Why Migrate to the SAP New GL?

When SAP promotes a new solution, it is usually about something we haven't seen before. So when the New General Ledger solution was announced, we thought, "What could be new about something as basic as the general ledger?" Well, a lot actually. Expanding on our prior posts about the benefits of the New GL and SAP Migration Scenario 1, today we'll explore a few key reasons why a utility already running SAP would consider migrating to the New General Ledger.

First, let's be clear, if you're running the classic SAP FI-GL, you don't have to migrate to the New GL when you upgrade. SAP has made the election to migrate a separate project from an upgrade. If you're getting what you need today from Classic GL, then you can stay put. But before you jump to the conclusion that you just don't need it, here are a few observations and suggestions to consider.

If you've been running SAP for a few years, you probably already know that the Controlling module works together with the General Ledger. In some cases it doesn't. We're referring to the differences between primary and secondary cost elements. CO is used for cost accounting. In the New GL, parts of CO are resident in the New GL. For example, the functional area, profit center and segment are part of the new general ledger table now called FAGLFLEXT instead of the familiar GLT0. Why add these fields to the General Ledger? Well, with the coming of more regulation around the use of International Financial Reporting Standards (IFRS), companies will need base financials on a segment of the business to comply with SEC requirements. A segment can be shown directly in the New General Ledger.

What we really find intriguing is the melding of the traditional Controlling module with the traditionally separated FI-GL. Rather than relegate the FI-GL to merely tracking account balances with links to the CO documents, SAP put CO objects alongside FI-GL accounts in the same table. The result: no reconciliation differences between CO and FI. This in turn speeds-up monthly closing, and makes segment reporting much more streamlined.

Utilities running the IS-U/FERC module can continue to use it with the New GL. FERC will still use CO tables to run the flow of costs trace, trace post, and direct post. The FERC drilldown will continue to store source and final objects in FERC_D1 to support the FERC balances in the new FIGLFLEXT table. But with the New GL, utilities have yet another option: to use the New GL to derive functional areas equivalent to the operations, maintenance, administration and general, and customer accounts expenses to stay in compliance—for example, with Title 18 of the Code of Federal Regulation (CFR) Part 101 for electric utilities.

So what are the advantages to utilities? Well, the New GL offers a way to provide line item FERC accounting for every transaction. Rather than derive FERC at the close of each month, utilities can consider FERC derivation in real time at the point of document entry. Such real time posting to FERC is possible by linking the CO object to a functional area. When charged, the CO object (e.g., internal order, PM order, cost center, or WBS element) will assign the functional area linked to the CO object to a field on the new GL table FAGLFLEXT.

We were skeptical of this approach due to the fact that secondary costs aren't posted to the New GL. Well, indeed they can be, but not as you might expect. Since secondary cost elements result in a net zero impact to the FI-GL (with the one exception of capital orders settling externally) secondary costs can be mapped to a General Ledger account via the CO transaction code. That means that assessments, overheads, and settlement cost elements can be mapped to the New GL. This is important because the CO objects charged with a secondary cost element are assigned a functional area needed for FERC reporting. The functional area from the CO object is thus updated in the New GL.