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Whether it's your calling or career, as an implementation consultant, you’ll frequently find yourself untangling the complex web of ERP systems.
This blog provides a deeper dive into the Standard Scope vs Public Sector Scope debate, to help you navigate the complex web of an ERP system within the Public Sector.
1. Key Choices
Understanding when to use Public Sector Management (PSM) instead of the Enterprise Management (EM) scope. The answer lies in identifying whether there are elements within a project that correspond with various facets associated with the public sector. For instance, if you’re dealing with multilateral reporting across different account assignments, consider the Public Sector Scope. This scope is also essential for year-end processes tied to government frameworks or specific governmental budgetary processes.
Below we have summarized and illustrated the key choices you have to make to decide on the correct Scope Version:
2. Public Sector Management Considerations
Public Sector Management implementation also captures specific to fund accounting. This is instrumental for nonprofit governmental entities, especially in North America, that need to maintain checks and balances on the usage and distribution of resources. For instance, the reporting framework within PSM is multifaceted. It allows for data to be grouped, controlled, and analyzed across multiple dimensions, such as fund, grant, budget period, budget account, functional area, organization, or project. Additionally, other processes such as commitment carry-forward and residual budget processing, specific to government-related year-end procedures, are also part of PSM functionality.
Moreover, government-related budgetary processes need a unique approach. For instance, increasing the budget from revenue is a requirement for many government agencies. To enable proficient control and oversee these processes effectively, Public Sector Management is equipped with these functionalities, thereby eliminating obstacles and facilitating these specialized processes.
Furthermore, when dealing with grants, within PSM, SAP delivers special processes such as indirect cost and cost-sharing. In a public sector organization dealing with myriad grants, these processes become vital, impacting budgeting and resource allocation. Similarly, the PSM Scope utilizes period-based commitment updating to ensure the precise tracking of all commitments using accounting practices.
In regards of budget consumption and asset acquisition, the PSM Scope recognizes expenses, payments, and collections instead of costs and revenues. By configuring your system with the PSM Scope, this functionality transitions the system from merely tracking depreciation to understanding and recording the consumption of budget during asset acquisition.
When managing costs and expenses, the PSM Scope offers a detailed perspective, differentiating between the two. In the corporate world, an expense usually equates to cost. However, in the public sector, an expense should be differentiated as a commitment that leads to future payment, while cost refers to the process that doesn't always result in a future money outflow (for example, depreciation). This differentiation provides a more detailed report, enabling better financial management within public sector organizations.
In terms of integrations, the PSM Scope is already integrated with SAP SuccessFactors for position budget control and with Concur for commitments. These integrations not only enhance the system’s capabilities but also simplify the overall operations of a public sector organization.
3. Evaluation
No doubt using the PSM Scope comes with its own set of limitations. One limit to note when implementing the PSM Scope is the automatic activation of the baseline scope, which includes around 180 choosable scope items. These items are defined based on the typical needs of public sector organizations. Nonetheless, some scopes can appear to be a hard boundary for public sector needs, such as sales incentives, cost of sales, and so forth. It’s important to note that SAP will continue to further improve the Standard Scope items in the future based on market needs.
Considering these complexities, it's recommended that consultants carefully evaluate their clients’ needs and evaluate whether the use of Public Sector Management is needed and beneficial. The takeaway is that a one-size-fits-all approach won’t suffice in understanding these scopes. Careful assessment and tailored solutions will be the key to unlocking the real potential of your ERP implementations for the public sector. In addition, partners may find the vast number of available scope items overwhelming, raising questions about which choices best correspond to the organization’s needs.
4. Conclusion
It’s essential to understand that each government organization will have unique requirements. For example, we had customers in certain countries/regions who categorized taxpayer accounting as part of ERP. Other government departments might have different definitions of ERP and accounting processes, which can involve the calculation and collection of taxes. In conclusion, it's important to remember that every institution will have unique requirements, and while the PSM Scope offers a wide range of functionalities, consultants should always prioritize their clients' needs. Applying a flexible approach, coupled with an in-depth understanding of the standard and public sector scopes, will truly enable consultants to extract the highest performance from their ERP implementations, ultimately benefitting the organization at large. Therefore, the Standard Scope vs Public Sector Scope isn’t a competition but rather a chance to maximize functionality based on each entity's special needs.
Co-Authored w/ Frank Godeby, Public Sector Product Management
