There is a distinct change in the mindset of multinationals happening. The trend is becoming a reality now, and management – specifically the SAP teams – are realizing the true cost of operating electronic invoicing in Latin America. This is especially true as over 500,000 organizations look to install the new CFDI mandates for electronic invoicing in Mexico.
KEY POINT -If the central SAP team has any part of the responsibility to implement or support the CFDI solution, the central SAP team NEEDS to be involved in the selection process. Don’t let a local team choose the cheapest solution and then turn to HQ when the #$%&% hits the fan.
If you are evaluating a better tool or just a solution that plugs into SAP to do the electronic signature, you have missed the mark.
Why you ask:
- Local solutions create integration projects and SAP configuration requirements
- SAP configurations and customer requests are not solved by the local e-invoicing PAC solutions
- Keeping up with Latin America e-invoicing legislation in Mexico means keeping up with the SAP configuration, the middleware, and the local e-invoice solution
- Companies running a central SAP COE tend to only update the system quarterly with significant changes occurring as often as 1 per month; this process doesn’t always neatly fit into the Mexico pace of change
So the true cost of electronic invoicing for an SAP shop equals the following — do the numbers and I guarantee you will be shocked. There are hundreds of thousands of dollars which cannot be spent annually on process improvements as they are hidden costs applied to maintaining SAP in countries like Mexico, as well as, Brazil, Argentina and Chile..
Key Lesson: Don’t let a $10,000 dollar local/point solution create a $300K a year support problem. There are hidden costs.
Cost always overlooked include:
- Research and implement the latest OSS notes from SAP – for most SAP companies they are not on the latest version, in reality not even close, so this is not as easy as it may seem
- SAP Functional Team – Orders To Cash, Procure To Pay, Financials
- ABAP developer
- Middleware Architect
- Local user costs
- Project manager
- Subject Matter Expert (Design and deploy SAP configurations based on the legislation – most companies spend weeks trying to figure out how to get their SAP system to work with government requirements and customer requirements at the same time)
- Set up costs for the local provider to test your files
- Overlooked data center costs
- Cost of the middleware (for SAP PI this is usually the cost of non-SAP integration data charge)
- Maintenance on middleware
- Hardware for middleware
- Hardware maintenance for middleware
- Ongoing costs – overlooked
- Annual cost for each local provider (annual fees, maintenance, hardware, etc…). Remember if you have a single PAC strategy and they are slow or unable to process your documents – you legally can not ship
- Cost for Technical Support
- Someone has to monitor and manage the middleware issues
- Someone has to monitor and manage the SAP system – an invoice isn’t done until it is posted or acknowledged in the ERP system
- ABAP developer
- Changes based on the law 2-3 times per year, per country
- Changes based on customer requests (The Addenda concept in Mexico)
- Could affect SAP master data, middleware, PDF output or distribution rules
- Annual cost to upgrade the system based on government changes
- Look at a percentage of the functional analysts, middleware architect, project manager and SME (subject matter experts) for a time period each year
- Costs of matching suppliers invoices to SAP PO and Goods Receipt – as you don’t want to pay mismatched invoices – you are responsible for the wrong taxes
So when you are looking to find dollars in tightened IT budgets, look at the total cost of operating your Latin America divisions.
- Put together a quick assessment of ongoing annual supports costs
- Internal SAP resources – functional team and abap developers
- Subject Matter Experts
- Middleware requirements – integration points
- Data center – servers, hardware, maintenance
- And do this for Brazil, Mexico, Chile and Argentina
Look for solutions that solve the entire problem, they exist and free up resources and cash for the SAP team to focus on growing the business, not just maintaining the business.
Sign up for email updates
Stay up to date with the latest tax and compliance updates that may impact your business.