Incentive and Commision

India SAP CoE, Slide 1

SD2008 - SD Incentive & Commission Management v 1.0


Incentive / Commission…?

Incentive / Commission is a variable remuneration for employees and partners.

These are to realize enterprise strategic goals like improved sales performance or quality, cost reductions or other types of value creation to the organization and can be monetary or non-monetary in nature


SD Incentive & Commission Management

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PurposeVariable compensation is a very effective level for aligning behavior such as sales performance with Corporate Goals. In highly competitive markets businesses need a highly motivated sales force. Flexible and Performance related compensation is the steering instrument for increasing performance. It is used to align sales force and employee performance to Organizational business goals.

In dynamic world, Companies organizational structure, sales channels, and product offerings often changes and calculation rules also changes proportionately and rapidly. when changes occur compensation is a significant cost element in businesses. Accuracy in calculations and cost control is important. To keep pace with that we need a flexible tool to calculate compensation types. Incentive and Compensation Management (ICM) is focused on calculating variable awards for constituents of the enterprise.


UseWhether you sell cars, insurance policies, or e-commerce services, incentive compensations and commissions play an essential role in your sales management

Used as a strategic tool, incentives and commissions help you to improve employee performance and reduce costs.

ICM is used to address this complex business process.


ChallengesDifficulty in understanding the Integration of ICM with

- Customer Relationship Management to automate sales commissioning

- Human Capital Management to apply variable compensation throughout the entire company, beyond direct sales.



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ICM’s Content

• ICM’s System Architecture • Basic Information – Packages in ICM• Business process – Solution Integration• Master Data• ICM’s Major Process


ICM system- Architecture

SAPHR

SAPFI

SAPBCA ...

Contract Accounting ...Others

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Con

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Commission Case

SettlementPartner

ORG

Commission Accounts

Policy Admin

Data WarehouseBW

Collection / Disbursem

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ICM Elements

Comm

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Basic Information – Packages in ICM

ICM is a control tool which is used to realize strategic enterprise goals for monetary and non-monetary incentives, for example, improved sales performance or quality, cost reductions or other types of value creation for your organization.. The flexible nature of ICM allows you to react swiftly to changing circumstances. When the enterprise strategy is changed, this can be reflected immediately in ICM.

Depending on business, market situation and enterprise structure, the business requirements vary, and this is reflected in the different levels of complexity offered by ICM. Since the various branches of industry are very different from each other, SAP provide the option of designing customers own commission management system according to your industry-specific requirements by selecting ICM packages. Thus ensuring of creating a commission management system that matches business requirements exactly. SAP also provided option of adding customer specific rule definitions to the preconfigured ICM packages.


Packages in ICM


ICM’s Business Process

Incentive and Commission Management

Analyze

Decide

Execute

Measure

Amend Compensation Plans for future Periods

Design Compensation Plans aligned with Corporate business strategy

Measure Compensation Results

Calculate Compensations Calculate IncentivesPrepare Settlement


ICM’s Business Process: Solution Integration


Analyze

Decide

Execute

Measure

Business Warehouse

Human Resources Customer

Relationship Management

Business Warehouse

Strategic Enterprise

Management


Integration of ICM with SAP Components

Contract Mgmt

CRM

Other

Strategy Mgmt

Data Warehouse Other

Calculation RulesAccounts

Human Resources

Accounts Payable Other

GL

Rules and Targets

Settlement

Agg

rega

ted

Res

ults

Operational Data

Data Storage

Targets Analytical& Decision Oriented Application


Settlement Operations

Ope

ratio

nal P

roce

sses


ICM’s Master Data - Elements

SAPHR

SAPFI

SAPBCA ...

Contract Accounting ...Others

Commission Case

Settlement

Commission Accounts

Policy Admin

BusinessWarehouse

BW

Collection /Disbursem

ent

Comm

ission

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Partner

ORG


Master Data – Business Partnerso Definition: Organization (firm, branch office), person or a group of persons or organizations in which your company has a business interest. Business Partner (BP) is centralcomponent of the SAP R/3 ICM Solution which is used in all applications.Business partners are created only once in the system. When a commission contract is created, it is given a unique assignment to a business partner with the role of commission contract partner.

o Control Elements of Business partners

1. Business Partner Roles2. Business Partner Categories3. Business Partner Types


Control Elements of Business Partners

Business Partner category

Business Partner Roles

Business Partner Types

2nd3rd

1st


Master Data – Organization Structure

• The SAP organizational tool (PD-ORG ) is used for creating organizational structures. Manage your internal and external workforce by defining responsibilities, for e.g. territories. It allows you to display the following:

– Organizational units– Job profiles– Positions– Relationships– Staff assignments

• Indirect participants can be determined by:– Structure– Contract relation– Data from the inbound interface


Master Data – Commission Contracts

The commission contract maps the relationship between company and commission contract partner or commission contract partners amongst each other. AII monetary and non- monetary agreements between the parties are mapped in the commission contract. Contracts are generally managed in versions (time-dependent). All documents can be managed together with the contracts, using optical archiving.

The commission contract is the central control element for: 1. Management

- Responsible commission clerk - How does communication take place?

2. Participation ratios - Relationship with indirectly participating commission contract

partners - Which commission contract partners may act amongst each

other? 3. Calculation bases

- Which conditions, rules, formulas, etc. are applied in which case? - Monetary processing - How are commissions settled and paid and via which channels? - Market ratios

4. Which products may be sold by whom in which regions etc.?


Commission Contract - Types

Different commission Contracts exists.They are

1. Global Commission contracts2. Standard Commission contracts3. Individual Commission contracts

Note: Commission Contract Bundle concepts are not dealt in this course


Major ICM’ s Processes

• Commission Case Calculation


Commission Case – Overview The commission case determines the remuneration result of the commission recipient on the basis of the information provided.It requires at least the following information:

Business partnerBusiness object (e.g. a sales order)Commission activity

Commissions are generated when a process (business transaction) takes place in an enterprise, which results in added value and at least one participant is involved. Agreements have to be made that trigger the disbursement of a commission. With Incentive and Commission Management, you can remunerate a wide range of business transactions as the system is extremely flexible. The result of the commission case is a commission document, which is required for settlement.

Commission case consists of four major process steps:Participant determinationValuation calculation Remuneration calculationPosting


Commission Case - Inbound Interface Information

ActivitiesParticipants ObjectsInbound Interface Information

The structured inbound interface offers the link to the operational system and contains information on

1. Participants2. Activities and3. Objects relevant for commission

Maximum flexibility is achieved through customer field enhancements to the inbound interface, with no modification necessary.


ActivitiesParticipants Objects

1.Determine Participant2.evaluate

3.Calculate remunerationclear

accept

Commission case

Salesorganization

Commission contract

Pending cases/parking

Sumtable

Sumtable

Commission account

post

Disbursement system

settle

closeContractPartner

Commission Case ProcessesInbound Interface Information



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ICM’s Customizing

• Prerequisite Customizing• Master Data Customizing

-Business Partners-Organizational Unit Customizing-Contracts

• Process Customizing


Prerequisite Customizing

IMG Activate SAP ECC Extensions ( T Code: SPRO)


Prerequisite Customizing – Packages (I)

Note: Please Don’t create it in IDES system. It needs Developers access key. If you have necessary authorizations and developers key then you can proceed.

IMG ICM Application Admin Installation of commission Application Name Commission Application


Prerequisite Customizing - Packages (II)

Select the Packages in left hand side and press the button. It will be added in your Application design.

You can choose the commission

application using this menu

(CACS_APPL_SET) and set as standard

Application

IMG ICM Application Admin Installation of Commission Application Select Commission Packages


Prerequisite Customizing – Packages (III) Copy client-specific Customizing from the template (core package)

Construct commission application

Commission Application Generation

Release commission application for clients

Copy the client-specific Customizing from the template

Can edit the permitted Business objects and assign the sub objects to it.



IMG ICM Basic Functions Preparation of Posting Select Commission Packages Commission Contract Partner Define Number Ranges



IMG ICM Basic Functions Preparation of Posting Comm.Docs, Stt. & Edit Update Mode For Totals Tables


Master Data – Business Partners

CACSIMG ICM Business partners BDT settings( SE43: BUPT)


Master Data – Business Partners - Roles

( SPRO)IMG Cross Application SAP Business partners Business partner Basic settings Business partner roles Define Business partner roles


Master Data – Business Partners - Types

( SPRO)IMG Cross Application SAP Business partners Business partner Basic settings Define Business partner Types


Master Data – Organization (i)

SAP easy Access Human Resources Organizational Management Organizational Plan Org. Plan Org. & Staffing ( Trxn :PPOCE)


Master Data – Organization (ii)

SAP easy Access Accounting ICM Master Data Org. Plan Org. & Staff Assignment ( Trxn :PPOME)


Master Data – Organization (iii)

SAP easy Access Accounting ICM Administration System Admin commission clerk Create ( Trxn :CACSMD301)


Master Data – Organization (iii)

SAP easy Access Accounting ICM Master Data Contract Partner Create ( Trxn : CACSMD001)


Master Data- Contracts

SAP easy Access Accounting ICM Master Data Commission Contract Create ( Trxn : CACSMD6101)


Process Customizing

IMG ICM Basic and Master Data Standard Commission Contract Define Contract Types


Process Customizing

IMG ICM Basic and Master Data Standard Commission ContractAssign Commission Contract Types to Partner Types


Process Customizing – Activity

IMG ICM Basic and Master Data Standard Commission ContractActivity Agreement Define Commission Activity Groups and Types


Process Customizing – Determine participants (I)

IMG ICM Basic and Master Data Standard Commission ContractParticipation Agreement Edit Participant Roles

Main participation role

Independent participation


Process Customizing - Determine participants (II)

IMG ICM Basic and Master Data Organizational Structure Assign Commission Contract Types to Participation Roles


Process Customizing – Valuation (I)

Define Calculation Procedure

IMG ICM Basic and Master Data Standard Commission Contract Valuation Agreement Edit Valuation Types


Process Customizing – Valuation (II)

IMG ICM Basic and Master Data Standard Commission Contract Valuation Agreement Edit Valuation Types

Define parameter

settings


Process Customizing – Remuneration (I)(Performance related Calculation)

IMG ICM Basic and Master Data Standard Commission Contract Remuneration AgreementsAgreement for Performance-Related Remunerations Edit Remuneration Type Activity


Process Customizing – Remuneration (I)(Flat rate Calculation)

IMG Incentive and Commission Management Basic and Master Data Standard Commission Contract Remuneration Agreement Agreement for Flat-Rate Remunerations.


Contract Type Screen Management

CACSIMGBasic and Master Datacommission contractBDT settings



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LetMeTransactions

CACSIMG ICM Customizing

CACS_APPL_SET Selecting the Commission Application and set as standard

BUP1/BUP2/BUP3 Create /change / Display General Business partners

PPOCE Create Org structure & staffing

PPOME Change Org structure & staffing

CACSMD301/02/03 Create/change /display commission clerk

CACSMD001 Create/change/display commission contract partner

CACSMD6101 Create/change/display contract



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Tips and Tricks

http://help.sap.com/saphelp_erp2004/helpdata/EN/9b/084736be07e421e10000009b38f889/frameset.htm


History of ICM.. SAP started developing a commission management in late 1998 together with MSG Systems as a partner. The target was to build an industry-specific solution in a first step and to make this available throughout different industries in a second step. The first step was focused on the insurance industry, targeting the high end of market requirements.FS-CS (Financial Services –Commission System) was developed together with 4 charter Clients in Release4.51. The second step building ICM as a cross-industry follow-up of FS-CS started in 2001. One focus in this step were the CRM and HR integration. Further focus was the enhancement of the commission modeling and calculation capability. In 2003 and 2004, ICM began to gain ground in further target markets. Together with the hereditary ones, the targeted markets are: Automotive Banking High Tech & Electronics Insurance Media Telecommunications Trade & Wholesales

Incentive and Commision

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