Hybrid Cloud Model Streamlines Compliance Process and Frees Finance and Technical Staff
On-premise compliance solutions require multiple staff positions to maintain internally, taking away valuable resources that could be focused on business innovation. Effective compliance requires input from sales and distribution, materials management, FICO analysts, business users, middleware architects, subject matter experts and ABAP developers. Using a compliance partner frees up staff and can reduce the associated maintenance costs up to 80%.
In the fourth part of our blog series examining how a hybrid cloud compliance model simplifies the transition to Brazil Nota Fiscal version 3.1, let’s examine all of the costs that go into NFe compliance.
+ Annual update implementation costs
- Research and implement the latest OSS notes from SAP
- SAP functional team – orders to cash, procure to pay, financials
- ABAP developer
- Middleware architect
- Local user costs for testing
- Project manager
- Subject matter expert to design and deploy SAP configurations based on local 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
- Minimum deployment across a three-tier SAP deployment (PROD, TEST, DEV)
+ Ongoing support costs
- Annual cost for compliance server
- Cost for technical support
- Someone to monitor and manage the middleware issues
- Someone 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
- 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 subject matter experts for a time period each year
+ Financial Operation Costs
- Cost of controllers to correct information prior to SPED reporting
- Audit risks of non-compliance (~250 US Dollars per incorrect XML that is not valid and archived, 75% to 150% fines based on incorrect taxes)
- Foreign Corrupt Practices issues – one Texas company recently had to pay 14 million US dollars for backroom deals uncovered in Latin America
- Accounts payable staffing costs for manual data entry and supplier invoice processing: SAP PO and Goods Receipt – if you pay mismatched invoices, you are responsible for the wrong taxes
+ Logistics – NFe legislation affects both your ability to ship outbound as well as receive goods at the warehouse
- Outbound – if you do not have an automatic “contingency process,” you may have your operations shut down for days for something as simple as a printing error
- Inbound Receiving – taking advantage of the government process to automate data entry and matching within the SAP system can reduce the cost of receiving trucks by over 40%
Your team is not in the business of being an expert on Brazil Nota Fiscal, and your time is much more valuably spent on your core business. The consistency in reporting required by government mandates means you should be taking advantage of the resulting economies of scale.
A hybrid cloud model not only offers these economies of scale, but also solves the internal SAP customization support and maintenance issues with native SAP extensions. Companies that are transitioning to hybrid cloud providers are reducing their maintenance costs in Latin America by upwards of 80%. Check out our case studies to learn more.
About the Author
Steve Sprague's electronic invoicing and middleware integration expertise stems from nearly twenty years of experience in the industry. As General Manager of Invoiceware by Sovos, Mr. Sprague manages global messaging, product strategy and field enablement which has led to the firm’s double-digit revenue/sales growth in the last three years.More Content by Steve Sprague