Leading Practices and Considerations for Global SAP ERP HCM

Implementations
by Mark Jackson

Senior Manager, Accenture

July 17, 2012

SAPexperts/HR
SAPexperts/Project Management

Learn the decisions and strategies that you need to know at the beginning of a global SAP ERP HCM
solution. Global SAP ERP HCM implementations need careful analysis and planning up front regarding
how the SAP ERP HCM environment is to be set up (i.e., activating countries and using the
Management of Global Employment module). Many of these decisions have a strong downstream
impact. See leading practices and strategies for global SAP ERP HCM implementations to assist
project teams in understanding the key questions that should be asked and answered before the
implementation begins.

Key Concept

Gaining an early understanding about the design and technical impacts of enabling country-specific settings is
key to determining the final goals for your global SAP ERP HCM implementation. The two available options are
commonly referred to as enabling country-specific MOLGAs (MOLGA is the technical name for country in
the SAP ERP HCM system) versus enabling MOLGA 99 (the international non-country-specific setting in the
SAP ERP HCM system).

Implementing SAP ERP HCM globally either in a big-bang or country rollout implementation is a strategic effort
with lots of different pieces. For example, from a technical perspective, there are many things to consider for
solution architecture, data conversion strategies, and customizations.

The strategy you choose for activating countries within SAP ERP HCM has a drastic impact on the functionality
and technical aspects of a project. One example is that most of the different countries in the SAP ERP HCM
system have unique country-specific infotypes and screens. The result of this is that separate data conversion
programs need to be leveraged along with different logic for pulling data based on country.

At the very beginning of any SAP ERP HCM project, project leadership and architects have to decide whether
to activate the country-specific switches in the SAP system or if they are going to assign a country or countries
to country-independent global settings (referred to as the MOLGA 99 solution). I cover the technical as well as
strategic choices and challenges facing projects when undertaking a global SAP ERP HCM implementation.
Which to Choose: The Country-Specific or the Global
MOLGA 99 Solution?
One of the most important decisions that must be made at the beginning of a project is whether to activate the
country-specific functionality for each country in scope or if it is better to use the MOLGA 99 solution. Both
options come with their own pros and cons and can affect the cost of a project. I discuss both options, and their
plusses and minuses in different situations.

The Country-Specific Functionality Solution

In an SAP ERP HCM implementation project, activating the country-specific functionality for each country is
called activating the country-specific MOLGAs. If a company is implementing payroll for the given country and
is required to also run legal reporting out of the SAP ERP HCM system, the best solution is to activate the
MOLGA for that country. This is because, for each supported country, the SAP system delivers a standard
localization.

For example, if a country is implementing in Canada and is required to do legal Employment Equity Act (EEA)
reporting out of SAP ERP HCM, you need to turn on the MOLGA for Canada. This is necessary because the
SAP system delivers several country-specific configuration tables and programmatic codes for Canadian legal
reporting. You must have the MOLGA activated to leverage the functionality. These reports require a lot of
specific data elements that can be found on standard country-specific infotypes and tables, all of which are
available when the switches are activated.

In addition to reporting and infotypes, activating MOLGAs also allows SAP ERP HCM users to deliver country-
specific functionality, such as specific personnel actions and country-specific drop-down values where needed.
Users are able to gain access to country-specific drop-down options and data values for given employees
based on the employees country.

For example, you can use the personal ID infotype (infotype 0185) or other country-specific infotypes to store
country-specific identification numbers for employees (e.g., the National Registration Identification Card [NRIC]
for Thailand, the tax filing number for Australia [infotype 0227-TFN Australia], and the Powszechny
Elektroniczny System Ewidencji Ludnoci [PESEL] number for Poland [localized version of infotype 0002,
personal data]) where needed. Regarding personnel actions, users can define country-specific personnel
actions to appear based on the person affected by the transaction within the system. This is done by using the
IGMOD feature (Figures 1 and 2). Feature IGMOD allows project teams to set country-specific configuration
settings based on country.
 Figure 1
Feature IGMOD in table T500L
Note
The MOLGA (country grouping) in Figure 1 is based on the country-specific MOLGAs in table T500L. Enabling
this specific MOLGA is based on table V_T500P as shown in Figure 2.
 Figure 2
Feature IGMOD showing specific configuration based upon MOLGA (country)

For example, when hiring a Belgium employee, a Belgium-specific hiring action appears and includes country-
specific Belgium infotypes such as infotype 0100 (social insurance B) and infotype 0101 (fiscal data B).

Another example of where country-specific functionality can be activated in the SAP ERP HCM system is in the
personnel and enterprise structures. Users can show specific values for employee group, employee subgroup,
personnel area, and personnel subarea based on the country of the employee.

A good illustration of this is how companies define the enterprise structure (personnel area and subarea) based
on each country (Figure 3). If the personnel area for a project is based on a geographic location (e.g., Paris,
London, or New York), you could cleanly separate the different locations by country and ensure that your
employees are tied to the country-specific personnel areas. If country-specific MOLGAs are not set up, all
personnel areas would be permissioned to all countries (Figure 4). This would lead to issues such as
employees being placed into invalid personnel area combinations (e.g., an employee is assigned to New York
in the country of France).
 Figure 3
Sample configuration table showing restricted personnel areas based on country (MOLGA)

Figure 4
Sample configuration table showing personnel areas with no country restrictions (MOLGA 99)

Figure 3 shows the configuration for table V_T500P in the SAP ERP HCM system. In this example, personnel
areas 1000, 1100, 1200, 1300, and 1400 only appear for German employees, and personnel area 1900 only
appears for employees being transacted on in Portugal. Figure 4 shows the configuration where all personnel
areas are assigned to MOLGA 99 (other countries). These personnel areas are allowed for all countries.

One key requirement that commonly comes up in global SAP ERP HCM implementations is the ability to
restrict certain employee groups and employee subgroups based on country. This is mainly to ensure that
companies can restrict certain types of employees from being hired based on the country where the company
is located. For example, Figure 5 illustrates the SAP ERP HCM systems ability to restrict the combination of
employee group 1 (regular employees) and employee subgroup A0 (applicant) to be allowed only in Germany.
This enables employers to restrict the SAP ERP HCM system to hire applicants from only one country; in this
example, Germany. This would not be possible if you use MOLGA 99.
 Figure 5
Assignment of employee group or employee subgroup based on MOLGA (table V_T503Z)

One other key consideration for activating the different country-specific switches is that the SAP system offers
a significant amount of localization (country-specific functionality) which is critical for payroll to run. As already
mentioned, there are country-specific infotypes in the SAP ERP HCM system and legal reports that are country
specific. There are also several global infotypes (e.g., infotype 0002 [personal data], infotype 0006 [address],
and infotype 0077 [additional personal data]) that have country-specific fields when countries are activated.
Figures 6 and 7 show examples of how Japan and Italy both share infotype 0002 (personal data), but have a
country-specific view for each.
 Figure 6
Infotype 0002 (personal data for Japan)

Figure 7
Infotype 0002 (personal data for Italy)
In Figure 6 the Japan Personal Data subscreen supports the ability to store names in local characters (e.g.,
Romaji, Katakana, and Kanji). In the Italian version (Figure 7), the Personal data subscreen does not have this
option, but stores critical details such as an employees date of birth, birthplace, state, language, country of
birth, and nationality. If a company needs to run payroll or legal reporting out of the SAP ERP HCM system for
Italy and Japan, these screens must be used as key data related to the employees resides on these country-
specific screens.

As you can see, there are several advantages to activating the country-specific switches in the SAP ERP HCM
system. This option, however, can be more costly to implement as project teams need to do a lot of country-
specific functionality configuration and development. In addition, activating each country requires project teams
to have separate data conversion programs for many of the global infotypes (where country-specific fields exist
like in the examples, above), as well as have conversion programs for each of the country-specific infotypes.
This adds a lot of complexity to your SAP ERP HCM solution when its being built, and requires thorough
testing to be conducted to ensure that all the country-specific functionality is working correctly.

The MOLGA 99 Functionality Solution

When project leaders decide to implement a simpler solution, and legal reporting and payroll are not in scope,
using the MOLGA 99 solution may be the best option. When you use the MOLGA 99 solution each of the SAP
ERP HCM personnel areas is assigned to a country grouping of 99 and no country-specific functionality is
called. With this setting, users do not enable country-specific functionality such as legal reporting and country-
specific payrolls. The major benefits of this solution are that it involves less configuration and it allows users to
get employees into the SAP ERP HCM system quickly. In addition, data conversion is much simpler as country-
specific screens are not used and the same conversion program can be used per infotype across all countries.

There are several distinct disadvantages related to the MOLGA 99 solution that project teams must clearly
understand before making a decision. One of the most important is that legal reporting is severely limited as
country-specific infotypes and logic are not leveraged. Most of the country-specific reports depend on the
mapping of personnel area to company code and the appropriate and relevant country (MOLGA), as shown in
Figure 3.

If countries are not assigned to the proper MOLGA, projects are not able to run standard country-specific legal
reporting out of the SAP ERP HCM system without customization to make these reports work with the MOLGA
99 country (and other attributes to be defined by the project). In addition, projects are not able to easily have
country-specific personnel actions. The main reason that this is more challenging is that projects arent able to
use the MOLGA field to determine the country, as all countries are assigned to MOLGA 99. To achieve
country-specific actions with the MOLGA 99 solution, custom configuration and hard coding of personnel area
or personnel subareas has to be done to enable country-specific personnel actions.
See Table 1 for a side-by-side comparison of the two options the country-specific MOLGA solution and the
MOLGA 99 solution.
 Table 1
Pros and cons of country-specific MOLGA and MOLGA 99 solutions

The Recommended Path for Activating MOLGAs

It is standard practice for global SAP ERP HCM implementations to activate the country-specific MOLGAs per
country. SAP delivers several global and local country-specific functionalities, which, in turn, depend on the
country-specific MOLGAs being activated. Although this may take a bit longer to build, this is by far the best
strategy as it helps ensure that your company has the latest functionality built within your SAP ERP HCM
system to support local payroll and legal reporting.

One common business case for activating MOLGA 99 is in situations in which a company already using an
SAP ERP HCM system acquires another company and requires fast integration to get the combined company
under a single HR environment very quickly. One possible, easy solution is to create HR structure values for
the employees from the newly acquired company and put them in the MOLGA 99 solution. However, as
mentioned previously, these employees would not be part of the legal reporting and payroll until the full
MOLGA solution is implemented, so this is just a temporary fix. These pros and cons should be considered
fully, and communicated to the project leadership team so that they fully understand the functionality that will be
in and out of scope based on the design decisions that are made. A list of pros and cons around this issue is
shown in Table 1.

Finally, as stated in my previous SAPexperts article Tips for Implementing Basic Management of Global
Employees in SAP ERP HCM, project teams also need to evaluate whether there is a need to activate the
Management of Global Employment (MGE) module, a component of the SAP ERP HCM system. Based on
requirements gathered, a project team may have specific needs to enable additional infotypes and personnel
actions related to expatriates and the expatriate process. If MGE is necessary, you should follow the
recommended path to enable country-specific MOLGAs as MGE is intended to integrate an employees
multiple assignments across numerous countries. In addition, there is specific functionality and configuration
that is MOLGA specific, such as enabling country-specific personnel actions and setting rules for multiple
assignments across different countries to an employee. More details about this can be found in my above-
mentioned article.
Mark Jackson

Mark Jackson has been working with SAP ERP HCM for more than nine years and specializes in the SAP ERP
HCM modules of Personnel Administration and Organizational Management. He is experienced with
implementing SAP ERP HCM globally and in defining global templates for SAP implementations.