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Firstly -- SAP External Service Management (ESM) must not be confused with SAP Service

Management (SM). ESM is the procurement of services. SM is to provide services to a client.

With External Services, you have a PO for services with Goods Receipt taking place. The GoodsReceipt is called Service Entries. In contrast with goods (stock or non stock) where receiving is

typically done by the inventory management group, the Service Entries are done by business

themselves. The logic is that the business generated the request for the service, that is where it was

done, it will be best if they do confirmation that service took place.

Lets look at the traditional SAP purchasing cycle vs SAP purchasing cycle for External Services.

The big difference is that the item category is D (services) is used. For the item, detail Service to be

performed can be specified. The receiving is a 2 step process. Create and then Accept Service Entry

Sheet

Lets step through the process and look at the documents. The steps are

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Step 1 - Create Purchase Requisition

Step 2 - Convert to Purchase Order

Step 3a - Service Entry Sheet

Step 3b - Acceptance of Service Entry Sheet

Step 4 - Invoice and payment (not shown here)

----------------- DETAIL -------------------

Step 1 - Create Purchase Requisition

What makes the PR a ESM PR is the Item category. For goods it is blank. For ESM it is D (Service). if 

the item category D is selected, it is mandatory to provide the account assignment.

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Step 2 - Convert to Purchase Order

The PR is converted to a PO. If me59 (automatic creation of PO) is used, the Material Group must

also be entered in the selection criteria, otherwise it doesn't work.

Step 3a - Service Entry Sheet

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Additional notes on External Service Management

Release procedure and SES

Release procedures can be build in PR, PO and Service Entry Sheets. (Also possible on Outline

Agreements and RFQ's)

Service Outlines

The services in the PR / PO can be specified in a hierarchy. See this post [sap123.com] for more

information on this.

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Outline Agreement (Contracts)

Services specified in PR / PO as well as Unplanned Services entered in SES can be pulled from a

contract (Outline Agreement).

Service masters & Service Conditions

The services can either be free text or Services Masters (similar to material masters for goods). The

prices for these services are stored in Service Conditions. Lots of SAP customers start using ESM

without Service Masters. And even if Service Masters are used, one do not need to use Service

Conditions.

Account Assignment U

Under special cases (if allowed), an account assignment U (Unknown) can be selected when creating

the PR / PO. In this case the correct account assignment category must be provided when the service

entry sheet is created.

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Configuration

The focus on this post is to introduce the concept, so no configuration options are discussed. See

below for config options related to this functionality. Config Menu: IMG > Materials Management >External Services Management

Transactions

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The following transactions were used for above screens:

ME51N - Create PR

ME21N - Display PO

ML81N - Create Service Entry Sheet

ML82N - Change Service Entry Sheet (Acceptance)

AC03 - Maintain Service Master