SAP HR

Since PZL in Mielec has become a part of the international United Technologies Corporation, the company has been using a global SAP ERP solution. One of the important areas which was not covered by the SAP system in Mielec was human capital management.

A system which was largely an in-house developed solution and required a continuous IT support in payroll processing was used both for human resources management and the payroll in PZL Mielec. It had many limitations in terms of functionality and, in addition, its maintenance involved a high risk of operation continuity due to the lack of both hardware and system support.

The change management process in the system didn’t meet basic security requirements, and the system’s limitations didn’t allow for the introduction of appropriate changes. Moreover, the integration of the payroll application with the corporate SAP system in the scope of the data warehouse, financial accounting and controlling, posed certain problems.

Obvious choice

Thus, the decision to implement SAP HR solutions was only a question of time. It was a matter of merely deciding which variant of the target solution would be launched. The scenarios involving outsourcing, corporate implementation and implementation of the entire solution from scratch were taken into account. The final choice was SAP HR in an in-house installation variant.

The main reason for starting the implementation project was the necessity to adjust the HR and payroll management to the high security standards in force in the corporation and the requirements of the Sarbanes-Oxley Act (SOX) which we are subject to as a subsidiary of the Sikorsky Aircraft Corporation and UTC.

In the UTC corporation, all the IT systems in use must meet the security and business process audit requirements as stipulated by the SOX Act. The previous HR and payroll system didn’t guarantee that.
The SAP HR implementation process started in April 2010, and at the beginning of February 2011 the first payroll for January was executed in the system. The implementation partner was BCC (since 2018 SNP). Before signing the contract, a joint review took place of all SOX requirements that were necessary to be taken into account in the solution.

During the preparation of the solution blueprint, great importance was attached to creating a tool that would streamline the existing processes, eliminate manual work and provide a secure platform for HR process management.

In the first phase of the project, it was assumed that the main SAP HCM modules would be implemented for the management of HR and the payroll for nearly 2,000 employees of the works in Mielec. Then, the project scope was extended to include the time evaluation functionality.

Time evaluation

PZL Mielec features a decentralized time management model which is related to the distribution of the plants which are in several locations and the organizational division into production centres or lines.
Before the implementation, the time evaluation was run on the corporate SAP system. Then a a monthly report was transferred from there to a legacy human resources and payroll system. This solution worked perfectly well for the purpose of cost accounting from the perspective of production planning, but it was definitively proven that it was not sufficiently adjusted to the requirements of the Polish law. The American time evaluation module was not able to fully manage e.g. the calculation of overtime hours, night hours and leave quotas.

Moreover, the working time has too much influence on the proper calculation of remuneration to separate the time evaluation module from payroll and handle these processes in two separate systems.
Currently, with the data provided by magnetic stripe card readers, a positive time recording now takes place in the system, so it is possible to control absences, overtime or night hours. The data provided by the Polish version of the time evaluation tool allows for a reliable settlement of the hours worked on a weekly or monthly basis and the inclusion of this data in the calculation of the remuneration.

The adjustment of these processes to the standards used in Poland will allow for a trouble-free future upload of the system vendor patches to reflect the changes of the external and internal regulations.
The transfer of the time evaluation from the corporate SAP system to the SAP HR system in Mielec while maintaining the existing wage type descriptions also allowed for a seamless change of the system management model and the simplification of many activities of the time administrators.

Single data entry

While changing the time recording tool and the storage of this data – from the central SAP system in the USA to a local SAP HR installation – there cannot be a break in the provision of human resources and payroll data to a corporate data warehouse (Global Data Warehouse). So, simultaneously with the implementation tasks, the interfaces feeding the corporate systems, including an interface for transferring the human resources and payroll data to a corporate data warehouse, were created and tested.

In such complex SAP installations that combine corporate and local systems, a major difficulty is to keep data consistency on all organizational levels and in all systems. To meet this challenge, in the described project the assumed target was to keep a single point of data entry. Actions aimed at the elimination of the simultaneous maintenance of the same data in several systems are also currently under way.

Salary posting automation

Another project task was the remodelling of the salary data posting solution in SAP FI.

Manual postings that always require a very detailed control in the process of posting and release itself were eliminated. Currently, the solution allows for not only the automatic posting of SAP HR data, but also enables the staff to perform a test run during which all information on possible errors is displayed and the posting simulation is done.

This allowed for considerable savings compared to the previous process.

Not only SOX

At each stage of building the solution, a key factor was to incorporate SOX. Meeting the SOX requirements means that the company is managed in a proper manner and doesn’t allow a lack of control over key processes, and hence reduces the risk of abuse.

Due to its corporate affiliation to UTC, the Aviation Works in Mielec are periodically audited by independent auditors who examine in great detail the business process flow, also in the HR and payroll area.
Apart from ensuring the data access security, one of the fundamental principles of transparency is the segregation of duties. With respect to SAP HR tools, the segregation of duties between HR professionals, payroll professionals, time administrators, and people responsible for creating the substance of documents means that in sensitive system areas, such as payroll preparation, the system requires that different people be responsible for the data entry and the salary calculation itself.

To comply with the principles of this double control of responsibilities of the individual processors of HR processes, an authorization assignment model, strictly defined in the blueprint phase, was used. The previous system didn’t allow for such a precise and flexible separation of user authorizations SAP does.

However, the SOX requirements are not the only regulations that had to be taken into account during the project. Apart from the Polish labour and remuneration law regulations, which are obvious, the IT management principles, obligatory in UTC, had to also be considered. In the corporate SAP solution, any interference in the system is subject to the change management and release process. The same procedures for the control over activities in the system also apply to the Basis consultants from SNP who are currently responsible for SAP HR administration in Mielec.

All project parties

Creation of the SAP HR system which is in great degree integrated with the corporate SAP ERP system required close cooperation with the IT organization at UTC which is responsible for system maintenance and development. The mechanisms of bidirectional communication with the global SAP installation were jointly worked out. In cooperation with UTC professionals, a series of interfaces had also been developed that were launched while going live

The three party collaboration of corporate professionals, the implementation team in Mielec and SNP worked out very well. All the project phases finished on time, which required great mobilization, in particular on the part of the employees of the Aviation Works in Mielec who had to manage their everyday workload with the added work on the implementation team.

The work atmosphere was very good, and thanks to an open channel of communication, any red flags were corrected on an on-going basis.

Despite the many changes that were necessary in connection with the launch of the new SAP HR system they were easily introduced to the PZL organizational structure. The change management process was well-planned out and executed successfully, which in consequence contributed to the success of the entire project.

First payments in SAP

The first salary calculation in the system was successful. We can already see that the data preparation process, the data evaluation and the salary calculation itself are being done much faster. Currently, the stabilization phase takes place. At this stage, the key users are already using the SNP application service in the field of HR.

The HR processes were streamlined and the entire responsibility for their execution was handed over to the business. Currently, the system allows for an effective information flow between the organizations responsible for handling human resources, payroll and time management. There is a clear division of responsibility for data recording and data processing. In principle, all registered data is subject to a minimum of double control in order to check the accuracy of the registration. The first level of control is already at a technical level. The system has a variety of data validation mechanisms during its entry and it controls the completeness of the entered data.

There are new ideas for further improvement to meet business needs. We will implement them accordingly, and with the SAP HR system it should not be difficult.