Each expert shared the most common SAP Controlling pitfall in their opinion & offered best practices on how to avoid it. Visit our website for all the latest info about 2014 Controlling Conference and SAP Financials.
Most Common SAP Controlling Pitfall: Inability to Automatically Reconcile the SAP CO-PA Module with the SAP General Ledger:
Overview of Controlling Profitability Analysis:
•Collects Revenues and Costs from various modules in order to analyze profitability
•Inherits the characteristics that are associated with those revenues and costs
•Examples of Characteristics are Customer, Product, Region, Salesperson, etc.
•Excellent tool for analysis but not easily reconcilable with the General Ledger
Costing Based CO-PA
•Groups costs and revenues into Value Fields
•Value fields are mapped to Conditions, G/L Accounts, Cost Components and Variance Categories
•This was the original model of CO-PA
•When people say CO-PA they are normally referring to “Costing-Based” CO-PA
•Splits the cost of sales value into its different cost components
•Can classify production variances into their different categories
•Better visibility of contribution margin as fixed and variable costs can be broken out
•Does not show G/L Accounts hence not as easily reconcilable
•More complicated to set up as it requires mapping of value fields to various objects
Data Flows into CO-PA
•Flow of Actuals in Profitability Analysis
•Flow from the Sales and Distribution (SD) Module
•Flow from Billing Document
•Flow from the FI/MM – direct postings
•General Ledger Posting
•Flow from the Product Costing
•Transfer of Cost Components to PA
•Flow from Cost Object Controlling
•Settlement of Production Variances to PA
•Flow from Project Systems
•Settlement of Results Analysis to PA
Options and Issues with Reconciling CO-PA
•You cannot post a billing document to Financial accounting if a CO-PA value field has not been mapped to a condition.
•However, it does not deal with any transactions that do not come from a billing document
•You can use transaction KEAT to perform a reconciliation function, by showing the differences between FI, SD and CO-PA
•However, Transaction KEAT is never completely accurate
•Account-based approach to CO-PA which can help you produce CO-PA reports using accounts and not value fields
•However, it simply replicates the P&L, therefore it shows the same differences with Costing-based CO-PA that you get when comparing the P&L with costing-based CO-PA
Most Common SAP Controlling Pitfall: Evaluating Design Alternatives-
Evaluating Design Alternatives:
In order to make informed design decisions, business stakeholders must understand the implications:
•Does this design option satisfy my business requirement?
•Is this an interim or end state solution?
•Interim solutions are usually not perfect, but manageable.
•What is gained or lost in the new process?
•Additional steps in a process may be justified if value is generated.
•What happens if we change our mind?
•Some key Controlling decisions are very complicated to change.
•What are the long-term implications?
•Is this process robust if we foresee adding additional company codes?
•Day to day impact to users
•How much pain or gain will users feel?
•Payroll postings to cost centers
•Sales and Distribution
•Account assignment group
•Chart of accounts
•Fixed asset assignment to cost centers
•Field status settings
Relation to ASAP Methodology
Design Alternatives are reviewed in the business blueprint phase of a project using the ASAP deployment methodology.
A thorough follow-through of the alterative through configuration, development and testing is necessary to ensure it satisfies business needs and the implications are understood.
Opportunities exist in each round of testing to review the alternative:
•Functional Unit Testing
•User Acceptance Testing
•Business Simulation Testing
•Identify 'As Is' Processes
•Blueprint 'To Be' Processes
•Conduct Fit/Gap Analysis
2. Business Blueprint
•Configure Blueprint Requirements
•Conduct Integration Testing
•Create End User Documentation
•Conduct Final Testing
•Deliver End User Training
4. Final Prep
•Move to Live Production System
•Optimize System Performance
5. Go Live & Support
•Clearly document the business requirement
•Return to business requirement as design alternatives are presented
•Document pros/cons of each alternative and final decision
•Map out the as-is and to-be processes for reference
•Ask thorough questions early and frequently on design impact
•Ensure integrated solutions are reviewed by cross-team leadership
•Communicate decision and implications to project leadership, stakeholders and affected users
•Conference Room Pilots (CRP’s)
•Use demo’s in SAP to illustrate system and process implications
•Gain buy-in from key stakeholders by involving them in CRP’s
•Involve users in testing and solicit their feedback
•Each material movement will require the user to enter the valuation type
•Is the additional entry work justifiable?
•Scrap on BOMs
•Scrap can be accounted for in a variety of ways
•Evaluate if scrap must be inventoried, sold, weighed, etc. and which alternative supports the requirement
•Employee cost center assignment
•Cost center definition must consider employee assignment
•If you cannot differentiate between labor on two production lines, you may need to assign employees at a higher level or transfer labor costs
•Company code to plant definition
•Typically legal and tax requirements drive this decision
•Users will need to know the difference between co codes and plants
Most Common SAP Controlling Pitfall: Beyond Cost Center Accounting – there’s more to SAP CO than meets the eye!
•Many companies do not fully utilize the functionality of SAP CO
•They are trying to use the various submodules for things they are not designed for
•It is key to understand the purpose and functionality of the SAP CO submodules in order to get the best results for your company
Example One: Cost Centers for Projects
This company created a cost center for each and every customer project
•No status management
•Project management and controlling not possible in SAP
•No calculation of work in process or POC
•Solution: Implementation of PS
Example Two: Cost Centers instead of CO-PA
•This company utilized a user exit to post all sales and cost of sales to one single cost center
•No segment reporting
•No contribution margin analysis
•Solution: Implementation of CO-PA and EC-PCA
Example Three: Cost Centers for Segments
•This company is using cost centers and internal orders but no profit centers
•No overall summary of cost centers and internal orders in one view
•Solution: Implementation of EC-PCA
Summary: Utilize the Sub-modules for what they are Designed for
Cost Center Accounting
•Simple temporary, cross-functional activities
•Complex temporary activities
•Analyzing internal processes
Product Cost Controlling
•Analyzing production costs
•Contribution margin analysis
•Analyzing market segments
•Summarizing all the other modules
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