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Management Reporting and Financial Operations Team makes sense of SAP

The original work of the Management Reporting Team focused on simplifying the process of providing information to management at all levels of MIT.

MIT's current reporting processes require substantial, redundant effort in order to provide timely and consistent information. Departments, laboratories, and centers often must keep separate databases, requiring additional data input in order to answer the most basic financial questions. With our current systems, the effort needed to satisfy government reporting regulations requires a great deal of reconciliation and classification of data. These steps will either be eliminated or reduced with the introduction of a new integrated software package called "SAP R/3," which is described below.

Eventually, people in all of MIT's departments, labs, and centers will use the new software for planning and budgeting, purchasing and requisitioning, initiating journal vouchers, billing, revenue accounting, tracking property, year-end close-outs, and labor distribution.

The first phase of this project focuses primarily on replacing the financial information systems at MIT. The new software package supports the original vision because it provides the correct information to the appropriate managers in a timely fashion. When complete, the total current effort associated with these processes will be significantly reduced and streamlined.

Beyond the elimination of unnecessary work, the goal is to provide better service and information, which in turn will help the Institute manage its financial operations more effectively. In an era of tight resources, accurate and timely information will help managers make the best use of MIT's resources.

What and who is SAP?

The "SAP R/3" package is a product of a German-based software company named SAP AG, which was founded in 1972 by four former IBM employees. (The full name for SAP is Systems, Applications and Products in Data Processing, but it is rarely used.)

SAP R/3 is an integrated "real time" financial system used by large and complex organizations. The package includes a variety of integrated "modules" and a centralized database. R/3 provides for automated data flow across the modules, and the software can be customized to meet MIT's specific needs.

R/3 is structured so that budget, purchasing, and financial data can all be accessed in the same program. Budget, purchasing, and financial data are stored in different modules of R/3, but the same data can be accessed by the user from any module.

The R/3 package that MIT is currently implementing uses a client/server system and will function on PC, Mac, or Unix platforms. Real-time access to data, excellent "drill-down" capability, and especially the emphasis on business process flow make SAP an ideal tool for reaching the goal of an integrated financial system. ("Drill-down" capability means that users can easily move from general categories to extremely detailed information.)

Here are some features of the R/3 implementation:

  • ������������������Everyone will use the same financial data
  • Information will be entered only once
  • All of the financial parts will be integrated
  • There will be less reconciliation of data because we will use one set of numbers from one system
  • There will be fewer hand-offs between functional areas.

What is currently happening?

For the past several months, members of the team (MIT staff, consultants from SAP, and consultants from CSC/Index) have been working to develop a new chart of accounts and financial architecture that will provide the basis for future reporting at the Institute. Teams that include representatives from many departments have been working on reporting requirements.

This requires changes in current accounting practices, exploration of alternative solutions in order to provide the most effective use of SAP, and consistency with the goal of more integrated financial practices at MIT.

Part of the flexibility of the SAP R/3 system comes from the fact that it can be custom-configured at the client site to provide maximum functionality. In addition to the changes in MIT's chart of accounts, other members of the team have been configuring the system so that it can support new business processes in Buy-Pay (purchasing, accounts payable), accounts receivable, budgeting and planning. Members of the team are currently gathering data from a variety of areas so that departmental needs can be reflected in the baseline configuration of the system.

What about training?

Please see the training article in this supplement.

How will SAP relate to SumMIT?

SAP R/3 will become the financial system of record for the Institute on July 1, 1996. As R/3 comes on line, SumMIT will no longer be improved and will not be supported after June 30, 1997. You do not need to be trained in SumMIT in order to learn SAP.

When will this work have an impact on you?

If you work in the Comptroller's Accounting Office, your work will be affected this winter when the Demo Labs (presentations of SAP's capabilities) will begin to show you the new processes. Training on SAP for CAO will begin shortly after that. The plan is to have Accounts Receivable and Payable, Purchasing, and aspects of the Budget Office converted to SAP on July 1, 1996. The rollout of this new system to departments, labs, and centers will take place over the span of the next fiscal year, with Demo Labs and training beginning in May 1996.

How can you get involved?

Over the past year, the Management Reporting Team has worked to inform the community and to use the wealth of knowledge at MIT to accomplish its goals. There have been dozens of presentations to a variety of audiences, articles in Tech Talk, personal interviews, demonstrations, and the use of a resource group to test concepts. In the near future, "Open Lab Days" will be held so members of the community can come and see the work in progress and talk with members of the team.

The team will provide "Demo Lab" events, which display specific process designs and demonstrate early aspects of the R/3 capabilities. They will visit various departments to gather reporting data for the configuration team. The team will also continue to engage members of the community through various types of presentations.

A version of this article appeared in MIT Tech Talk on December 13, 1995.

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