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SAP Commodity Risk Management rapid-deployment solution

SAP Commodity Risk Management rapid-deployment solution

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SAP Commodity Risk Management rapid-deployment solution

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  1. SAP Commodity Risk Management rapid-deployment solution Solution Details

  2. Contents Overview of SAP Rapid Deployment Solutions Overview of the Solution Solution in Detail • Exposure Management • Commodity Futures • Commodity Forward • Commodity Swaps • Commodity OTC Options • Listed Commodity Options Service Delivery Technical Details

  3. Overview of SAP Rapid Deployment solutions

  4. SAP Rapid Deployment solutions Fast • Quickly address specific needs • Gain fast time to value with seamless rapid-deployment tools, embedded best practices • Speed end-user adoption with guides and educational materials • Simple • Clearly priced services and project time frames – help ensure a predictable outcome • Modular yet integrated solutions – help ensure long-term landscape integrity • Support across all environments (on-premise, mobile, and cloud)– leveraging the cloud to accelerate projects and deployment A complete solution Deployed in weeks

  5. What’s in each solution? SAP Rapid Deployment solutions Software Quickly address the most urgent business processes Content SAP-supported best practices, templates, and tools make solution adoption easier Enablement Guides and educational material speed end-user adoption Service Fixed scope and price provide maximum predictability and lower risk

  6. Overview of the solution

  7. Drive commodity risk management excellence • With the SAP Commodity Risk Management rapid-deployment solution, you can manage and assess the price risk of commodity positions and handle the financial transactions used to hedge this risk Do you struggle with... • Measuring and capturing exposure to commodity price changes from your business activities • Managing the financial instruments used to mitigate the commodity price risks • Calculating your net exposure to price volatilities accurately in real time • Meeting operational and accounting compliance requirements

  8. Business process scope covered Commodity Master Data Market Data CommodityRisk Reporting Example Exposure Setup Credit RiskAnalyzer e.g. : Commodity Master Data Future Master DataQuotation Master DataCommodity Price Curves File upload:CPE QuotationsFuture QuotationsInterest Reference Rates . . Limit Management by Company Codeby Business Partner/ Company Code Commodity PositionExposure PositionKey Figure Analysis StandardReporting Example Exposure attributes Example Book StructureExample Position Structuring Deal Processing Status Position List Simulated Positions Position Flow List Posting Journal Periodic changes Fair value(key date) Transaction Manager Calculate and post accruals • Product Types BusinessPartner Post realized P&L(deal end) Deal Conclusion DealValuation Deal Creation Deal Posting Roles CounterpartyIssuerDepository bank Confirmations Payment Address/ CommunicationAuthorizationsDerived Flows, e.g. TaxPayment method • Forwards • SWAPS • OTC-Options • Futures • Listed Options Financial Accounting • Cash Position & Liquidity Forecast Classic or NewGLChart of AccountsCompany code(s) Project specific elements (out of scope): • Reporting:Cash position in currencyLiquidity forecast from AR and APDrilldown by Company Code,Product / Transaction Type,invoice and account Bank BALANCESHEET P&L VALUATION IFRS and/orUS-GAAP,German GAAP

  9. Key Deliverables – Business Process Scope Master Data Procedure Legend Master Data Procedure Upload of Market Data Support process Exposure Management Core process CommoditySwaps Commodity Forwards Commodity OTC Options Commodity Futures Commodity Listed Options Reporting & Analysis

  10. Benefits for you • Improve your visibility on commodity price exposure • Keep commodity price risk to a minimum • Ease compliance with internal and external regulations • Automate and standardize processes for managing financial commodity transactions • This rapid-deployment solution will help you to: • Process the collection of price relevant information from procurement and sales activities • Automate the processing of financial instruments, from deal capture to accounting • Calculate and examine the total exposure to commodity price risks in real time • Help ensure that internal and external regulatory and reporting requirements are met

  11. Exposure Management • Collect commodity price risks.

  12. Exposure Management: scope and benefits • Enables an accurate, centralized, and holistic view of commodity price risks • Simplifies the process for collecting and calculating commodity price risks • Provides an accurate view of your exposures, as hedging transactions automatically update the positions • With exposure management functionality, you collect commodity price risks • Manual capture of raw exposure • Report and analyse raw exposure • Release and freeze exposure • Exposure positions for the individual risks are generated to make it visible what the risk exposures are • Net exposure positions are calculated once hedging transaction has been entered

  13. In the system Entry of raw exposure • Key process flows covered • Create raw exposures • Check raw exposures • Release raw exposures • Check exposure positions • Calculate NPV of exposure position (optional) Exposure positionsper month Overall commodity position report with exposure per month and a hedging transaction

  14. Commodity Futures • Commodity futures are used to mitigate the risks of commodity price fluctuations to which companies are exposed due to their activities in buying or selling goods.

  15. Commodity Futures: scope and benefits • Automates the management of future transactions • Integrates to the overall commodity position to update the overall commodity price risk exposure • Reduces the amount of manual work, as it automates financial transactions management and positions keeping • Helps ensure operations compliance such as compliance with SOX 404 rules • Helps ensure accounting compliance according to multiple international regulations in parallel • Helps you to focus on value added activities instead of manual steps • Commodity Futures are used to mitigate the risks of commodity price fluctuations to which companies are exposed due to their activities in buying or selling goods • A Future is traded on an exchange as a standardized product with standardized quality of the underlying asset and in a fixed quantity • There are several contracts traded within a year, distinguished by the delivery period or delivery date for the underlying commodity. • The closeout of the position is done by matching opposite positions or using a closing transaction

  16. In the system • Key process flows covered • Open and close future commodity positions • Manage commodity future transactions and positions • Calculate and post margins for commodity future positions • Perform valuations for commodity future positions • Post profit and loss for commodity future transactions A Long Open position is added for 8 contracts of 25 ton each Long and short positions can be matched automatically or manually

  17. Commodity Forward • Commodity forwards are used to mitigate the risks of commodity price fluctuations to which companies are exposed due to their activities in buying or selling goods.

  18. Commodity Forward: scope and benefits • Automates the management of commodity forward transactions • Integrates to the exposure management functionality to update the exposure • Reduces the amount of manual work, as it automates financial transactions management and positions keeping • Helps ensure operations compliance such as compliance with SOX 404 rules • Helps ensure accounting compliance according to multiple international regulations in parallel • Helps you to focus on value added activities instead of manual steps • Commodity forwards are used to mitigate the risks of commodity price fluctuations to which companies are exposed due to their activities in buying or selling goods. • It is an agreement between a company and a counterparty in which the terms, the underlying asset, and the settlement date can be adjusted individually. • The transaction is always settled in cash at maturity.

  19. In the system • Key process flows covered • Create commodity forward transaction (buy or sell) • Post commodity forward transaction (for example, broker fees) • Calculate net present value • Perform key date valuation • Perform cash settlement • Post realized profit and loss Forward Transaction with posting journal for three months end valuations and realized loss fortwo valuation areas

  20. Commodity Swaps • Commodity swaps are used to mitigate the risks of commodity price fluctuations to which companies are exposed due to their activities in buying or selling goods.

  21. Commodity Swap: scope and benefits • Automates the management of commodity swaps • Integrates to the exposure management functionality to update the exposure • Reduces the amount of manual work, as it automates financial transactions management and positions keeping • Helps ensure operations compliance, such as compliance with Sarbanes-Oxley 404 rules • Helps ensure accounting compliance according to multiple international regulations in parallel • Helps you to focus on value-added activities instead of manual steps • Commodity Swaps are used to mitigate the risks of commodity price fluctuations to which companies are exposed due to their activities in buying or selling goods. • It is an agreement between a company and a counterparty in which the terms, the underlying asset, and the settlement date can be adjusted individually.

  22. In the system • Key process flows covered • Create Commodity SWAP Deal • Post Financial Instrument Transaction (Fees) • Calculate Net Present Value of Instrument • Perform Key Date Valuation • Perform price fixing • Post and pay periodic net settlements • Post Realized Profit and Loss at maturity Exposure to 450 ton Aluminium floating price in June 2012 SWAP for 400 ton to convert floating exposure to fixed exposure Exposure to floating prices reduced to 50 ton

  23. Commodity OTC-Options • Commodity Over the Counter (OTC) Options are used to mitigate the risks of commodity price fluctuations to which companies are exposed due to their activities in buying or selling goods.

  24. Commodity OTC-Options: scope and benefits • Automates the management of OTC commodity options • Integrates to the Exposure Management to update the exposure • Reduces the amount of manual work as it automates financial transactions management and positions keeping • Ensures operations compliance such as compliance with SOX 404 rules • Ensures accounting compliance according to multiple international regulations in parallel • Helps you to focus on value added activities instead of manual steps • Commodity OTC options are used to mitigate the risks of commodity price fluctuations to which companies are exposed due to their activities in buying or selling goods. • It is an agreement between a company and a counterparty where the terms, the underlying asset and the settlement date can be adjusted individually. • Buying a commodity option gives the right but not the obligation to buy or sell a commodity at a defined price and date or period according to the option terms.

  25. In the system • Key process flows covered • Create OTC Commodity Option (Put or Call Option) • Post OTC Commodity Option • Calculate Net Present Value of Instrument • Perform Key Date Valuation • Exercise or expire option OTC Option main data When option is exercised, it can be cash settled or the underling forward transaction is created

  26. Listed Commodity Options • Listed commodity options are used to mitigate the risks of commodity price fluctuations to which companies are exposed due to their activities in buying or selling goods.

  27. Listed Commodity Options: scope and benefits • Automates the management of listed commodity option transactions • Integrates to the exposure management functionality to update the exposure • Reduces the amount of manual work, as it automates financial transactions management and positions keeping • Helps ensure operations compliance, such as compliance with Sarbanes-Oxley 404 rules • Helps ensure accounting compliance according to multiple international regulations in parallel • Helps you to focus on value-added activities instead of manual steps • Listed Commodity Options are used to mitigate the risks of commodity price fluctuations to which companies are exposed due to their activities in buying or selling goods • A Listed Commodity Option is traded on an exchange as a standardized product with standardized quality of the underlying asset and in a fixed quantity. • Buying a listed commodity option gives the right but not the obligation to buy or sell a commodity at a defined price and date or period according to the option terms. • The closeout of the position is done by matching opposite positions or using a closing transaction

  28. In the system • Key process flows covered • Open and close listed commodity option positions • Manage listed commodity option transactions • Calculate and post margins for listed commodity option positions • Perform valuations for listed commodity option positions • Post profit and loss for listed commodity option transactions Exposure to 450 ton Aluminium floating price in June 2012 12 Listed Option contracts for each 25 ton to convert floating exposure to fixed exposure Exposure to floating prices reduced to 150 ton

  29. Service Delivery • Rapid deployment of Commodity Risk Management

  30. Go live in as little as 12 weeks 1 2 3 • Start • Run • Deploy Expectations • Project management • Kick-off workshop participation • Scoping workshop • Preparing technical infrastructure • Solution activation and confirmation • Implementation of options • Knowledge transfer to key users • Master data load • Testing of solution • Switch to QA and production • End user training • Data migration • Hand over of solution • Go-Live • Post go-live support and activities Results • Superior support to ensure smooth functioning • Mutually-approved options selected • Working SAP system • Successful rollout and adoption • Configuration documentation

  31. Engineered Services for Rapid Deployment Solutions • Your path to Go-Live: fast, efficiently and at predictable cost • Fixed-price Implementation Services • Pre-defined Project Methodology • Ready-to-use Accelerators 1 2 3 Start Deploy Run • Project management • Kick-off workshop participation • Select options workshop • Preparing technical infrastructure • Accelerators / Deliverables • Service delivery model • Pre-delivery requirements and checklist • Work breakdown structure (WBS) • Consulting delivery guide • Solution details • Solution summary • Scoping questionnaire and options • Kick-off presentation • Software requirements • Solution Manager template • Solution activation and confirmation • Implementation of options • Knowledge transfer to key users • Master data load • Testing of solution • Switch to QA and production • Accelerators / Deliverables • Quick guide • Business process documentation • Best-Practices content(pre-configuration) • Scoping questionnaire and options • Configuration guides • Test plans and scripts • End user training • Data migration • Hand over of solution • Go-Live • Post go-live support and activities • Accelerators / Deliverables • Training Materials – Business process documentation, process-flow recordings etc. • Delivery acceptance forms

  32. Implementation methodology 1 2 3 Start Deploy Run Kickoff Workshop Configuration Guide Project Schedule Scoping Questionnaire Check Lists Support Portal

  33. Project Planning Week 12 FINISH Week 2 Week 4 Week 8 START DEPLOY RUN 2-4 weeks before START After 12 weeks SAP involvement Customer involvement

  34. Go live in as little as 12 weeks • The implementation service for the SAP Commodity Risk Management rapid-deployment solution uses best practices in the area of commodity risk management to deliver preconfigured solution that allows you to assess the price risk of commodity positions and handle the financial transactions used to hedge risk. • With the rapid-deployment implementation approach you get a fixed scope at fixed price which removes most of your project risks. • The quick-time-to-value implementation methodology enables you to go live in as little as 12 weeks, plus 4 weeks post Go-Live support. A special step-by-step guide describes each activity during the deployment

  35. Key deliverables • Provide the IT infrastructure (server) • Install the SAP Enhancement Package 6 for SAP ERP 6.0 with minimum EA-FINSERV SPS 4 on the development and production environments • Provide fixed contact people in the business and IT departments • Conduct end-user training & change management • Perform acceptance testing • Data migration and cleansing • Transport to production • Installation check • Workshop to confirm the pre-defined requirements • Project documents: Work Breakdown Structure including a project schedule, Test Scripts and Scoping Questionnaire • Activation and Unit Test of chosen packages for the SAP Commodity Risk Management rapid-deployment solution in the development system • Knowledge transfer to key users on configured SAP Commodity Risk Management rapid-deployment solution system • Support for going live

  36. Project team: SAP • SAP Project Manager • Serves as a central contact person for SAP, from project initiation to going live and support • Responsible for the coordination of SAP tasks and project management assistance with the customer’s project manager. • SAP Consultants • Responsible for implementation of the agreed upon scope for the rapid-deployment solution

  37. Project team: customer • Leading Project Manager • Serves as a central contact person from the customer, from project initiation to going live and support • On your side: responsible for functional and commercial project management, coordination of customer tasks, overall project controlling and updates to the project steering committee • Basis staff • Especially responsible for the installation and administration of the SAP system landscapes • Functional department staff / key users • Responsible for workshops, questions from SAP, end-user training, and possibly as a power user for simple configurations • Specialized Staff (Optional) • Responsible for further specialized areas such as customization and configuration

  38. Technical Details

  39. Software requirements • SAP Solution Manager 7.0 • SAP ERP 6.0 • SAP Enhancement Package 6 for SAP ERP 6.0

  40. System landscape Service Market Place Development System Consolidation System Production System Installation data file (.txt file) Solution Scope File (.xml file) Solution Builder SAP CTRM SAP CTRM SAP CTRM Transport

  41. SAP Rapid-Deployment solutionsThe fastest way to run your business better