Personnel departments represent a central cost pool in public budgets. Particularly in times of tight resources, measures to contain personnel costs surge. The budget law that sets the legal guidelines in various countries for controlling personnel envisions a series of savings methods, such as remaining within defined limits for the number of positions within an organization or imposing blocks against refilling positions or allowing promotions. The legislative and executive branches of government can no longer do without targeted controlling. To that end, personnel costs must be planned, budgeted, and committed as personnel-cost liabilities. The available budget must be continuously compared to actual expenditures. Controlling helps recognize and implement potential savings.
SAP has responded to these requirements with its new Position Budgeting and Control application within the SAP for Public Sector solution portfolio. This solution was created in close collaboration with customers who are organized in national user groups. It features an international design and can be customized to the requirements of an individual agency. Many aspects of the application can also be enhanced by upgradeable development interfaces with Business Add-Ins (BAdIs). Position Budgeting and Control includes the following functional areas:
- Personnel budget plan management
- Commitment creation
Scenarios for Personnel Budget Plan Management
In an organization, personnel budget plan management maps the financing of employees or the financing for positions that will be filled. Depending upon the organizational structure that defines the tasks of positions, sections, or departments, an individual budget structure oriented to the available finances can be managed. In this case, the supply of personnel and positions is mapped in full-time equivalents (FTEs). This approach has the advantage of being very flexible. In this approach, an FTE can be prorated to several positions in the organizational structure and then distributed to various persons. Commitment creation clarifies the funds committed for personnel, how position changes affect the budget, and if actual expenditures correspond to the limits. Personnel budget plan management helps fulfill legal requirements. Accordingly, it supports, as required by law, the creation of a position plan as an attachment to the budget plan and therefore manages it again.
For FTE processing, public authorities use various methods. Accordingly, SAP offers two scenarios:
- Personnel budget plan management with its own budget structure
- Organizational management for public services without their own budget structure (which is fully integrated in the Organizational Management application component)
Which scenario is used depends primarily upon how individual agencies function. Ultimately, the result – the budgeting and controlling of the position plan – remains the same.
Personnel Budget Plan Management with Its Own Budget Structure
In this scenario, users can account for personnel and personnel structures in their own commitment items. In this manner, positions and persons can be assigned to budget lines. This scenario enables a clean division between the work and the FTE budget. The cost driver “full-time equivalent” can be used to distribute a person’s work among various positions and have it be financed by one or more budget elements.
The user receives important information at a glance. Budget rules used for FTE, reoccupation blocks, or assignments rules are entered and displayed directly on the budget element, at each commitment item. The legal reasons for financing a position or a person are also linked to the corresponding budget element. They make procedures transparent and simplify invoice verification. A function for user-controlled follow-up lists helps track dates. If a date is created on a budget item for a specific task, such as checking the workforce requirements, users receive a reminder when they log on to the system. Alternatively, periodic reports can provide an overview of upcoming activities. Financing rules can be defined as needed and built into the components. Such rules ensure adherence to prescribed requirements and limitations, or to use customer-specific notification keys (such as alternative valuation – incorrect financing) for reporting. Various types of error messages (warning, information, and errors) control how the system reacts and how financing is analyzed. These messages show if persons and positions have been posted correctly and issue a warning in the event of incorrect financing. Numerous reporting functions provide online support to position managers in their work. Individual columns to describe the office, FTE rules, traffic-light icons for availability checks, and much more can be displayed or hidden as desired.
Organizational Management for Public Services
The scenario organizational management for public services represents another variant of position management. Here the position plan is mapped by the evaluation of data that is appropriate only for positions within organizational management. This scenario meets the changed working requirements in public facilities by decentralization: responsibility and authority are transferred to downstream administrative offices.
Notes on budget law or internal administration are placed directly in the organizational structure. Blocks can be inserted here to prohibit reoccupying a position within a defined period. “Group notes” on the organizational units can also be inserted. These notes automatically propose a reassignment block within a given organizational unit when certain events occur, such as a position becoming vacant. Users can generate the position plan easily if they already have an organizational structure, which is a reporting structure that maps the organization in the form of sections, departments, and positions.
A series of attributes describes the position with information relevant to the position plan. These attributes might include information such as “valuation according to budget law,” the upper limit for positions, or the working time for valuation of FTEs. As an option, an analogous valuation can be stored and exchanged with the valuation according to budget law on a key date. In this scenario, date tracking supports users. Totals can be calculated according to various selection criteria, sorted by employee’s status, or even by considerations of legal budgeting requirements. A link to Microsoft Excel then enables users to format that layout as required. Flexible reporting offers options to generate an overview of the upper limit for positions or a business distribution plan.
Automatic Commitment Creation
The functional area of creating commitments automatically comprises several components of mySAP Human Resources (mySAP HR), including Personnel Cost Planning, Personnel Administration, and Organizational Management in the SAP for Public Sector solution portfolio. The automatic commitment creation function allows users to create encumbrances at a much earlier date than can be guaranteed with SAP integration by transferring payroll results to accounting. Expected personnel costs can be linked much more reliably at the beginning of the year and the personnel commitments can be adjusted during the year. Cost projections (simulations) show the affects over longer periods and provide a foundation for possible budget updates. The system recognizes when changes relevant to remuneration occur within the employee’s master data or the position’s valuation. These objects then are marked automatically for updating within the next commitment run, which occurs at regular intervals.
The commitments can be posted in both the Public Sector Management and Controlling components. Standard reports can compare and contrast plan and actual values. In Public Sector Management, the commitments can be mapped as a funds commitment for the personnel expenditures and also displayed as a funds precommitment of the expected costs of vacant positions.
The creation of encumbrances occurs automatically, according to Customizing settings. The personnel commitment is posted to the same account that will later be used for posting payroll results. This approach avoids inconsistencies and leads to more transparent costs because of comparisons among the plan, commitments, and actuals. Budget deficits and surpluses can be recognized quickly within a fiscal year. Unused budget can be transferred to other areas or blocked from further use. SAP Workflow supports communication between the HR and accounting departments. The definition and assignment of roles enables a seamless flow for the creation of commitments. For example, if problems occur unexpectedly during this process, the system informs the employee who can contribute the most to the solution of the problem.