Oxygen Thinking – SAP ERP6 New GL
And for the record, SAP now calls New GL “SAP General Ledger” as it’s been released since 2004 and is not really new anymore. But for this paper, we’ll continue to call it New GL as it still is new to a lot of people.
SAP’s Classic GL versus New GL – Different Approaches
- Organisations currently using an SAP version that is pre ECC5 typically report their financial position using one or more ledger structures. (SAP now refers to these as the Classic ledgers) These are usually one or more of the following:
Classic GL – for legal reporting requirements - Cost of Sales Ledger – for profit and loss reporting around lines of business
- Classic Profit Centre Accounting – for management and segment reporting at profit and loss level and some balance sheet items
- Special Ledger – multi-dimensional and defined at a customer level
- Industry Specific Ledgers – organised around industry specific requirements e.g. grants or funds management
SAP’s New GL solution has combined the entire separate ledger reporting dimensions and now provides an integrated financial management approach that supports:
- Legal reporting requirements
- Management and segment reporting
- Extensibility by industries and customers
- Balanced books for any dimension
- Parallel sets of books
- Fast close leading to a lower cost of accounting management
- Fully international accounting standards compliant with true transparency
The Advantages of New GL – An Overview
SAP’s New GL in ERP6 has a number of advantages over the Classic GL found in SAP R/3. Some of the advantages include:
- An expanded data structure (e.g. company code, business area, profit centre, segment and functional area). Additionally, user defined or customer characteristics can be added to New GL
- The real-time document splitting functionality allows complete financial statements (lower than company code) for characteristics such as Business areas, segments, profit centres, etc
- Real-time reconciliation of management accounting (CO) and financial accounting (FI). Real-time CO-FI integration which eliminates the need for time-consuming reconciliation and period end tasks
- A single database for financial and management accounting. This eliminates the need for separate, specialised ledgers and enables faster reconciliation and closing
SAP New GL allows a number of “books” (ledgers) within the GL. This is an option for reporting a parallel accounting method in the SAP system for different currencies, valuations, fiscal years, characteristics, etc.
Oxygen’s view on SAP’s New GL
It is Oxygen’s view that organisations upgrading to/or implementing SAP ERP6 can gain significant benefits in migrating to/or implementing SAP’s New GL. Benefits typically include:
- External financial reporting requirements can be met using multiple New GL characteristics (e.g. legal entity reporting, segment reporting, etc.)
- External financial reporting requirements where different valuation is required can also be achieved (e.g. IFRS, US GAAP, Tax, etc)
- Internal management reporting requirements for a “balanced set of books”, lower than legal entity (e.g. profit centre) is enabled allowing for balance sheet responsibility and working capital accountability to lower levels of the organisation
- Minimise the use of spreadsheets for financial and management reporting, providing less manual manipulation of data, better audit trail, etc
- Faster close and more accurate data by less reconciliation effort required/minimise manual manipulation of data
- Greater visibility, audit trail and understanding of financial data for the user community
As we speak to customers about New GL, we regularly receive questions. Some of these include:
I am implementing SAP ERP6 for the first time, will I get New GL?
Yes. The New GL capabilities are automatically activated on installation of SAP. The New GL is then customised for your requirements and then implemented.
We are using SAP R/3. How do I migrate to New GL?
If you are using an SAP version that is pre ECC5, you can choose one of two options. Firstly, you can perform a technical upgrade to ERP6 and then migrate to New GL. Alternatively, you can choose to re-implement using SAP ERP6 with New GL already activated. Oxygen has worked with customers across both of these options.
Can I perform a technical upgrade to ERP6 and a migration to New GL at the same time?
A technical upgrade can be performed at any time but a migration to New GL is fiscal year dependent. This reason being coupled with risk mitigation, it is recommended by SAP to complete the technical upgrade to ERP6 first and then perform the migration to New GL. They should be treated as two separate projects under the same program of work.
When you migrate to New GL, do you lose previous fiscal year financial information?
No. The previous fiscal year information is in Classic GL. You migrate the opening balance and transactions in the new fiscal year to New GL. What you lose is the ability to compare in one report (for one fiscal year only), last year and this year financial information. If this is critical to you, a BI solution can be implemented to overcome this issue.
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