Set Up and Utilize Internal

Orders as Standard SAP®

Functionality

John Jordan
ERP Corp © 2015 ERP Corp. All rights reserved.
 Introduction

• Internal Orders Overview

• What are they?

• How are they used?

• Real vs. Statistical

• Limitations & benefits

• To plan or not to plan

• Grouping

• Which type better fits your requirements?

• Case Study: Capture R&D Costs with Statistical Orders

• Configuration of statistical internal orders

• Collection of values

• Reporting
3
 Topics

• Internal Orders Overview

• Real vs. Statistical
• Case Study: Capture R&D Costs with Statistical Orders
• Reporting
• Summary

Start of first section:

List the main points in your presentation and insert this slide at
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 Internal Orders Explained

• What are they?

• Internal orders are a cost object in SAP Controlling module

• The primary purpose of an internal order is to capture costs

and/or revenues related to specific event or project
• Provide cost control & monitoring of short-term jobs & tasks

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 Internal Orders Explained (cont.)

• How are they used?

• Internal orders are used to capture and monitor:
• Non-departmental costs
• Revenues related to a specific sales order
• Large or small internal projects

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 Topics

• Internal Orders Overview

• Real vs. Statistical
• Case Study: Statistical Orders to Capture R&D Costs
• Reporting
• Summary

Start of second section:

List the main points in your presentation and insert
this slide at the start of each new topic. Move the
highlighted box down for each new section. This
divides your presentation into easy to follow
sections.

7
 Real vs. Statistical

• Real internal orders

• A real internal order tracks costs that settle to:
• An asset
• A general ledger account
• Another cost object such as a cost center or internal order
• Can post plan:
• A new building or large maintenance project that will result in an asset
• SAP implementation: settlement is split between asset and expense
accounts

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 Real vs. Statistical (cont.)

• Real internal orders

• Can be planned or budgeted
• A plan allows for actual costs collected/committed to be compared
with the plan assigned to an order or group of orders
• A budget allows for costs collected/committed to be compared with the
budget assigned to an order or group of orders
• A plan can be exceeded, a budget cannot (availability control)
• Not all orders have to be settled
• Internal orders can be used in the same manner as cost centers with
regard to capturing costs
• The key is to ensure that the values are assigned correctly within the
OPEX section of the profit and loss statement
• This can be accomplished by assigning functional areas

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 Real vs. Statistical (cont.)

• Statistical Internal Orders

• This type of internal order is used for reporting purposes and
cannot be settled
• The real costs are assigned to another cost object

• When entering transaction must enter both cost center and

internal order
• Statistical orders are used for the following types of spend:
• Marketing
• Trade show costs
• Special projects (time and expense tracking)
• Research and development spend

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 Benefits & Limitations

Options Real Statistical

Plan or Benefit – allows for clear view of Limitation - expected amounts can be
Budget spend against assigned to the order but
expectations not reported
Settlement Benefit – allows for cost collection Limitation – cannot be settled
and settlement according Benefit – because settlement is
to user defined rules NOT included, there is less
maintenance
Posting Benefit – costs are posted directly Benefit – costs are posted to the
to the internal order relevant department
responsible for the costs
while the order allows for
specific reporting
Reporting Benefit – reports can be run by Benefit – reports can be run by order
order or group, viewing or group
actual, commitment and
plan/budget
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 To Plan or Not to Plan

• There are two types of internal order planning

• Plan integrated
• Internal order / cost element planning and allocations are updated on
sender / receiver cost centers automatically
• This type of planning can also be transferred to profit centers
• Non plan integrated
• Local planning of costs or activities related to an internal order does
not update cost center and/or profit center plans automatically

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 To Plan or Not to Plan (cont.)

• Budgeting for internal orders

• Exceeding a budgeted value applied to an internal order is
considered a hard stop, unlike planning which is a warning
• If proposed spend exceeds budget the system will not allow
the transaction to post
• Any excess amounts require an adjustment to the budget
• Activate availability control
• The budget can take into account any values committed via a purchase
order during entry of financial postings (invoices or G/L entries)
• Activate commitment management

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 To Plan or Not to Plan (cont.)

• Budget control for cost centers

• Link a statistical order to a cost center in the Control data tab

• Postings to the order will automatically post to cost center

• Refer to SAP Note 101030 for more details

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 Grouping

• Internal orders are not associated with a mandatory hierarchy

• All cost centers must belong to the standard hierarchy

• Orders can be grouped by activity or project based upon

planned usage as follows:

A2 Cycles Trade
Show

400239
400237 4002378
Promotional
Booth Rental Travel
Items

• Grouping orders together increases efficiency during

settlement and reporting
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 Grouping (cont.)

• A grouping of internal orders can also be used to collect and

budget a large project where you want to charge to a lower level
but report at a higher level
• Examples are:
• Large scale building

• Renovation projects

• Large scale marketing/advertising

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 Which type of order better fits your requirements?

• Determine how the order will be used

• Will it require settlement to cost center, asset or GL account?

• Do you require planning or budgeting?

• It is necessary to review actual vs. commitment vs. plan?

• Is the purpose to collect department related costs specific to

an event or project for internal reporting requirements?

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 Topics

• Internal Orders Overview

• Real vs. Statistical
• Case Study: Capture R&D Costs with Statistical Orders
• Reporting
• Summary

Start of second section:

List the main points in your presentation and insert
this slide at the start of each new topic. Move the
highlighted box down for each new section. This
divides your presentation into easy to follow
sections.

18
 Case Study: Statistical Orders to Capture R&D Spend

• Company / system profile

• Small privately held company in the United States

• Implemented ECC 6.0 with SAP General Ledger early 2008

• Controlling functionality implemented included:

• Cost center accounting
• Profit center accounting
• Product costing
• Profitability analysis (CO-PA)
• Requirement provided:
• Identify the correct tool to capture R&D expenditure by
individual product
• Project system or internal orders

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 Case Study: Statistical Orders to Capture R&D Spend
(cont.)
• Current method of identifying R&D costs:
• Cost center reporting
• Upon further discussions with the controller and CFO, it was
confirmed that the R&D department was represented by various cost
centers organized by:
• Function (engineering, design, general R&D)
• Location (plant 1, plant 2, etc.)
• The client did not have any systematic method of identifying the costs
• Manually reported values using spreadsheets

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 Case Study: Statistical Orders to Capture R&D Spend
(cont.)
• Recommendation:
• Statistical internal orders
• Given the requirement that existing cost centers retain responsibility
AND the reporting requirements, this was the most efficient option
• Project system would require too much design and maintenance
• The cost of implementing statistical internal orders equated to 20
consulting hours versus a larger implementation of project system

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 Configure Order Type for Statistical Order

• Transaction: KOT2
• IMG menu path:
• Controlling

• Internal Orders

• Order Master Data

• Define Order Types

• Select category 0420

• SAP standard order types can be copied and then modified

• Your SAP system may or may not contain above order types

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 Configure Order Type for Statistical Order (cont.)

• Field requirements:
• Header
• Order category = 1
• General parameters
• Planning profile = 000001
• General plan profile
• Control indicators
• CO Partner Update = Active
• Classification = X
• Commit. Management = X
• Status management
• Status Profile = 00000002
• Release immediately = X

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 Create Statistical Internal Order

• Transaction:KO01
• Menu Path:
• Accounting  Controlling  Internal Orders  Master Data
 Internal Order  Special Functions  Order  Create
• Select Order Type 0420

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 Create Statistical Internal Order (cont.)

• Field requirements:
• Header
• Description
• Assignments
• Company Code
• SAP User Responsible

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 Create Statistical Internal Order (cont.)

• Field requirements:
• Control data
• System status = REL
• Currency = Company
code currency
• Statistical order = X

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 Create Statistical Internal Order (cont.)

• Field requirements:
• General data
• Estimated costs =
Estimated amount for
project/event*
• Save
• System displays message:
• Internal order was
created with Order
number 400XXX
• Fields are information only
• Can be used for other
purposes
*Information only; not included in reporting
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 Topics

• Internal Orders Overview

• Real vs. Statistical
• Case Study: Capture R&D Costs with Statistical Orders
• Reporting
• Summary

Start of second section:

List the main points in your presentation and insert
this slide at the start of each new topic. Move the
highlighted box down for each new section. This
divides your presentation into easy to follow
sections.

28
 Reporting

• Internal order reporting is divided into categories to make it

easier to find the report you are looking for:
• Plan/Actual Comparisons

• Actual/Actual Comparisons

• Planning Reports

• Line Items

• Master Data Indexes

• Summarization Reports

• More Reports

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 Reporting (cont.)

• Two primary reporting areas for statistical internal orders are:

• Actual/Actual Comparisons

• Line Items

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 Actual/Actual Comparisons

• Compare results on period, quarterly, or annual basis with a

prior fiscal year
• Identify where your department is over time from a spend
analysis perspective
• Period Comparison
• Period totals for a fiscal year
• Quarterly Comparison
• Quarterly totals for a fiscal year
• Yearly Comparison
• Current fiscal year totals along with totals for two previous years

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 Line Items

• View line item data relevant to:

• Actual postings

• Commitments

• Plan

• Two most relevant reports are:

• Orders: Actual Line Items
• Display all line items posted to:
• Internal order
• Internal order/cost element combination

• CO Documents: Actual Costs

• Display actual CO document s created:
• Internally
• Externally from FI

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 Topics

• Internal Orders Overview

• Real vs. Statistical
• Case Study: Capture R&D Costs with Statistical Orders
• Reporting
• Summary

33
 Summary

• Statistical Orders provide valuable reporting and require limited

set-up and maintenance
• Retains reporting by cost center

• Allows for grouping of internal orders based upon events

• Easier to set-up and maintain than project system

• Can collect revenue

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 Five Key Ideas

• Implement statistical orders for following events:

• Trade shows

• Conferences

• R&D expenses

• Entertainment
• Collect costs related to company Christmas party
• Implement real orders without settlement for projects that do
not require capitalization
• Implement commitment management and availability control
• Consider reporting using FAGLL03
• G/L account line item display

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 Resources

• 100 Things You Should Know About Controlling with SAP

• https://www.sap-press.com/controlling-with-sap_3746/

• SAP Help
• http://help.sap.com/saphelp_erp60_sp/helpdata/en/a9/ab7f68
414111d182b10000e829fbfe/frameset.htm
• SDN Wiki
• http://wiki.scn.sap.com/wiki/display/ERPFI/Internal+Orders

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 Questions

• Now:
• Ask questions now for immediate answers

• Later:
• jjordan@erpcorp.com

Q&A
37
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