Listen to the latest episode of Bramasol’s Insights to Action Podcast Series, in this episode we provide you an overview of SAP Contract and Lease Management (CLM) and focuses on what it is and what it can do for you.

Also, below is a transcript of the podcast episode:

Jim Hunt: This is Jim hunt for Bramasol’s Insight to Action podcast series. Today we’re really lucky to have Susanto Bordoloi, who is the associate vice president practice head for office of the CFO solutions. He’s got over 20 years experience in finance solutions and business solutions both on the client side and on the consulting side. So he has been on both sides of the desks and understands the issues. Today we’re going to talk about SAP contract and release management software and we’re gonna focus on what it is and what it can do for you. Welcome Susanto. It’s really great to have you here.

Susanto B: Thank you and Thank you Jim and happy to be here. And as you rightly said that I’ve been involved with, for past 20 years with doing a large scale implementations and small scale implementation, helping clients to come up with the best approach, what it means for their existing problem with compliance regulation, meeting their compliance regulation. That is one part. The second part is how we can help them to complete to the existing industry sector and you know, bringing all the tools and solutions and one of them being a SAP CLM contract and lease management. So I’ll be happy to answer some of the questions you may have that will help our clients to make sure they select the right solution. They select the right approach and they select the right a system integrator.

Jim Hunt: Having just come through the implementation deadlines for ASC 842 and IFRS 16. The new leasing compliance regulations. This is an apropos topic and a lot of people started with point solutions, expedient solutions or more comprehensive solutions. And let’s use that as kind of a set up and first question. What is SAP CLM? What’s it do? Why was it developed and how does it fit into the overall constellation of leasing and asset management solutions?

Susanto B: Absolutely. Thank you. I’m very happy to take that question because this a question I see all of our clients asking some of the questions that people think that it is a new product. It is not. So that’s, we have to make sure people understand that SAP CLM, is part of SAP’s core product called REFX flexible real estate management solutions. So that’s SAP REFX has been in the market for about 14 to 15 years now. You know, that’s the piece that’s part of the core module. So what is it the day it is, they use these products and they applied some oysters notes so that this product can be used to meet the new regulations, for example. It is, it is integrated with the existing REFX. So if you think about it holistically, yeah. REFX is the bigger,circle. And then SAP CLM is one component of the REFX solution. For example, why does develop, because, some of the aspects of is like the contact management classification and some FI and CEO interfaces what are the types of contracts existing under the contract management? How are you classified based on the new regulations ASC 842 and IFRS 16 and how it ties back to your existing ERP landscape, SAP landscape. So it is, it is a product that was being in the market as I said for about 15 years now. And what they did is, the good part here is I would say differentiator from all or the solutions we have in the market is this is being certified by PWC. So PWC, they have certified this products saying that this meet all the regulations with the new regulation. Of course, the only caveat is you have to do the configuration, right? And that’s why companies like Bramasol is there to make sure that we do the configurations right and then this will help to comply with the new regulations as well as this will also help companies to put them together on a forward looking fact. For you do not want to do any customization because you don’t want to make sure you want to make sure your return on investment and your year over year costs to the project is minimal. So this is part of their original SAP’s landscape SAP’s module. So that’s why having a tool like CLM will help a lot of companies not just to, to meet the current regulation may, but it will also help companies tohow can I manage in essence, how can I do the contract? How can I do multi gap postings? How can I classify and evaluate my existing, you know, lease assets.So it is just a start, but it can has a lot of potential going forward.

Jim Hunt: Well it sounds like it’s certainly does not fall into the category of just two point product that was developed for the recent changes to lease accounting. It’s at 15 years. I didn’t realize that, but not as a core technology had been evolving over 15 years. So it’s really kind of broad based solid solution rather than a point product. And I think the next question, how does that play into the overall it roadmap should be really interesting because it is a core part of IT technologies.

Susanto B: Yeah. You said it rightly so, and that is one of the confusions that I see. We tell a lot of our clients, the some of them things that it’s a new product. It is not. So, it is not a point solution just to meet the new regulations. So in the overall landscape, for example you know, companies will have S/4 HANA. Companies are migrating from ECC their existing ECC landscape to the new solution on S/4. So this solution, once you built it, it is in integrated leasing scenario. We did the core SAP module. So thereby, if you do not have to do any customization, and this is all the quotes are written in ABAP code, like any other, any other modules. So this is a module. Anyone who works in the SAP area, they’re quite conversion about the modules concept.

Susanto B: So which means like there are some native interfaces and native configuration objects that are already part of the CLM. And that’s way it’s always talks to different kind of modules. For example, companies who have sales and distribution modules, companies who will have materials management module company may have ariba company may have a FICO asset accounting. All those modules are very tightly integrated within the SAP CLM module as a part of the standard configuration object. So this is comes as a the standard object. And of course you have to do the right level of configuration and then put companies to ensure that they do not have to do something different just to take care of the SAP CLM. It is part of their whole module and that’s helps CIO and CFO because those are the two stakeholders we work on our client sites, because we have to make sure CFO job, do they want to comply with the new regulation? At the same time the CIOs are happy with the solution because it helps them on a longterm solution instead of a point solution. Yeah. Jim.

Jim Hunt: Well that’s excellent. I’ll talk a little bit about the overall cost and implementation process. It sounds like it’s certainly different than trying to install a standalone application and then integrated with your business practices.

Susanto B: Sure. Yeah. Thank you. So Jim, what we did is, because of the new, the regulations being new and there are a lot of interpretation and then it interpretation from the accounting side. As you know, this is not an IT pure play IT project. It is driven by the business and supported by it. That’s how I see it. And then having said that, we came up with Bramasol came up with a new methodology, purpose built methodology, project methodology called LASER. Lease, Accounting Solution Engagement Roadmap. So this is a very proven methodology. And I have said over with my existing clients over 30 or so, they want to use. All of our clients wants to use our methodology because it has been proven that this methodology works perfectly on a lease accounting projects. So irrespective of the,solution whether it’s the CLM or others, this project methodology works best. So in respect to the timeline, I have seen it depends on a lot of drivers here. So the leases, all the lease abstract itself is one of the important drivers of complexity drivers for a project for lease accounting project. And apart from that we also made sure when you put together a team of project team, it includes a team from Bramasol. And also you want to leverage what’s existing a team members that are clients may have, for example, if the client already has someone like an asset accountant and then technical accountant role. We all want to leverage those kinds of resources. For example, the other tools and resources will be who will be in the SAP basis resources, testing tools, etc,. Net this methodology test in between somewhere like, you know, six months all the way to 12 plus months on a similar project implementation.
Again, what we have also done, it can also be significantly reduced if the data size and the volume is reduced is low because our team came up with some automation tool like for example how we automate the configuration so that you do not want to do manual configuration. So our team came up with some automation tool to automate the configuration process. Our team also came up with some automation tool to load the contact directly into the SAP CLM. And thereby it reduces significantly the overall realization effort. And honestly, what we can do, we can just spend a couple of weeks on a team site, on a project or a client site and then we can pull together realization estimate. And really, because this is a very reduced timeline because of our recent learnings working on so many projects right now. So thereby it all depends on the data. So I think the first step on a project, I want to say like we want to understand how many days, how many contexts we are talking about, what is the volume, what is the sizes whats your landscape, and those are the variable factor. But net, net, we have a very geared solution and we will use all our artifacts and collateral on our client side to make sure the project is delivered successfully and within short span of time.

Jim Hunt: Well, what’s the typical span of time? And I know that there’s no one size fits all, so I’m not trying to nail you down, but it’s helpful to get a feel for if I did a point solution or a temporary solution to comply. And now I want to move into a more sustainable solution. What kind of timeframe am I looking at to get there?

Susanto B: Yeah, absolutely. So it can vary. One of the thing we have to make sure the comparison is correct. So this solution that we are talking about is helps you and we can one time implementation costs, that’s pretty much it. And then based on the client agreement with the SAP there you know, the, of course they have to buy some licenses, but again, those come at a minimal cost. And then year over year retention or maintenance costs reduce and then probably tackle by their existing contract with SAP. So keeping those aside on a timeline like this we typically say 10 last bit, then it can start somewhere within like say if project I have seen, we have delivered within three to four months is there is the shortest timeline and some of the projects which some clients want to go in multiple countries, multiple industries and in those cases it can vary within a case, say for example all the way from six months to 12 months, but the surface I would say within three to four months is the shortest time we have delivered a project.

Jim Hunt: Is it possible and is it wise to phase that in for instance, start with target countries and then bring in other countries or does it need to be done all at once?

Susanto B: Yes, so that’s a two fold approach. What I have seen is companies as I said, the heart and soul of a project or scope of the project is driven by the lease data. So if companies who are very methodical about where the leases are, how many leases I have, who are the team that can manage my leases going forward for those types of companies, I have seen that we can deliver this solution really quick and fast. And I in those situations I propose a kind of a big bang theory or big bang approach versus if company who is not really for like for example, I want to comply and see how the data is for US GAAP first and then I want to expand it to the IFRS regulation. It could be because of I don’t have visibility about the data, I don’t have a you know, who are the team that will be managing my lease is going forward in those situations. I proposed this staggered approach like phase one, let’s do what we can do right now and this can be also done through a proof of concept phase. So that’s where people can see how the features in the solution will look like so that they can get good at graphs and then they want to expand it to the bigger horizon. So it is, it depends on the time that you tried and then how much progress they have already made already within, before our team even shows up on their site.

Jim Hunt:Thanks. Thank you. That’s very helpful. There’s just such a, just about all the time we have for today but I wanted to give you a chance to add anything that you think we haven’t covered. It’s just been very enlightening for me. That’s for sure.

Susanto B: Thank you Jim I think one of the, one of the primary thing we all I always suggest my clients is first they have to think about the long term solution. They don’t want to make sure that, you do not want to take a solution that the maintenance costs will be high. Although the implementation sounds to be shorter timeline and, and maybe smaller on the price point. But on a long term it will you too. It is a huge different because the cost would be high versus CLM. I have seen because we deliver multiple solutions, not just CLM, but this solution I have seen how companies put them on the right track for a longer term solutions. So I highly encourage people to look into our, we have already some collaterals posted in our website. I would highly encourage people to go to those materials that are already posted in some of our collateral in our bramasol.com website. And if they have any questions they can always reach out to us and we will make sure, we take it one step at a time, have them understand why this solution or CLM solution is helpful or beneficial for a company like for a company or client. So that is something that I will always tell our clients to think about before buying or taking a decision on a solution.

Jim Hunt: Yeah, that’s great. And I, I did want to reiterate that that Bramasol.com If you visit the website there’s a lot of leasing material, there’s material on CLM and there are ample buttons that you can push too, requested demo or request to contact. We’ll have that information also on the homepage for the Bramsol Insights to Action podcast. So it sounds as it’s been a pleasure today and very informative. I really appreciate your time and I know that the listeners to this podcast will learn a lot from it. Thank you again. Look forward to talking with you more in the future.

Susanto B: Thank you so much, Jim. My pleasure.

Thank you for listening to this episode of Insight to Action podcast series. We hope that you found it helpful to ensure that you never miss a future episode. You can subscribe to Bramasol at iTunes or wherever you get your podcasts. For more information about Bramasol and detail on our solutions for compliance optimization and financial transformation. Please visit www.bramasol.com or email us at [email protected]

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