A Stable Framework for Social Commitment

October 19, 2004 by admin

Giving children over the world a future is the mission of Munich-based SOS-Kinderdorf e.V. The state-approved youth welfare association offers a home to children, who for various reasons are not living with their parents. The organization supports around 125 projects worldwide, of which 50 are in Germany, where around 2,300 employees support more than 20,000 children, young people and young adults. It also provides short- and medium-term accommodation for children in emergency situations and gives them career opportunities through various training and employment measures. SOS-Kinderdorf e.V. is supported by 2.3 million patrons and donors as well as almost 19,500 sponsors.
Human ideals and social commitment are bundled together in a robust corporate framework, characterized by modern management as well as flexible and transparent structures. By developing its controlling operations, SOS-Kinderdorf e.V. hopes to increase efficiency within the organization.

A firm basis for management control

To create a robust basis for management control, the organization decided to switch its accounting system to SAP R/3 and implement the Financial Accounting (FI), Asset Accounting (AA), Controlling (CO), Treasury (TR) and Sales and Distribution (SD) functionalities. It previously utilized a non-SAP, DOS-based solution for its financial accounting. SOS-Kinderdorf e.V. purchased mySAP ERP licenses, meaning it could keep all options open for the future expansion of its corporate solution, such as the integration of reporting in SAP Business Information Warehouse. It opted for consultancy group Plaut as its partner for the project and the group handled the design and implementation of the SAP solution.

Scope of the SAP solution

Scope of the SAP solution

The project began in July 2003 and the team tackled it in stages. The first phase involved establishing a robust financial accounting and billing system for the 50 German institutions and the Munich office. The team then implemented cost center accounting and linked various special applications, such as the cash accounting program and HR system, to the new solution. In the second phase of the project, which is still ongoing, the association is developing the controlling functionalities and mapping the entire reporting system in the SAP-standard financial accounting and cost center accounting modules.

Robust financial accounting

The SOS-Kinderdorf e.V. accounting system is split into two groups, a fact which had to be considered during the implementation of the financial accounting system. Seven large institutions are “self-posting” and perform all of their own accounting and billing as the necessary employees are based on site and this is used to give young adults an opportunity to train in commercial roles. The Munich office handles these tasks for the other “non-self-posting” institutions.
The project team adapted the new solution to the requirements of SOS-Kinderdorf e.V. without moving away from the SAP standard. However, various organizational changes were required in the accounting system. All institutions were mapped in their own accounting group and an additional accounting group was created for the Munich office. This division into various accounting groups enables SOS-Kinderdorf e.V. to ascertain a result for each institution.
The organization now processes the large majority of general ledger and accounts receivable/payable transactions with the new solution. Only HR accounting and cash management are still performed with legacy applications in the accounting groups. The appropriate data is transferred via an interface from these programs into the SAP financial accounting module. Business relationships between the individual institutions, e.g. the sale of furniture from the SOS-Kinderdorf e.V. wood workshops, are depicted via common internal accounts receivable/payable.

File cards worn out

The association manages and monitors its tangible fixed assets with the Asset Accounting module in SAP R/3 (FI-AA). Like the accounts receivable/payable accounting module, it is a subledger of the FI general ledger. As asset accounting was previously performed with a file card system, the data had to be entered into Excel sheets before it could be transferred to the SAP solution. At the same time, the assets had to have a standardized structure that met business-management and legal requirements and be appropriately assigned in accordance with the organizational criteria arising from the new cost center structure.
For billing purposes, proceeds from sales and services, particularly from the SOS training and employment institutions, have to be mapped in a standardized form in the SAP sales and distribution module. The project team therefore transferred the necessary legacy data, such as material numbers, from the legacy applications to the new solution. At present, the invoices for care funds are partially transferred from upstream systems into the financial accounting module.
Since the on-schedule system launch in January 2004, SAP R/3 has greatly facilitated SOS-Kinderdorf’s work. For example, the annual amortizations are automatically posted to the relevant cost centers in the asset accounting module. Furthermore, a deferred depreciation preview is possible, thus enabling the depreciations to be simulated.

A controlling tool for managers

Following the go-live of the new solution, the controlling functionalities are now being extended. SOS-Kinderdorf e.V. laid the foundations of stable management control processes in the initial project phase by expanding the existing cost center and cost element accounting modules. The organization developed a detailed cost center structure and revised the accounts plan. As the profit and loss account is mapped in the cost center accounting module, all general ledger accounts are now created as cost elements. Apart from regular actual postings, the new system already contains the planning data for 2004, meaning the organization was able to depict the profit and loss account with a planned/actual comparison for every institution at the beginning of 2004. This offers managers effective opportunities for internal control.
The second project phase involves mapping internal cost allocation for billing within the institutions by the end of 2004. The aim is to assign costs to the projects they relate to, e.g. the SOS-Kinderdorf children’s care system. What’s more, the project team is implementing a solution to allocate overheads to the institutions and headquarters. As SOS-Kinderdorf e.V. is looking to perform its budget planning for 2005 in SAP R/3, the team is currently drawing up a process for planning primary and secondary costs.
In a short project duration lasting only half a year, the core commercial processes of SOS-Kinderdorf e.V. in Germany have been successfully transferred to a standard SAP R/3 system. One of the major challenges was transferring the legacy data, in particular into the financial accounting module. Furthermore, interfaces to continuing third-party systems had to be designed and implemented. However, the investment has paid dividends − after the successful conclusion of the first project phase, the SAP system offers a robust control tool which builds on the external accounting system to provide managers with possibilities for internal control.

Michael Wächter

Michael Wächter

Christian Garke

Christian Garke

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