Many businesses running SAP struggle with planning and budgeting costs in SAP for investments and large projects. Typical issues they face are:
- Lack of transparency for costs and investments
- Siloed projects and budgets that make it difficult to have an executive level view of all ongoing project costs
- No integration between modules of SAP
- Lack of reporting
All these common issues are solved in the Investment Management (IM) module. An overview of the module and its variety of uses will be discussed in this blog article.
The Investment Management module of SAP provides a variety of functionalities and integrations with other modules. With help of the Investment Management module, functionalities such as planning, investment and financial processes in the company could be used to consider some of the following purposes:
- Utilization of investments in tangible assets (e.g., using in-house production or purchasing)
- Use of projects which mainly generate overhead costs
- Investments in R&D processes
- Use of maintenance programs
Appropriation Requests
The Appropriation Requests component facilitates the investment process during the planning and decision-making phase for implementing investments. An appropriation request is a planned measure (e.g., an investment) that must be reviewed and approved by one or more departments due to their high costs. It represents a concrete plan to be implemented within the company.
The request consists of a master record with basic details, such as the type of investment, organizational assignments, and the measure for implementation. Variants can be created for each appropriation request, allowing different alternatives for realizing the plan. Each variant has its own master data, focusing on the most important plan values, and at least one variant is always associated with an appropriation request.
Investment Programs
An Investment Program in SAP represents a structured framework for planning and monitoring the costs belonging with a set of Investment Measures within an enterprise or corporate group. It consolidates the financial aspects of multiple Investment Measures and allows for comprehensive budgeting, administration and control. Investment Programs serve as a supplement to cyclical planning and budgeting processes, supporting the annual preparation of investment plans and budgets.
These programs ensure transparent and consistent control over the allocated budgets, helping organizations comply with their corporate structures and financial governance requirements. They provide a systematic approach to managing and tracking investments, offering greater insight into how resources are allocated and spent across different departments or business units.
Investment Measures
A functionality in SAP that collects costs and allows you to track budgeting and planning. When using this component, CO objects like internal orders, maintenance orders and projects can be considered and represented as Investment Measures. These measures facilitate companies to ensure that they retain financial control over their investments.
The Investment Measures component allows you to handle the accounting and controlling aspects of measures undertaken by your enterprise to produce long-term fixed assets for internal use, which must be recorded as assets under construction on the balance sheet key date. Overall Investment Measures in SAP provide a robust framework for managing the financial aspects of long-term capital projects.
Reporting of Investment Management
The Investment Management module includes an Information System that supports the planning and monitoring of investment programs within your enterprise. The structure of the information system is analogous to the CO information system settings, e.g., monitoring cost effectiveness with the help of plan/actual comparisons.
Note: As described above, the Investment Management module generally consists of four components. However, these four components could be used selectively. This is particularly beneficial for small or medium-sized companies, which usually only use the “investment measures” component and not the entire selection of Investment Management components. The other components are often covered by other tools, e.g., Excel, third-party tools or BI.
To fully utilize the capabilities of Investment Management in SAP, it is advisable to implement the other three interconnected components as well. This approach ensures that no external tools are necessary, providing a single, unified source for investments. An example of the budgeting and planning for “IT Investments in 2025” within a company is illustrated in the following graph:
Investments are planned and budgeted using an Investment Program, along with its Investment Program Positions and Investment Measures.
Considerations before implementing Investment Management:
- High configuration with high integration dependencies
- The configuration of the IM module requires an advanced understanding of the other integrated core modules and their processes and individual settings of the modules (e.g., FI (especially FI-AA), CO, PS). A lack of configuration in the other modules could cause issues for the IM process.
- In addition to technical knowledge, business knowledge is also required.
- High reconciliation of planning with a seamless integration required
- Planning for Investment Management requires cross-departmental planning and coordination within a company (e.g., Finance (especially FI-AA), Controlling, Purchasing, Project Management).
- The budget management (if in use) should be harmonized with other modules as much as possible. The longer the time frame of a project is planned, the more difficult it becomes to forecast the budget data in advance of the project.
