Planning personnel cost and headcount using the SAP HCM solution "Personnel Cost Planning and Simulation": - Process in SAP HCM - technical basics - Centralised planning or involving browser based line manager tools - Proven best practise for common scenarios and challenges in personnel cost planning and calculations - Rolling forecasts

1. Personnel Cost and Headcount
Planning in SAP HCM
Peter Gilberg
Sven Ringling
iProCon Group
SAP HCM Best practice Conference,
London, 8th Nov. 2012
#HCMBP2012

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Basic Approaches
Do a
Forecast
counting each
Penny
Find the
differences
afterwards
Punish the
culprits
Slide: 2
Create a Plan
based of
Forecast and
business
parameters
Act
according to
your plan
Improve
planning
quality
through
learning loop
From:
To:

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Agenda
■ Personnel Cost Planning – Basics
■ The Planning Process
► Preparation
► Data collection
► Planning run
► Detail planning and data transfer
■ Selected Best practices
Slide 3Session 4B - Personnel Cost Planning

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How it fits into SAP HCM
Slide 4
Session 4B - Personnel Cost Planning
Cost-
accounting
Personnel
Cost
planning
Organisational
ManagementPersonnel
master data
Compensation
Management
Training & Events
Management
Quota Planning
(sits in OM)
Payroll Results
BI (Business
Intelligence)

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What is it all about?
• Payroll results
• Master data
• Organisational structure
Forecast for personnel cost based on current
information
• Assumptions for the whole organisation
• Apply to change forecast
Applying scenarios
• Line managers make changes according to business requirements
• May comprise more than one planning cycle
Interactive Planning
Slide 5Session 4B - Personnel Cost Planning

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Cost Item = Central Building Block
Slide 6Session 4B - Personnel Cost Planning
cost item
wagetype
symbolic
account
FI/CO account
0..1
0..n n..m
• Using the symbolic account concept from payroll
• 3 types:
• Direct cost items: derived from data basis, e.g. Basic salary
• Dependant cost items: calculated from other cost items, e.g. NI
contributions
• Additional cost items: created in planning run, e.g. Headcount or FTE
Configuration BAdI Programming

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The Planning Process in SAP
Slide 7Session 4B - Personnel Cost Planning
Planning
preparation
Data
collection
Planning
run using
business
rules
Detail
planning
(applying
same
business
rules)
Transfering
results
Framework
and
configuration
Data basis
from PA, PY,
OM, T&EM
Planning
runs per
scenario
Agreed final
plan version
Integrated in
SAP CO
plans

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Result of planning process
Data basis
Design principle: logic required in detail planning should not sit here
Planning run
scen. 1
Planning run
scen. 2
Plan scen 2 after
detail planning
Transferred to plan
version in CO
module
Planning run
scen. 3
Plan scen 3 after
detail planning
Slide: 8

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Agenda
■ Personnel Cost Planning – Basics
■ The Planning Process
► Preparation
► Data collection
► Planning run
► Detail planning and data transfer
■ Selected Best practices
Slide 9Session 4B - Personnel Cost Planning

10. www.iprocon.com
Planning Preparation
Slide 10Session 4B - Personnel Cost Planning
planning
preparation
data collection
planning run Detail-planning transfer of results
Implementation in SAP
Configuration Development
Define parameters
Top management
direction
Statutory framework
Collective
agreements
Scenarios

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E.g.: Variations and scenarios
Slide 11Session 4B - Personnel Cost Planning
planning
preparation
data collection
planning run Detail-planning transfer of results
Scenario 2:
„Recession“
Scenario 1:
„Normal“
Bonus
employees
Bonus
Execs
Annual salary
change
EE subgroup
10: „Salaried
employees“
EE subgroup
20:
„Executives“
feature
HCP01

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Agenda
■ Personnel Cost Planning – Basics
■ The Planning Process
► Preparation
► Data collection
► Planning run
► Detail planning and data transfer
■ Selected Best practices
Slide 12Session 4B - Personnel Cost Planning

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Data collection
Slide 13Session 4B - Personnel Cost Planning
planning
preparation
data collection
planning run Detailplanning transfer of results
Purpose: data basis for all planning scenarios
How: basic valuation of all relevant objects
employee position Orgunit Quota
PA: IT0666 OM: IT5010
Data basis = direct cost items

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Employee Data
■ Data collection methods
► Infotype 0008 – basic salary
► Infotype 0014 – recurring payments / deductions
► Infotype 0015 – additional payments
► Difference between actual and planned pay
► Compensation guidelines (from compensation management)
► Payroll results (real or simulated)
► Simulated payscale change
► Data from training and event management
► Custom data collection methods (enhancement – often used for
country specific payroll infotypes not included in standard, such as
0071 for UK pension schemes)
Slide 14Session 4B - Personnel Cost Planning
planning
preparation
data collection
planning run Detailplanning transfer of results

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Payroll results or master data??
How and why to use payroll results?
• Posting run fills planning cluster
• For future periods, this can be based on a simulation
• Very tempting: looks accurate and no little extra config
The downside:
• If all comes from payroll, dependencies are not ‚known‘ to cost planning, so
detail planning won‘t work
• Master data and configuration for the whole planning period must be available so
payroll can run
• Performance issues (may run for hours or even days)
• You may not have payroll for all countries running in SAP
Blended solution
• Often some elements are taken from PAST payroll results (e.g. overtime) as
basis for forecast
Seite 15Session 4B - Personnel Cost Planning
planning
preparation
data collection
planning run Detailplanning transfer of results

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Filling data basis from payroll posting
Slide: 16

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Data Collection for Employee
■ Run Report (transaction PHCPDCEM)
■ Data collection
► Infotype 0008 – basic pay
► Infotype 0015 – Additional Payments
■ View Infotype 0666 „Planning of Pers.
Costs“
■ Manipulate data (transaction PHCPDCUI)
■ Delete data basis (transaction PHCPDCDL)
Slide 17Session 4B - Personnel Cost Planning
Demo Video on : http://ow.ly/f3GUy

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Organisational Data
■ Data collection methods
► Infotype 1005 – planned compensation
► Data from connected objects (e.g. averages)
► Data for vacant positions
► Data from quota planning
► TEM (Training cost)
► Custom data (Enhancement)
Slide 18Session 4B - Personnel Cost Planning
planning
preparation
data collection
planning run Detailplanning transfer of results

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Putting a £-Sign to Vacancies
Slide 20Session 4B - Personnel Cost Planning
Infotype „Planned
Compensation“ (Positions)
Transparent
High data maintenance effort
One cost item only
Jobs
Transparent
Low data maintenance effort
Possibly several cost items
Requires proper job catalogue
Occupier
No data maintenance
Several cost items
Not transparent

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Agenda
■ Personnel Cost Planning – Basics
■ The Planning Process
► Preparation
► Data collection
► Planning run
► Detail planning and data transfer
■ Selected Best practices
Slide 21Session 4B - Personnel Cost Planning

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Planning run
Slide 22Session 4B - Personnel Cost Planning
Feel Good Inc.
PCP CD ...
planning
preparation
data collection
planning run Detailplanning transfer of results
PA: IT666
OM: IT5010
Planning run in
Cluster PCL5 Cost items

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Cost items
Slide 23Session 4B - Personnel Cost Planning
planning
preparation
data collection
planning run Detailplanning transfer of results
Planning run uses same data basis to calculate several scenarios. The result
of the planning run are the dependent and additional cost items incl. key
figures – added to the direct cost items from the data collection.
• From data collection
• Basis for dependent cost items
• e.g. Basic salary
Direct
• Relative value based of other cost items
• May have capping limit
• e.g. Employer NI contribution, pension
Dependent
• Fixed value
• e.g. Allowance for work clothing
Additional
• e.g. headcount
• May depend on work percentage – e.g. FTE
Statistical key figures

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Planning Run
■ How it works
► Manage planning runs (transaction PHCPADMN)
► Perform a planning run
► Show results
► Delete plans (transaction PHCPPRMV)
■ Examples
► Dependent and additional cost items
► Valuation of vacancies
► Cost distribution
Slide 24Session 4B - Personnel Cost Planning
planning
preparation
data collection
planning run Detailplanning transfer of results
Demo Video on : http://ow.ly/f3H8y

24. www.iprocon.com
Agenda
■ Personnel Cost Planning – Basics
■ The Planning Process
► Preparation
► Data collection
► Planning run
► Detail planning and data transfer
■ Selected Best practices
Slide 25Session 4B - Personnel Cost Planning

25. www.iprocon.com
Detail Planning
Slide 26Session 4B - Personnel Cost Planning
planning
preparation
data collection
planning run Detailplanning transfer of results
- Individual changes for each object (e.g. Employee) on
cost item level
- Options:
- For whole plan done centrally
- For orgunits done by line managers
- Done in browser as BSP (old) or WebDynpro (new)
- No Portal required
- Can be integrated in MSS in portal
Line manager
Planning run in
Cluster PCL5What makes this great?
The rules for dependent cost items, whether in configuration
or BAdI programming, are applied, whenever a change is
made in detail planning. So, if basic salary is increased, NI is
increased accordingly

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Detail Planning
■ Examples:
► Salary change
► Headcount change
► Central budgets
► Organisational changes
Slide 27Session 4B - Personnel Cost Planning
Demo Video on : http://ow.ly/f3HqB

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Transfer of plans
Slide 28Session 4B - Personnel Cost Planning
planning
preparation
data collection
planning run Detail-planning transfer of results
- Transfer into CO module
- Cost items are linked to symbolic accounts
- Symbolic accounts linked to GL accounts
- Activity types only possible via modification
- Creating budgets (CO as well as compensation management)
- Transfer into BI

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Agenda
■ Personnel Cost Planning – Basics
■ The Planning Process
► Preparation
► Data collection
► Planning run
► Detail planning and data transfer
■ Selected Best practices
Slide 29Session 4B - Personnel Cost Planning

29. www.iprocon.com
Selected Best Practices
Slide 30Session 4B - Personnel Cost Planning
• Absence Valuation
• Plan vs. Actual: rolling forecast
• Accumulate cost items
• Manual maintainance of infotype 5010
Simplifying the process
Higher quality in the results

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Valuation of absences
SAP standard can consider absences
• But deletes all cost items for absence period of defined
absences
• In some cases, you want only some cost items deleted
or change valuation
Custom solution:
• Selectively delete or change cost items in absence
periods
• BAdI HRHCP00_DC_COSTITEMS
Slide 31Session 4B - Personnel Cost Planning

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Having a plan
Slide 32Session 4B - Personnel Cost Planning
0
5000
10000
15000
20000
25000
30000
35000
1 2 3 4 5 6 7 8 9 10 11 12
Plan
Plan

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Comparing Plan & Acutal
Slide 33Session 4B - Personnel Cost Planning
0
5000
10000
15000
20000
25000
30000
35000
1 2 3 4 5 6 7 8 9 10 11 12
Plan
Payroll

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Create a rolling forecast
Slide 34Session 4B - Personnel Cost Planning
0
5000
10000
15000
20000
25000
30000
35000
1 2 3 4 5 6 7 8 9 10 11 12
Plan
Payroll
Forecast

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Accumlate Cost Items
Seite 35Session 4B - Personnel Cost Planning
Basic Pay
Overtime
Bonus payment
NI
Pension
ER
XYZbenefi
s
NI
Pension
ER
XYZbenefi
s
NI
Pension
ER
XYZbenefi
s

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Accumlate Cost Items
Seite 36Session 4B - Personnel Cost Planning
Basis Pay
Overtime
Bonus payment Basis NI and pension
Transparent calculation
Improved performance in planning run
NI
Pension
ER
XYZbenefi
s

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Manual Maintenance of Infotype 5010
■ Some elements difficult to forecast based on
existing HR data
► E.g. overtime depends on future business volume more than
data from past
► Requires judgement from line manager
► Based on business data like sales forecasts
► Not assigned to particular employee
Slide: 37
■ Pragmatic solution:
► Estimate overtime volume
and capture it directly in IT
5010 for department
► Also applicable for training
cost, recruitment
cost, entertainment,…

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Further Proven Enhancements
Recruitment Wave
Simulated leavers
• By age
• According to contract end date in infotype 0016
Integrating pensioners
• In SAP standard, they are not part of OM and therefore excluded from cost planning
UK pension schemes:
• Custom data collection method for infotype 0071
Get overtime and shift allowances from payroll
• Selective reading of payroll results – may even shift to different periods (e.g. for overtime at
Easter)
UK NI calculation and BUPA without using payroll results
Integration into Processes & Forms
Seite 38
Session 4B - Personnel Cost Planning

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Project examples
Client Scope Time / effort
Chemicals, 1,000 staff, UK +
German subsidiary
Pragmatic implementation
incl. detail planning and BI,
but no line manager
involvement
- 10 weeks
- 15 consultant days
Bank, Germany, 4,000 staff Complex implementation incl.
detail planning with line
managers and 3rd party CO
interface
- 9 months
- 60 consultant days
International organisation,
2,000 staff
Complex implementation with
many bespoke planning
elements (e.g. recruitment
wave)
- 6 months
- 50 consultant days
IT service provider, 800 staff Building a pragmatic pilot
without line manager
involvement
- 2 weeks
- 5 consultant days
Group of universities, >50,000
staff
Full redesign and
performance optimisation
- 3 months
- 20 consultant days
Slide: 39

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Questions?
Slide: 40
s.ringling@iprocon.com p.gilberg@iprocon.de