Personnel Cost Planning the past, the present, the future

1. Personnel Cost Planning the past, the present, the future Henny Claessens Universiteit Maastricht International HERUG conference 26th - 28th March 2002 Melbourne, Australia

2. 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

3. Introduction Universiteit Maastricht 7 faculties FacultyofMedicine 1974 FacultyofHealth Sciences 1980 Faculty of Law 1982 FacultyofEconomics & Business Administration 1984 FacultyofArts and Culture 1991 FacultyofScience 1992 Facultyof Psychology 1995 11.000 students 3.000 staff SAP modules implemented: - HR 1999 - FI, CO, MM, SD, AM 2001 - Cost Planner (integrated add on; not SAP) 2002

4. Introduction Universiteit Maastricht Students and staff Students Staff 1995 2000 1980 1985 1990

5. UM’s 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

6. You can’t manage what you can’t measure Peter Drucker Extremely true in a growing university !

7. The processUM’s 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 2002Planned months 2002 Total • Jan-Apr May-Dec xxx • Jan-May Jun-Dec yyy • Jan-Jun Jul-Dec zzz • Etc. Etc. …. 2. Yearly rolling forecast for next 5 years • After current year: Planning periodTotal • 2003-2007 XXX • 2004-2008 YYY • 2005-2009 ZZZ • Etc. ….

8. The past (I)UM’s 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 (S) • GPL based (Gemiddelde Personeels Last) In English:  APC based (Average Personnel Cost) 3. Rolling forecast within the year • Months within current year; actuals YTD + planned periods 4. Rolling forecast for next 5 years • Beyond current year

9. 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 !

10. 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 UM’s personnel cost planning • In particular ‘soft’ future oriented changes (starting from…) • Reason for: HERUG development request# 13 • Next major release; R/3 enterprise; won’t wait for this …. • Temporary solution: Cost Planner (ROI 2-3 years)

11. 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

12. 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

13. PERSONNEL COST PLANNING • basic pay for occupied positions (P) • projected pay for vacant positions (S) IT 0014 fixed additional pay 95% IT 0015 variable additional pay • Wage elements: • additional pay PA (occupied positions) • Wage elements: • additional pay IT 0008 basic pay IT 0001 organisation P 3000 • Wage element: • basic pay (PSgroup/period) CO HR 150 K O OD 700 OM (vacant positions) 2000 detailed info? IT 1015 cost planning IT 1007 vacancy C no IT 1018 cost distribution 27 yes IT 1011 work schedule IT 1015 cost planning 5% • Cost distribution: • internal orders (OD) S • E.g..: • work schedule • GPL • direct valuation • ... 3000 • Wage element: • GPL (average personnel costs)

14. The present (I) Integration HR Cost Planner CO Wage-type HR • Infotype 0008 • Infotype 0014 • Infotype 0015 UM specific development of drill down functionality (two steps): 1. K or OD  S or P 2. Detail of S or P Wage-element Cost Planner • Infotype 9008 • Drill down functions within standard Cost Planner: • cost center (K) • request (OD) • object (O, P, S, C) Cost element CO

15. The present (II) ‘Standard’ Cost Planner functions

16. Cost Planner

17. Plan Scenario Administration

18. The present (III) Personnel Cost Planning ‘finalized’ when transferred from Cost Planner to CO ….. (HR Plan Version)

19. The present (IV)

20. 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 White Paper: see download section SAPnet • www.sap.com/solutions/hr/factsheets.asp

21. 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

22. 1 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) 3 2 4

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