be monitored in one alert, or set up an alert for each of your cost centers. Then you choose the cost element group that represents travel costs and set the time period to be monitored. You tell the system to compare "actual" versus "plan" and set the threshold value to 80 percent. From then on, the system gives you a green light as long as everything is fine and a red light for each threshold that has been exceeded.

Defining conditions for alerts on single line items works the same way. For example, you might want to be alerted whenever there is a posting on a cost element without any planned budget that exceeds a certain value. In the iView Critical Line Items on My Cost Centers, you create a new rule, select your cost centers to be monitored, choose the cost element group—in this case, Unplanned Cost Elements—the threshold value, and the start date from which line items should be monitored (Figure 2).

You may question how the system is able to select thousands of line items, compare them to the conditions, and display the result whenever a manager looks at the monitor in the portal. A buffer mechanism makes this possible. The system evaluates the alerts for each manager in batch jobs that can be scheduled every night or every weekend. The result of the evaluation is stored in a buffer. Whenever managers call their monitor, only the relevant results—the green and red traffic lights plus some additional data—are read. A time stamp at the bottom of the monitor indicates when the evaluation took place.

Figure 1

Monitoring your cost centers

Figure 2

Defining personal rules on the cost center monitor

Root-Cause Analysis and Resolution for Cost Overruns

Once alerted to a cost overrun, managers will want to drill down to the cause. Instead of calling their financial analyst, they can investigate the situation themselves directly in the portal. For example, there are two possibilities in Critical Variances on My Cost Centers:

• You can display a graphical overview for that rule. It reads the plan and actual costs that are monitored by that rule and calculates a trend for the year (the system assumes that the average variance between plan and actual for year-to-date will reoccur in the coming months). This helps the manager to evaluate whether there is an unusual variance in a particular month or whether this is a trend for the entire year. Figure 3 shows the situation in March, indicating that—if the situation continues—actual costs will be slightly over plan by year’s end.

• You can also display a Report Writer report that explains the situation in full detail. The report is called using the report/report interface, skipping any selection screens. All selections defined in the rule, such as cost centers, cost elements, or time range, are automatically transferred to the report. From that report, the manager can further drill down—even to the line-item level—using the usual R/3 techniques. In customizing, you can define which report group is called from within the cost center monitor. Thus, you can exchange the standard report with any suitable custom report.

From within the other monitor, Critical Line Items on My Cost Centers, you can jump directly into the line-item display transaction in R/3. This is again done by a mouse-click, skipping any selection screens and directly displaying the relevant line-item detail. From within that transaction, the manager can, for example, drill down to the original document.

After the managers understand an alert, they can start self-services for adjustments in their portal. One of these services is the form called Request for an Adjustment Posting, which allows managers to submit corrections over the Web. A cost accountant then receives the form, checks it, and enters the adjustment posting into the system. Additional standard forms are available with the SAP Internal Service Request (ISR) framework. Delivered with MSS, they include requests for master data changes, budget transfers from one object in a manager’s responsibility to another, or requests for budget increases. In addition, you can create custom forms for new self-services that you want to offer to your managers.

Figure 3

Displaying a graphical trend analysis for an alert using cumulative values

Monitoring Costs on Internal Orders and Projects

Often, managers are not only responsible for budgets on cost centers, but also for budgets on internal orders or projects. MSS provides an overview on the objects for which the manager is responsible.

Figure 4 shows how the managers are presented with a snapshot view of their projects. There are two iViews. Which one you use is determined by whether you use plan costs on projects or on budgets. The first iView contains a list of the selected objects and a bar chart showing how much of the budgeted costs have already been assigned. In the lower part, you can see what costs were planned per project and which costs have been assigned. The assigned costs are split into money already spent and money so far only committed—for example, purchase orders that are not yet invoiced.

Two iViews in MSS, Budget Consumption on My Internal Orders and Plan Consumption on My Internal Orders, have the same scope, but with the intent of monitoring internal orders. With MSS Release 50.2 (which was available as of March 2003) an internal order monitor has two new iViews, Critical Variances on My Internal Orders and Critical Line Items on My Internal Orders. This monitor allows managers to set their own alerts.

You might have noticed that no selection screens are shown in Figures 1 or 4. The reason why? There aren’t any.

The selection criteria—like the cost centers for a particular manager—are stored in a so-called personalization framework. This provides managers with much easier access to relevant cost management information, which occasional users often find hard to locate.

In addition to the various monitors I’ve outlined, managers can run several standard reports at any time—not only at month-end—to carry out standard reporting or detailed analysis. These reports include Report Writer reports as well as BW Web reports for cost centers, internal orders, and projects. You can extend these with your custom reports and still avoid selection screens.

Figure 4

Monitoring costs on project

² iView is SAP’s name for Web services that can be used in an Enterprise Portal. They are similar to transactions, but are in a Web format.