This is Blog #7 in our Record to Report Blog Series. You can find the complete series outlined HERE.
Author: Pete Graham, John Hume, Sales Consulting Manager at Magnitude Software
The Latest Market Overview
Many customers have selected SAP Contract and Lease Management (CLM) to assist them with their compliance needs related to lease accounting. These lease accounting needs are still very strongly influenced by the recent adoption of IFRS 16 / ASC 842 in 2019. These new lease accounting regulations brought lease liabilities onto corporate balance sheets.
Over the last few years, SAP has learned a tremendous amount of information about how customers have adopted and adapted to these new lease accounting standards. As a result, the SAP Contract and Lease Management (CLM) solution released an updated valuation engine in Q1 2021 to provide more flexibility in managing lease accounting needs.
SAP Contract and Lease Management (CLM) can be purchased by itself or bundled with SAP Real Estate Management.
Very recently business activity influenced by the pandemic has brought a lot of interest in the lessor equipment space and for those customers the SAP S/4HANA Accounting Integration (SAI RoadMap) (SAI Help) product should be of interest. SAP S/4HANA for Accounting Integration is a SAP Innovative Business Solution that can currently either integrate with a 3rd party or legacy leasing contract management solution or be used to co-innovate with customers and create an E2E leasing solution in S/4HANA.
Customers still frequently ask about the best ways to manage their lease accounting needs over time. My experience has found that the Comply, Optimize, & Transform (COT) paradigm applied to lease accounting is an excellent and very successful framework in helping customers chart a path forward regardless of their starting point. We first starting using the COT methodology successfully with CLM customer sessions about five years ago and still find it very helpful today.
The idea is to quickly match up a customer’s immediate goal with their current state and then develop a plan of action to productively achieve the desired goal. For instance, a customer’s immediate goal could be to
- Comply with a current lease accounting need, or to
- Optimize an on-going lease accounting process, or to
- Transform lease accounting operations in a stepwise fashion.
The good news is that the SAP S/4HANA Intelligent Enterprise led by SAP Contract and Lease Management (CLM) can help customers achieve any of these goals by playing a leading role in the appropriate plan of action.
SAP CLM can quickly help customers in
use case 1) by offering a robust solution that can be quickly adopted On-Premise or in the Cloud.
SAP CLM has assisted customers in
use case 2) by providing customers with continuous improvements overtime increasing each customer’s ability to optimize their processes.
And customers in
use case 3) looking to transform their operations can jump from a legacy system right to an SAPS/4HANA Intelligent Enterprise solution introducing stepwise improvements in financial operations and visibility related to lease accounting.
SAP CLM is widely used tool world-wide assisting customers with their lease accounting needs. Existing CLM customers wanting to learn more about potential improvements to CLM with the ability to provide feedback on them should check out the SAP Customer Connection focus topic SAP Contract & Lease Management and Real Estate Management (Americas).
You can find all blogs available in our Record to Report Blog Series HERE.