Bank Communication With mySAP ERP Financials

Juergen Weiss
Director Solution Management, SAP AG

Corporate2Bank Communication Today Current Capabilities Of mySAP ERP SAP Bank Relationship Management Summary

Does This Look Familiar To You?

mySAP ERP
- FI-AP - FI-AR - Cash Management - Treasury Management
VAN VAN

Host-to-host 1n mySAP ERP

- FI-AP - FI-AR - Cash Management - Treasury Management

Leased Leased Line Line

E-banking 1m mySAP ERP

- FI-AP - FI-AR - Cash Management - Treasury Management
ISDN ISDN

Internet Internet

Public Public Telephone Telephone Network Network

Fax
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Pain Points For Corporates (I)

Interface costs (hardware/software/network)
Global companies typically operates between 8 to 15 different bank relationships Requiring just as many different interfaces (online banking tools) Costs per interface: EUR 20.000 50.000 per year That means in total EUR 240.000 to 450.000 only for bank communication

Manual processing costs

Payment orders for each bank have to be manually handled separately per bank relationship in the ERP system Bank statements have to be collected from each bank separately and manually handled in the ERP System Manual handling of 8 to 15 different E-Banking tools (Upload, authorize, send) Current solution for payment transfers is inefficient:
many different people involved - takes too much time no straight-through-processing Changes in used media sometimes required (e.g. file-to-paper)

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Pain Points For Corporates (II)

Cost of working capital
Lack of visibility of financial supply chain. Status and confirmation messages are often not received Errors in payment orders are identified too late. Certain level of liquidity must be kept on transaction accounts due to lack of information

Dependency on house banks

High dependency on house banks without standardized interfaces due to cost of changing bank relationship.

Security issues
Security gaps during payment file transfer (authorization, signature and encryption often not part of the solution)

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Pain Points For Banks

Interface costs (hardware/software/network)
Global operating bank must often invest in- and maintain multiple proprietary interfaces and communication software Inefficient client access through multiple, costly delivery channels

Customer satisfaction
Service offerings differs from country to country due to different interfaces. Difficulty to win additional customers because of missing standardization. Corporate customers are reluctant to change bank relationships due to high costs Lack of straight-through processing

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Corporate2Bank Communication Today Current Capabilities Of mySAP ERP SAP Bank Relationship Management Summary

Current Capabilities Of mySAP ERP

Buyers Bank

Suppliers Bank

Status of payment initiation

1 2 3

Bank Statement Other messages

4

Debit/Credit transfer initiation

Payment acknowledgement

Buyer
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Supplier

Bank Communication with mySAP ERP Today

mySAP ERP System
Execute Payment Program

3rd Party system

Upload File Security

Create Payment Order

Authorization Encryption Digital Signature 5.

Payment Order

File Server

Send Payment File Server Order to Bank

Network

Bank Statement

Collect Bank Statement

House Bank

Security Import Bank Statement

Encryption Digital Signature

Post/Processing & Clearing

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Upload File

Corporate2Bank Communication Today Current Capabilities Of mySAP ERP SAP Bank Relationship Management Summary

Bank Communication With mySAP ERP (Overview)

SAP Bank Relationship Management

SAP Exchange Infrastructure (SAP XI)

SAP Integration Package For SWIFT

SWIFT MT/MX

SWIFTNet SWIFTNet
FileAct/FIN FileAct/FIN

mySAP ERP 2005

FI-AP FI-AR Cash/Treasury Mgmt. HCM

SWIFT Alliance Access/Gateway

Batching Approval rules Dig. signature Payment tracking Workflow SAP XML Exception handling

Mapping Routing

SAP XI Resource Adapter

Internet Internet

Corporate Network
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DMZ

Bank Communication with mySAP ERP (Detail)

mySAP ERP 2005
Execute Payment Program SAP Bank Relationship Management Create Batch Routing Create Payment Order Payment Approval Work List SecurityFile Approval Workflow Ser Authorizationver
Digital Signature

SAP Exchange Infrastructure

House Bank

Mapping

Payment Order Request

Security
Encryption Digital Signature

SWIFTNet FileAct/FIN

Bank Statement

Receive Status Message(s) Exception Handling Receive Bank Statement

SAP Integration Package For SWIFT

SWIFT File creation/ conversion Local authentication

SWIFT Alliance Access/Gateway

Import Bank Statement

Post/Processing & Clearing

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Resource Adapter

File DB Bank JMS Bank HTTP Network Network SOAP Application

SAP Bank Relationship Management Features (I)

Increased payment-flow transparency Payment status monitor with full status history Flexible status concept Processing of new ISO20022 payment status report and other status messages (e.g. ACK/NACK) Drill-down to documents and master data Display of generated payment formats Exception handling Visibility of errors in payment status monitor Automatic generation of alert workflow items Automatic generation of follow-up activities (e.g. blocking of vendor accounts)

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SAP Bank Relationship Management Features (II)

Increased compliance Multi-eye release procedures for payment approvals Personal digital signatures for outgoing payments for internal audit purposes Release of individual payments or entire batches Flexible approval rules (e.g. low-value payments = only one approver) Approval, rejection or resubmission of payments Flexible sorting and structuring of approval work list

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SAP Bank Relationship Management Features (III)

Batching of payments Logical structuring of payment files Flexible batching rules which can be enhanced Automatic creation of unique identifiers Bank communication Real-time integration with SWIFT via SAP Integration Package for SWIFT Optional integration with banks via XI adapters on a project basis Availability mySAP ERP Financials 2005 (in Q2 2007)

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Architecture Overview SAP Integration Package for SWIFT

SAP Exchange Infrastructure

Messaging Layer SWIFTAlliance Access MT

Communication Layer

Message

SWIFTAlliance Gateway

FIN FIN FileAct FileAct

SAP File Adapter

File Exchange (FTP, shared folders)

MX AFT

Native SAP File Adapter with extended modules

HMAC-SHA256

Keyed-hash message authentication code

SAP AG 2005, Title of Presentation / Speaker Name / 16

SWIFT AllianceAccess native Automated File Transfer Adapter

SAP Integration Package For SWIFT Features (I)

SWIFTNet Integration Inbound and outbound support of FileAct and FIN Integration with SWIFT architecture (SWIFTAlliance Access/Gateway) Management of local authentication and integrity between SAP NetWeaver XI and SWIFTAlliance Access/Gateway (HMAC-SHA256) SWIFTStandards XML Support Standard XI mappings for ISO20022 messages. Initial implementation of: Customer Credit Transfer Initiation Customer Direct Debit Transfer Initiation Payment Status Report Cash management advice message Cash management statement message

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SAP Integration Package For SWIFT Features (II)

SWIFTStandards MT Support Processing of:
Request for transfer (MT 101) Foreign exchange confirmation (MT 300) Fixed-loan/deposit confirmation (MT 320) Customer statement (MT 940) Interim transaction report (MT 942)

Tight SAP Integration Available for R/3 4.6C and upwards Support of various status messages in conjunction with SAP Bank Relationship Management (prerequisite: mySAP ERP 2005)

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Corporate Connectivity with SAP

mySAP ERP mySAP ERP
CRM Global Trade Services

SAP for Banking SAP for Banking

SRM Customer Invoice Processing Supplier Invoice Processing Payroll Processing Treasury Cash Management Financial Supply Chain Management

Network
Payment Initiation SAP Exchange Infrastructure (XI) SAP Exchange Infrastructure (XI) Status Message Execution Confirmation Request for Cancellation Cancellation Status Credit/Debit Advice Bank Statement .

Payment Processing

Deposits Management

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Corporate2Bank Communication Today Bank Communication With mySAP ERP SWIFT Integration Summary

Benefits Of Improved Bank Communication

Enhanced straight-through-processing (STP) rates More cash flow transparency and visibility of working capital Reduced maintenance costs by using global payment standards Increased security and compliance

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