Creating the Master Agreement

Business Customer within an organizations structure, closes a master agreement for cloud products. The Customer has negotiated customer prices for usage and monthly fees and a volume discount for total revenue of 10% the year. The customer hierarchy sales area and development areas are assigned to the master agreement.

Master agreements are created in SAP S/4HANA Service using the Manage Master Agreement app. Sales Order Management (SOM) focuses on the ordering side of the master agreement.

The master agreement is used as a product catalog in which you can define individual products (configuration) for a customer. Every product is represented as an item of the master agreement. The product redefinition is maintained on the item level. This means that you do not have to create new specific products for every new customer. Those products are based on standard products, but in the context of the master agreement, they can have a master agreement-specific product number, as well as a specific product description or different prices.

In addition to the product list, the business partners that can participate in the master agreement are also captured. These can either be contract partners later on or they can be service recipients.

While SOM focuses on the ordering side of a master agreement, SAP S/4HANA Convergent Invoicing (CI) focuses on the billing side.

This business scenario shows the creation of a Master Agreement:

The master agreement data is distributed between SAP S/4HANA Service, SOM and SAP S/4HANA, Contract Accounts Receivable and Payable (FI-CA) and each component stores the relevant data for its core processes.

Those products are based on standard products but in the context of the master agreement can have a master agreement-specific product number as well as a specific product description or different prices.

You can manage various business partner roles in the master agreement:

• Master Agreement (Contract) Partner: The master agreement partner is the partner with whom you have negotiated the master agreement. A master agreement only has one master agreement partner that is assigned on the Master Agreement header. The sold-to party category is assigned to the master agreement partner.
• Authorized Contract Partner: Authorized contract partners can perform releases and act as the contract partner (payer), sold-to party, and service recipient in the provider contract as a default setting.
• Authorized Sold-to Party: Authorized sold-to parties can perform releases and act as the sold-to party and service recipient in the provider contract as a default setting. However, they cannot act as the contract partner (payer) in the provider contract. The default contract partner is used here.
• Authorized Ship-To/Service Recipient: Authorized service recipients cannot perform releases or act as the contract partner in the provider contract. They can be entered as an alternative service recipient in the provider order.

It's possible to redefine the standard products due to customer or master agreement purposes.

• Create Master Agreement.
• Assign Products, assign Business Partners with hierarchies, maintain Configuration for Products, Redefine subitems, and Assign / Redefine Cross Catalog Mapping Tables and Parameters.
• Master agreements can be offered to an individual partner or group of partners represented by a customer hierarchy.
• Call-offs can be requested for partners assigned to the hierarchy.
• The customer hierarchy is also stored with the Contract Accounts Receivable and Payable (FI-CA) provider contract.
• Define Master Agreement specific prices.
• Release Master Agreement Items.
• Replicate Master Agreement in FI-CA.
• Display Invoice Agreements, Discount Agreements, and Invoice List Agreements.
• Display related subscription orders, contracts, and solution quotations (related objects).
• Create Subscription Order / Solution Quotation / Sharing Contract from Master Agreement.
• Auto determine a Master Agreement during creation of Subscription Order / Solution Quotation /Sharing Contract.
• Search for Master Agreement.

The following process steps are done during master agreement creation:

1. Access the FIORI App Manage Master Agreement, and create a new Master Agreement.
2. Assign a master agreement contract partner.

   The master agreement contract partner needs to have a contract account for technical reasons as well. The master agreement contract account is used in Convergent invoicing in order to assign billable items.

3. Create a master agreement item as a reference for subscription order call-offs:
   • Select a product.
   • Define Custom Product IDs and Custom Text. Configure the product, and fix the configuration if required
   • Find sub-items of bundle in the product list and redefined sub-items.
4. Partner function in Master Agreement:

   The contract partner is the partner with whom you have negotiated the master agreement. A master agreement only has one contract partner and it's assigned on the Master Agreement header. Authorized contract partners act as the contract partner, sold-to party, and service recipient in the call-off object as a default setting. Authorized sold-to parties act as the sold-to party and service recipient in the call-off object as a default setting. They cannot however act as the contract partner in the provider contract. The default contract partner is used here. Authorized service recipients cannot act as the contract partner in the call-off object. They can be entered as an alternative service recipient in the call-off object.

   The Master Agreement Partner (Contract Partner) is the partner that you negotiated the master agreement with. This partner is also the legal partner. In addition, it's possible to maintain a contact person and a description.

   On Master Agreement item level, you have to assign Authorized Partners. Authorized Partners can perform call offs (such as provider orders) for the master agreement or can receive goods and services. If the standard behavior is not sufficient, it's possible to define your own rule using the BAdI Check Authorized Partners for Provider Master Agreement.

   The authorized partners can be added as business partners and the hierarchy structure itself can be added or a hierarchy node. In this case, a hierarchy node is added.

5. Convergent Charging Tables:
   • Depending on the Master Agreement negotiation, it might be necessary to change the entries of a standard Mapping or Range Table only for this specific Master Agreement.
   • In case of redefining, the system automatically copies the default table and creates a new table. Mapping or Range Tables will be created as Agreement Tables with relation to Master Agreement.
   • It's also possible to assign another exiting table.
   • Using the hyperlink, you can navigate to the Convergent Charging table.
6. Master Agreement – Convergent Charging Parameters

   The concept of redefining Convergent Charging Parameter is similar to the tables. The system reads the parameters from the standard product (cross catalog mapping) and displays them in assignment block Convergent Charging Parameters. The following options are possible to redefine a parameter:

   • Redefined Value: The column Redefined Value is editable, and you can enter an individual value.
   • Characteristic: The column Characteristic is editable, and you can select a characteristic from the product configuration Attribute: The column Characteristic is editable, and you can select an attribute from the product configuration.
   • BRF Event: The column "BRF plus function" is editable, and you can select an existing BRF Event
7. Redefine Product Billing Cycle / Billing Cycle determination Rule

   You can set a master agreement-specific billing cycle / billing cycle determination rule, which will then be copied to the subscription item of the call-off object

8. Manage the status: Release master agreement item.
9. Define recurring price conditions for master agreement items.
10. The master agreement is replicated to Contract Accounts Receivable and Payable (FI-CA). Discounts, invoice agreements and invoice list agreements are assigned to the master agreement and shown in the Subscription Order Management (SOM) side of master agreement.
11. The master agreement item is ready for subscription offs. All call-off documents are referenced to master agreement for discounts and invoicing agreements.
12. Create a subscription order for the sold-to party, and the master agreement is set as reference for the subscription order.
13. Master agreement conditions are transferred to subscription call-offs.