Fixed Asset Accounting Challenges Met by SAP Fiori Solutions

Written by: Grant Slinger

Fixed Asset Accounting plays a pivotal role in overseeing an organization’s assets throughout their entire lifecycle. As organizations contend with the complexities of new technologies and changing regulatory landscapes, fixed asset accounting faces modern challenges. These challenges include ensuring accurate capitalization, maintaining compliance with changing accounting standards, safeguarding custodianship of tangible assets, and facilitating clear and effective communication across departments.

In this blog we explore the challenges faced by Fixed Asset Accounting and shed light on how SAP Fiori can address them.

SAP Fiori for Fixed Asset Accounting

SAP Fiori serves as a transformative UX technology with the potential for optimizing Fixed Asset Accounting business processes. Our focus is on delivering actionable insights that facilitate the initiation of collaborative workflows and enforce approvals in compliance with the organization’s delegation of authority.

Through the implementation of workflow, SAP Fiori streamlines critical processes such as Project Completion with Asset Capitalization, Asset Disposals, Write-downs, and Transfers. Explore the synergy between Fixed Asset Accounting and SAP Fiori as we reveal key insights, solutions, and strategic approaches for efficient and timely fixed asset management.

Understanding the Importance of Fixed Asset Accounting

Fixed Asset Accounting is a structured way of handling an organization’s current assets from when they are obtained until they are no longer in use. It is the organized process of keeping track and managing assets that last for more than one accounting period. Fixed assets include investments like buildings, machinery, vehicles, and land, that are crucial for short term business operations and aim to generate long term value for the organization.

The fixed asset accounting process includes creating a fixed asset register, accounting for their depreciation expense, and properly retiring or disposing of the long term asset, all in accordance with financial reporting regulations.

Increased competition, supply challenges and society expectations have placed greater pressure on the enterprise’s total fixed assets, and this has demanded transformation in Fixed Asset Accounting, presenting both challenges and opportunities!

The Lifecycle of an Asset

The asset lifecycle encapsulates the entire journey an asset takes, starting from the initial planning and acquisition phase all the way through to its eventual disposal. Whether tangible asset or intangible assets, they are valuable resources that yield future economic benefits for an organization’s financial accountant. The assets useful life and asset depreciation involves several key stages, each marked by distinct activities, decisions, and considerations.

1) Planning

• Sets groundwork for asset management.
• Identifies organization’s needs for new assets aligned with strategic goals and current asset base.
• Involves critical budget preparation for asset acquisition.

2) Procurement

• Involves researching potential suppliers.
• Includes sourcing assets and navigating approvals.
• Crucial decisions on purchasing or leasing assets are made.

3) Utilization

• Activates assets to fulfill their intended purpose.
• Success depends on seamless integration into existing systems.
• Directly influences the duration and value derived from assets.

4) Maintenance

• Focuses on regular maintenance to extend asset useful life.
• Well-thought-out strategy for upgrades or refurbishments.
• Continuous monitoring to identify and address operational issues promptly.

5) Disposal

• Indicates the end of an asset’s useful life and their accumulated depreciation is accounted for on the balance sheet amidst financial statements.
• Involves retirement or disposal when no longer cost-effective.
• Requires careful planning, considering potential asset replacements with a potential time requirement.

6 Common Challenges in Fixed Asset Accounting

1. Data Collection: The data collection for the capitalization of assets is complex. Asset information includes serial numbers, models, locations, and responsibility areas such as cost centers. Assigning asset classes and useful life and the correct cost splits requires detailed attention by asset accountants. The intricacies of asset tracking and organizing this disaggregated information underscore the need for a robust system and process to ensure accuracy and efficiency in the initial and ongoing asset management.

2. Timeliness: Ensuring that asset capitalization aligns with net fixed assets commissioning and usage, and that disposals and transfers are promptly reported, is vital for compliant asset management. Delays in documenting these events can significantly affect financial reporting accuracy and compliance with accounting standards and regulatory requirements, such as taxation.

3. Workflow: Communication barriers among key stakeholders, including Project Managers, Engineers, Procurement, Financial Accountant and Asset Accountants can impede the seamless flow of information and clarity on next actions. Lack of the assignment of responsibility and difficulty gathering approvals further impact the efficient execution of the process. Streamlining these workflows is crucial to enhance collaboration, minimize errors, and ensure effective asset management.

4. Rekeying Data: The reliance on manual processes like Excel and Email, as a result of the lack of formalized collaboration, exposes fixed asset accounting to risks and errors from manual re-keying of data from disparate sources. Addressing this challenge is crucial to guarantee accurate and efficient data management.

5. Visibility: Current reporting often overlooks key project status data relevant to fixed asset accounting, focusing primarily on cost and schedule control. Asset accountants must gain insights into capital projects and asset completion to ensure proper initiation and management of the accounting process. This enhanced visibility is vital for accurate and effective asset accounting.

6. Control: Addressing the challenges in fixed asset accounting, including ensuring auditability, adhering to SOX compliance, maintaining accurate asset registers, and avoiding/resolving audit points, is crucial. Overcoming these obstacles is essential to maintain the integrity and reliability of an organization’s asset management processes.

How Does SAP Fiori Solve Fixed Asset Accounting Challenges?

SAP Fiori can play a significant role in helping organizations overcome fixed asset accounting challenges by providing a user-friendly interface and associated user experience process for managing asset transactions. Here are some of the benefits that SAP Fiori brings to address asset accounting challenges:

Intuitive User Interface: SAP Fiori offers a modern and intuitive user interface that enhances the user experience, making it easier for individuals across the organization to interact with fixed asset accounting software through highly mobile applications.

Role-Based Access: Fiori delivers a personalized user experience by providing role-based access. This focuses the users on the processes and data that they need relevant to their role. This helps in maintaining data security and integrity in fixed asset accounting.

Real-Time Data Access: Real-time data access in fixed asset accounting significantly enhances accuracy, efficiency, and decision-making. It ensures data integrity, facilitates informed decisions, and ensures accurate and up to date records.

Mobility: SAP Fiori’s mobile-friendly design is particularly beneficial for field technicians, maintenance personnel, and other professionals who need to access and interact with capital asset data with mobility.

Improved Reporting and Analytics: Fiori provides advanced reporting and analytics tools that help in the fixed asset accounting process. Users can easily generate real-time reports and analytics on asset net book value, accumulated depreciation, and other critical financial data, which can help in strategic decision-making and compliance.

Overall, SAP Fiori offers a comprehensive capability to overcome fixed asset accounting challenges by providing a modern and user-friendly platform for managing assets efficiently, ensuring data accuracy, financial modeling, and facilitating informed decision-making across the organization.

How do Standard SAP Fiori Apps compare to IQX Process Fiori Apps?

Although the technology layer is the same, there are a number of key differences between Standard Apps and IQX Fiori Apps.

1. ECC and S/4HANA: All IQX Asset Management Fiori Apps run both on ECC and S/4HANA, while Standard SAP Fiori Apps are predominantly centered around S/4HANA, with limited reach into the ECC environment. Both Standard and IQX Fiori Apps can run on the BTP Launchpad or Work zone.

2. Customization of UI and Data Model: While ECC Standard App had limited extensibility, S/4HANA Standard Apps can be customized and extended using the Key User (in-App) extensibility framework. IQX Fiori Apps are 100% custom Apps and are targeted at the exact transaction and data set required for the optimum user and process experience. Only the required fields are included (unlike standard apps) and extensive and unlimited additional business data is easily accommodated using the low code configurator.

3. Staging Layer and Workflow: Staging Layer and Workflow: Standard SAP Fiori Apps demand precise data for instant creation of a single backend transaction, restricting adaptability. In contrast, IQX Fiori apps improve this approach by adding a staging layer for storing and managing data within a request instance. Coupled with a configurable workflow engine, this facilitates collaborative processes such as review, endorsement, and approval, transforming Fiori into a comprehensive business process and workflow management tool.

4. Integration Orchestration: Standard SAP Fiori necessitates executing multiple separate transactions to achieve a desired process outcome, leading to a fragmented user experience and disjointed business processes. In contrast, IQX Fiori Apps distinguish themselves by combining ALL the necessary business information into a unified single request. Upon integration, the integration orchestration controls the sequential update of multiple target transactions to achieve the overall business outcome.

For example, the IQX Project Completion Fiori App does the following:

• Change the status of the WBS Elements (CJ02)
• Update the settlement Rules for the WBS Elements (CJB2)
• Create the fixed asset records (AS01)
• Adjust the Forecast (plan version) to Actuals (CJR2)

This Orchestration approach focuses activity on business outcomes with enhanced efficiency and promotes a more intuitive and cohesive user experience. Moreover, it facilitates a seamless flow of information across modules and business roles, effectively dismantling silos and bolstering overall operational efficiency.

Implementation Approach: Standard Fiori Apps are provided as ready-to-run for all users, yet their customization becomes challenging as requirements increase. Conversely, IQX Fiori Apps are inherently customizable, supported by a deployment strategy that starts with a working baseline solution. The implementation focuses on tailoring the baseline to deliver a highly personalized, high-value workflow enabled business process solution. This approach reduces time to value, lowers project risk and significantly reduces the total implementation costs for a fully customized application.

IQX Fiori Applications are different to Standard SAP Fiori Applications, especially when comparing compatibility, customization, workflow management, integration, and implementation. While Standard SAP Fiori Apps mainly focus on S/4HANA and offer limited extensibility, IQX Fiori Apps are compatible with both ECC and S/4HANA, offering full customization for optimal user and process experience.

They provide workflow by adding a staging layer and a configurable workflow engine, enabling collaborative processes, and transforming Fiori into a comprehensive business process management tool. IQX Fiori Apps also integrate all necessary business information into a single request with orchestrated integration, streamlining the user experience and improving operational efficiency.

Navigating New Horizons: SAP Fiori’s Impact on Fixed Asset Accounting

Fixed Asset Accounting encounters a range of complex challenges, from maintaining data precision to ensuring cohesive integration across varying processes. This blog addresses six key challenges, spotlighting SAP Fiori’s pivotal role in navigating these obstacles effectively. As the Fixed Asset Accounting lifecycle spans from acquisition to disposal, it necessitates attention to detail, a requirement that becomes increasingly demanding as organizations grow, and the complexity of asset information expands.

SAP Fiori stands out as an impressive technology platform, characterized by an intuitive user interface, immediate access to SAP data and business rules, mobility, and security. Its versatility allows for fully customized apps to deliver exceptional user experience to fit unique business needs, enhancing compliance, and ensuring data fidelity.

The nuances distinguishing Standard SAP Fiori Apps from the IQX Fiori Apps are particularly noteworthy. This blog highlights IQX’s superior coverage of Asset management, ready-to-use solutions, and cohesive transactional workflows, underscoring its position as a more comprehensive and user-centric approach.

SAP Fiori provides a holistic approach to overcoming Fixed Asset Accounting hurdles, equipping businesses with the necessary tools to tackle complexities, elevate efficiency, enhance cash flow, trace fixed asset depreciation, and uphold compliance standards. As companies continue to embrace and integrate technological advancements, Fiori emerges as an indispensable resource, streamlining Fixed Asset management processes and fostering heightened accuracy and productivity in managing your fixed asset account across their entire lifecycle.