SAP S/4HANA Delta for CO Configuration

2.1 Controlling organizational structure

The SAP software organizational structure is fundamental to the overall structure in which master data and transaction data is defined in SAP. It is essentially the backbone of the system. Accurate design and setup of the software organizational structure is a critical step in SAP implementation; it is extremely difficult to change the structure once it has been designed and configured, and the transaction data has been posted.

SAP software organizational structure reflects a business’s own organizational structure, reporting requirements, and processes in the SAP system.

An enterprise’s organizational structure is mapped to the SAP system organizational structure. This is done in the early stages of SAP implementation projects to ensure that all business processes function smoothly, not only from a transactional processing point of view, but also from an internal and external reporting perspective.

The key elements of SAP organizational structure are:

• Chart of accounts—this is a list of general ledger accounts. Accounts are broadly classified into assets and liabilities, and then broken down into more detail as required by the organization. The chart of accounts can be used across multiple company codes and provides a common definition across all companies. Additionally, it streamlines the financial consolidation of the company’s financial books across multiple legal entities.
• Fiscal year variant—this identifies the financial and reporting calendar for an organization. Many companies use a calendar month as the reporting calendar and adopt fiscal year variant K4. Four periods allow for optional additional buckets for quarterly/annual financial reporting.
• Operating concern—this represents an enterprise in terms of profitability analysis. It is the highest organizational structure element in SAP Controlling. It is possible to assign multiple controlling areas to one operating concern.
• Controlling area—this captures and records costs and revenue across the organization, primarily from an internal reporting perspective. It also provides a cross-company view of the organization. To be assigned to the same controlling area, all relevant company codes must have the same chart of accounts and fiscal year variant. Although company code currency can be different, the controlling area has a unique currency in which all transactions are recorded.
• Company code—this is the smallest organizational unit for which a complete set of self-contained accounts can be drawn up for external reporting. A company code represents a legal entity for external reporting and records all relevant transactions. It generates all supporting documents for the legally required financial statements, such as balance sheet and P&L (profit and loss) statement.
• Profit center hierarchy/group—this is a business unit in the enterprise that operates as an independent unit in the marketplace. Both income and expenses can be monitored at the profit center level, thereby creating a complete P&L—and also a partial balance sheet at the working capital level—at the profit center level. This information can then be summarized using the profit center hierarchy to represent the management structure.
• Versions—in SAP Controlling, these maintain independent sets of planning data and actual data. Versions are used in planning to set up alternative scenarios based on different assumptions. Actual data is posted in version 000 to compare plan versus actual costs, as well as plan versus target costs.