Advantage of using External service mgt

Question

Dear All,
Can any one tell me, what is the advantage of using service master(external service mgt) over creating service as a material in material type DIEN?
Your input will be highly appreciated.
Thanks,
sahu

Answer 1

Hello, Sahu
Before explaining the advantages of ESM, i want to clarify you about the DIEN (which is a standard material type for SERVICES)
Material type DIEN is for Services
Services can be performed internally or procured externally (outsourced). They cannot be stored or transported.
Services can be
-> Construction Services (like Centring, Shuttering) work
-> Cleaning services (House keeping)
-> Tax Consulting (Taxation for finance matters to company)
Suggestion: You can create service master for the above mentioned services using the DIEN material type. But as we know that services CAN NOT BE STORED or Transported physically. Because Service (it's just a text which indicated what service to be performed by the vendor /external supplier, that you will be mentioning in PO when you create service PO) can only be measured through PERFORMANCE (i.e, through Activity based, i mean depending upon the ACTIVITY).
That is Activity based Services can only be recorded, maintained and measured (i.e, Performances for each different activity) accurately through ESM.
like, Service master record
Standard service catalog,
Service PO,
Service Entry sheet.
And the Purpose and Advantages of the ESM is as follows:
This section provides a general introduction to MM External Services Management.
It provides an overview of the functionality, shows how MM External Services Management is integrated into the Purchasing application within the Materials Management module, and indicates the interfaces to other applications.
Purpose
MM External Services Management (MM SRV) is an application component within the Materials Management (MM) module. It supports the complete cycle of bid invitation, award/order placement phase, and acceptance of services, as well as the invoice verification process.
Features
MM External Services Management provides a basic process for the procurement of externally performed services. This basic process comprises the following functionality:
Service master records, in which descriptions of all services that may need to be procured can be stored. In addition, a standard service catalog and model service specifications are available.
A separate set of service specifications can be created for each concrete procurement project in the desired document (e.g. PM maintenance plan or maintenance order; PS network; MM purchase requisition, RFQ, contract, purchase order, or service entry sheet).
Service specifications can include items representing materials in addition to those representing services or activities.
When creating voluminous sets of service specifications, you need not laboriously enter each individual service manually. Instead, you can make use of the referencing technique and the selection function to copy quickly and simply from existing master data and documents.
MM External Services Management offers two basic ways of specifying services:
As planned services with description, quantity, and price.
By "planned services" we mean services whose nature and scope is known to you at the start of a procurement project or transaction.
At the time the services are requested, the individual specifications are entered either with the aid of a service master record or directly as short and long texts. Price and quantity are specified in both cases.
As unplanned services with the setting of a value limit only.
By unplanned services, we mean services that cannot be specified in detail because their precise nature and scope are not initially known, or services which - for various reasons - you do not wish to plan. Unplanned services therefore have no descriptions.
They are entered in the form of monetary limits. Services may be performed up to a value not exceeding these value limits. This allows you to exercise a degree of cost control in such situations.
You can analyze data already available in the system in order to find suitable sources of supply for certain services.
You can also carry out a bid invitation process and evaluate the bids submitted in response using the price comparison list function. You can then award a contract to (or place an order with) the desired vendor.
During the phase of service performance (execution of work), various lists and totals displays enable you to retain an up-to-date overview of your service specifications, the progress of the work, and the costs being incurred.
You can record the performance of services or work in service entry sheets.
You can indicate your acceptance of the work set out in the entry sheets in various ways.
Following acceptance, the vendor’s invoice can be verified and released for payment.
As an alternative to this basic process, various accelerated and simplified processes are made available to you for use if desired in connection with specific procurement transactions.
Integration
MM External Services Management is completely integrated into the Materials Management system. The master data for the procurement of services can be stored in service master records, for example, which subsequently provide default data for the purchasing documents. Service specifications for a concrete procurement project are not created and processed separately each time (e.g. as bid invitation or contract specifications), but entered directly in the purchasing documents (e.g. in a request for quotation, quotation, purchase order or contract).
The following graphic demonstrates the degree of integration of MM External Services Management:
The External Services Management component is linked to the SAP modules PM Plant Maintenance and PS Project System. As a result, it is possible to create purchase requisitions for external services within the framework of maintenance measures or a project and then transmit them to Purchasing without incurring additional data maintenance work.
The interaction of the R/3 modules MM, PS and PM, CO and FI saves time and effort and reduces the frequency of errors. This is because data need be entered once only, after which it is available for all follow-on activities within a business process.
An example of the integration of MM and CO is purchase order commitments. The expected value of unplanned services is forwarded to CO from within MM so that a commitment figure can be established and monitored. This enables the relevant budget for procurement measures to be prepared in good time.
For complete information on ESM:
Please read the URL:
http://help.sap.com/saphelp_47x200/helpdata/en/c3/72cfd355cd11d189660000e8323c4f/frameset.htm
Hope this will clarify you,
Reward, if it helps,
Regards,
Srin.K