Investment controlling succeeds with SAP investment management
Investments involve the targeted conversion of capital into assets and are a central aspect of corporate management. Investment management comprises the planning, implementation and control of investment decisions, which include expenditure on property, plant and equipment, maintenance, research, development and employee development. For manufacturing companies in particular, considerable investments are made in the procurement and maintenance of production facilities. Bad investments can have serious financial consequences, including the risk of the company going out of business.
In uncertain times of supply shortages and sanctions, investments are risky, yet they are crucial for smooth long-term production. Many companies use software such as SAP IM - Investment Management to keep track of investment objects, set priorities and react to changes in the global economy.
SAP investment management
The SAP IM module supports users in every step of the planning, implementation and control of investments in the company. The measures required for this range from the business and financial assessment of the investment and checking the feasibility of investment projects to providing the methodological and technical infrastructure for investment support and providing the necessary information for reporting purposes to the company management.
Investment programs
Investment controlling often faces the challenge of optimally implementing the concept of planning and budgeting. The SAP IM module offers the option of creating a program structure to clearly display planned and budgeted costs. This forms the basis for optimal and integrated investment planning through to the capitalization of fixed assets, including annual financial statements.
Program structure
Program structures can be defined independently of organizational units such as business units, plants, etc. Various structural levels are set up for this purpose, whereby the first structural level, also known as the top position, is created in the first step and all other program positions are created subsequently.
As a rule of thumb, the simpler the program structure is set up, the easier it is to plan and report.
Planning and budgeting
A limited amount of capital is available for the implementation of an investment project or investment program. Due to this shortage of capital, it is necessary to allocate the budgets to the various projects, which is known as budgeting. The main objective of budgeting is to ensure that those investment projects that can make the greatest contribution to achieving the company's objectives are prioritized.
There are two basic approaches to budgeting investment projects. The first approach is based on a fixed budget that has already been set in advance. Under these conditions, projects must be prioritized according to the available financial resources.
The second approach involves the simultaneous optimization of the investment program and the investment budget. In this case, the interactions and dependencies between the investments and the financing are taken into account. This enables a more flexible allocation of funds, which maximizes the overall profitability of the investment portfolio.
The selection of the appropriate approach depends on the specific circumstances and objectives of the company. Both approaches have advantages and disadvantages, and the decision should be based on a careful analysis of the company's financial situation and strategic objectives.
Planning
As with the program structure, planning can also take place at different levels. Planning can either take place at the program position or at the corresponding appropriation request. You should consider the following aspects when selecting the appropriate object at the time of planning:
- Planning without reference to a measure > IM program position
- Planning with reference to a measure > Appropriation request
- Planning with reference to a specific measure > WBS elements or CO internal orders
However, a planning mix is also conceivable in any case.
Budgeting
Once the program structure has been set up and planning has taken place for the relevant object, budgeting can also be carried out. The budget is distributed from top to bottom, whereby the planned values can be corrected if necessary. The budget values can be maintained accordingly.
A major advantage of investment management is the complete overview of planning, budgeting and the budget already used:
Good to know - the year of approval
In practice, investments are often planned over several years. In order to make optimum use of this planning concept, the approval year is used. This is always clearly linked to the investment program through the designation and assignment of the corresponding year.
In this way, the values approved in this or other years can be mapped in the program.
Various scenarios are conceivable:
- The planned values of the measure of an approval year can be returned to the program and used at a later date
- Retention of the measure's budget and distribution of the budget within the measure at a later date.
Summary
Investments are crucial for every company and require effective investment controlling. SAP Investment Management (IM) provides significant support here, as the entire process can be mapped in a fully integrated manner. The planning and budgeting of investment projects are essential, whereby two approaches are available for budgeting: fixed budget or simultaneous optimization of program and budget. The choice depends on company goals and conditions. With SAP Investment Management, planning including the budget and costs can be optimally compared in order to strategically manage investments and ensure the long-term success of the company.
SAP IM provides companies with significant support in investment management, as the entire process can be mapped in a fully integrated manner. Depending on the company's objectives and conditions, either the fixed budgeting approach or the simultaneous optimization of program and budget is suitable.
