Written by: Richard Frykberg

Overview of the SAP Appropriation Request and CapEx Management

Capital Expenditure (CAPEX) Management is one of the most critical processes for all organizations. Wise investment decisions accelerate the creation of wealth. Poor decisions can result in someone getting fired.

The CAPEX process is the longest running business process commencing many months prior to a financial year in the planning and budgeting cycle, and concluding years after with a post evaluation review.

For many large organizations that run SAP as their core ERP system, this process is transactionally well supported. The SAP Investment Management module provides support for long range planning against Investment Program Positions, Appropriation Requests support the call-off against these budgets, Projects and Internal Orders track the actual expenditure which is committed, and the Fixed Asset module keeps track of the final asset.

Nonetheless, CAPEX is an area where we find SAP Fiori App business process solutions are delivering substantial business value in accelerating the end-to-end process and improving governance and control.

6 Key Gaps in the SAP Functionality Include:

• Usability – SAP Appropriation Requests can hold most of the data elements required, and are extremely well integrated with planning and execution. Realistically, however, they are impractical for executive consumption as very few organisations use all the data fields available, and many require the inclusion of additional classifications. The resulting complexity of clicks and tabs ensures that not many organisations direct project sponsors to complete an SAP Appropriation Request (transaction IMA11) directly in SAP. Typically the source document for most business case justifications is an Excel model, and an effective CAPEX solution should embrace the user-experience.

• Project Demand and Portfolio Management – The CAPEX process is not just about raising final Requests for Appropriation – it is about collation, classification and prioritisation amongst a number of competing initiatives. This requires an easy-entry low-threshold mechanism for initiating funding requests that allows for increased collaboration and transparency of early-stage opportunities. Appropriation Requests are an overkill at this early stage, and your organisation may not have licensed SAP Portfolio and Project Management (PPM). An intuitive Web App is well suited to collate these business requirements.

• CAPEX Budgeting Granularity – The Investment Management Program Structure and Positions are well suited to handling the annual top-down CAPEX budget. However the further detail of the underlying approved initiatives that comprise the annual CAPEX budget for a responsibility area are not identified in SAP. Appropriation Request are typically employed for the call-off of project initiatives during the year and need to be reconciled to the underlying project initiatives comprising the budget.

• Document management – The CAPEX process is heavily reliant on supporting documentation comprising both business case justification and supplier quotations. These can be attached to Appropriation Requests via SAP DMS. However, secure accessibility to this supporting documentation by executive decision makers is imperative for expedited approvals. OneList Approvals surfaces all the essential request details and supporting documentation for ease of access and ultimately more timely and confident decision making.

• Workflow flexibility – It is not unusual for large value CAPEX requests to go through 10 or more levels of approval. This audit trail of approvals and the commentary provided along the way is as important as the underlying data to effective decision making. SAP-based workflow requires that all participants are licensed SAP users and administration of SAP workflow rules is often cumbersome and the preserve of IT. Effective process solutions enable business process owners to update the approval matrix to ensure effective compliance with delegation of authority and governance policies.

• Executive Approval – There is nothing more demoralising to a project manager than starting late as a result of delayed approvals. This often impacts both personal KPI’s and delays the business benefits to be derived from the project investment. OneList Approvals addresses this need with mobile apps for every device platform. The native mobile OneList Approvals app works everywhere, even offline in planes.

Business users require a solution that allows them to utilize familiar tools like Excel, that supports the effective collaboration between stakeholders, that expedites executive approvals and that seamlessly integrates with SAP.

CAPEX Management Solutions Provide 3 Key Benefits:

1. Executives are able to make more informed investment decisions more confidently;
2. Time-critical opportunities can be capitalised upon sooner; and
3. Process transparency supports organizational learning and continuous improvement.

Optimizing your CAPEX Management System and Appropriation Request Processes

So whilst SAP transactions underpin the CAPEX process, let us demonstrate how the IQX CAPEX solution can add enormous value to your most critical business process.

This article was last updated on 1st July 2019.