Simplifying CAPEX Project Management in SAP S/4HANA: 4 Key Takeaways

Picture of Göktürk Vercan
Göktürk Vercan

SAP Enterprise Portfolio and Project Management (EPPM) Solution Expert

October 1, 2024

Did you know that poorly managed capital projects can lead to significant delays, with the average large-scale project finishing 20 months behind schedule and running 80% over budget? In industries like chemicals, energy, and construction, these overruns can have a serious financial impact, often caused by inadequate planning and lack of coordination across departments.

Managing these projects effectively requires cross-functional collaboration—engineers create project plans, stakeholders review and approve proposals, and sourcing teams handle procurement. Without the right tools, these projects quickly become difficult to manage. When organizations transition to SAP S/4HANA, many questions arise: Should we implement Portfolio and Project Management (PPM), or is Investment Management (IM) enough for managing our CAPEX projects? What are the latest standalone apps in the SAP Project System (PS)? How can we ensure real-time reporting without the need for extensive custom development? And how can we avoid the common pitfalls of migration?

In this article, I’ll share 4 key takeaways for managing CAPEX projects with SAP S/4HANA, helping organizations avoid costly mistakes and improve project efficiency.


1. Separate CAPEX and EXPENSE WBS Elements for Better Reporting and Integration

A fundamental step in optimizing CAPEX project management is distinguishing between Capital Expenditure (CAPEX) and Expense within your Work Breakdown Structure (WBS) elements. By separating these elements, you enhance clarity in financial reporting and ensure seamless integration with other SAP modules.

This separation allows for:

  • Accurate Financial Tracking: Monitor capital investments and operational costs independently, leading to more precise budgeting and forecasting.
  • Improved Compliance: Align with accounting standards by correctly categorizing expenditures, which is crucial for audits and financial statements.
  • Enhanced Decision-Making: Provide stakeholders with detailed insights into where funds are allocated, facilitating better strategic decisions.

2. Use Investment Management (IM) for Basic Portfolio Management

If full-scale Portfolio and Project Management (PPM) seems overwhelming, Investment Management (IM) offers a simpler alternative for managing your CAPEX portfolio.

Key features:

  • Budgeting and Planning: Allocate funds effectively across various projects and monitor expenditures in real-time.
  • Approval Processes: Implement appropriation requests to control capital spending and ensure projects align with strategic goals.
  • Simplified Reporting: Generate reports that provide insights into investment programs without the complexity of PPM.

IM provides a simpler solution for organizations that need to manage budgets but don’t require the comprehensive features of PPM, such as resource management or capacity planning. This makes it an ideal choice for businesses focused primarily on financial tracking and budget control, rather than complex project and resource management.


3. Use Existing Queries or Extend Them for Real-Time Reporting via Embedded Analytics

Timely information is critical for project success. Leveraging SAP S/4HANA’s embedded analytics allows you to use existing queries or customize them for your reporting needs.

Benefits:

  • Real-Time Data: Access up-to-the-minute information on project performance, budgets, and timelines.
  • Customizable Reports: Tailor reports to highlight the metrics most relevant to your organization.
  • Informed Decision-Making: Empower managers with insights that enable proactive management rather than reactive problem-solving.

4. Consider Less Costly Alternatives Like Screen Personas and Adapt UI, Before Developing a Custom Solution from Scratch,

Custom development can be resource intensive. Before you commit to building new solutions from the ground up, explore SAP’s built-in tools like Screen Personas and Adapt UI.

Why this approach works:

  • Cost Efficiency: Reduce expenses associated with custom coding and long development cycles.
  • User Experience: Enhance interfaces to be more intuitive for your team, increasing adoption rates and productivity.
  • Agility: Implement changes faster, allowing your system to adapt quickly to new business processes or requirements.

If you’re interested in learning more about managing CAPEX projects in SAP S/4HANA, we invite you to join us at the Deutschsprachige SAP-Anwendergruppe e.V. (DSAG) Annual Congress in Leipzig on 16 October 2024. Cüneyt Aksoy from Aksoy.Consulting, along with Dietmar Sickmann, Process Manager Maintenance & Engineering, and Dr. Peter Merz, Head of Technical Controlling, both from Röhm , will be presenting on the topic “Investment Management at Röhm – an integrated solution in S/4HANA Private Cloud” (in German “Investitionsmanagement bei Röhm – eine integrierte Lösung in S/4HANA Private Cloud”).

We’d love to see you there! If you’d like to discuss CAPEX projects further or have any questions in the meantime, feel free to reach out to us. We’re always open to helping you optimize your approach to CAPEX project management in SAP.

Picture of Göktürk Vercan
Göktürk Vercan

SAP Enterprise Portfolio and Project Management (EPPM) Solution Expert