Professional Documents
Culture Documents
SAP CONTROLLING
ORGANIZATION STRUCTURE
GHOSH, BISWAJIT (JIT)
0
SAP Certification Tutorial
Contents
INTRODUCTION...........................................................................................................................................2
1
SAP Certification Tutorial
INTRODUCTION
Welcome to the SAP Controlling module. In this article we will discuss about the organizational
structure relating to Controlling module of SAP. This particular documents does not contain any
screen shot or technical configuration details as it is written being focused mainly on conceptual
understanding behind the foundation of organizational structure in SAP.
Before we pop into the main subject matter it is essential to know brief about Controlling
module and how it come into effect in SAP sufficing the need of business in real time.
In SAP Controlling (CO) is the term used in reference to Management Accounting. The main
purpose of Controlling is same as that of Management Accounting which is mainly concerned
with the effective use of accounting information and preparation of internal reports sufficing
the need of management and the decision makers within the organization.
Like in any company or organization the reporting level is properly structured so that the flow of
specific information and confidentiality is correctly maintained. In parallel to that Controlling
(CO) module of SAP has came out with a proactive methodology which describes how a specific
company is to be structured and therefore organized within the same SAP system forming a well
synchronized unit which can represents as a closed system used for cost accounting purposes.
Therefore the bottom-line behind the existence of controlling module in SAP is the need for
facilitating proper coordination, monitoring, and optimization of all processes in an organization
and behind this, organizational structure of Controlling has great contribution.
Now moving forward, this document will also provide an insight about how the features of
following integrated organization units under Controlling which has facilitated the need of
dynamic internal reporting criteria (will be covered in next tutorial)
Cost Center - Cost / Overhead Cost Accounting
Cost Object - Product Costing
Internal Order- Order Settlement
Profit Center - Profit Center accounting
Profitability Segments - Profitability Analysis
which have to be set up in the system, depending on the functions or modules that are to be
implemented in the to-be system. Each of these organization structure objects may have a defined
logical relationship with one another and have to be mapped and assigned to achieve the required
integration in terms of the process and data flows within the whole SAP system.
Before we go into the details of each organizational units and its related features let us understand how
these units are lined up in hierarchical structure from Controlling Area and its component perspective.
3
SAP Certification Tutorial
Now we can see the way a standard organizational structure is mapped in SAP in commercial spectrum
which portrays an enterprises hierarchy. However understanding the foundation of organization
structure is always a perspective based, which can be Logical or social
Client: In commercial organization and technical terms client is a self contained units which
comprise its own set of Programs, Tables, and Master data and Transaction records.
Operating Concern: From controlling area and internal reporting area perspective Operating
Concern is considered as the highest organization unit within Profitability Analysis (COPA). The
prime aim of COPA is to provide profitability-oriented information on the market or sale to
support the decision making, planning and controlling operations within an organization. The
market or sale segments are usually made up of a combination of characteristics regarding the
customer, product or sales channels of the organization which can be analyzed in a multi-
dimensional information cube. From business perspective, it is required to cater for additional
reporting dimensions including Customer Group, Product and Country.
Company Code: A company code represents a legal entity in SAP. A company code is set up for
every legal entity which records transactions and maintains its financial books (i.e. sub-ledgers
and GL) in the SAP system. The financial books cater for the functionalities to generate a
complete set of financial statements, including Profit and Loss (P&L) statement, Balance Sheet
(B/S) and Cash Flow statement.
Plant: This is one of the indispensable unit in the Organizational Structure which is represented
as production center where goods and services are produced according to Production,
Maintenance, Procurement and Material planning. A Company code can posses the assignment
of one or more plant. Generally from Production operation perspective Plant is defined within
the enterprise structure under Material Management module.
4
SAP Certification Tutorial
Sales Organization: This organization unit is defined under Sales & Distribution module In terms
of Company Code Perspective Multiple Sales Organization can be assigned with one company
code depending on the actual business requirement.
In order to understand the mapping of Organizational Structure lets use the following business
scenario to create the same Enterprise Structure in SAP.
Company group called CSN (Comserve Network) is the Head Quarter and is responsible for internal
reporting like Profitability Analysis, Cost Accounting from the Transaction created in both the Branch
Company based in UK and Netherlands. Therefore it is also expected CSN (Hq.) as an important
Organizational entity is to be positioned at the top of the Organizational Structure. CSN Company
comprises the following:
1. Two Branch office having separate entity situated in two different locations one in UK and One in
Netherlands. E.g. CSN-UK , CSN-NL
2. Each Company Branch Office contains respective Plants, Purchase Organization and Sales
Organization. So CSN-UK has Plant CSPL1, Purchase
Scenario at a glance:
Now: How do we go about defining the enterprise structure for the entity Comserve Network ?
In terms of creating a new Enterprise structure complying the present Organizational Structure of a
company is always perspective based. A Consultant need to understand the main purpose behind the
formation of Organization structure emphasizing the correct flow of internal reporting within the correct
level of the hierarchy.
Option 1. Based on Location Create separate Enterprise Structure for each company CSN-UK and
CSN-NL where Plant Sales Organization and Purchase Organization is assigned respectively.
ption 2. Consultant must also consider the point of group reporting perspective which will direct the
design creation of a unique enterprise structure. Since CSN-UK and CSN-NL are the two Branch Company
Office under CSN Head Quarter so it is understandable that CSN-UK, CSN-NL along with its respective
plant, Purchase Org and Sales Org. is formed as 2 individual Company (entity) under Head Quarter CSN
which can be created as Operating Concern and a prime reporting entity.
5
SAP Certification Tutorial
Based on correct analysis let us come into a conclusion about defining the enterprise structure in SAP
complying the reporting needs of the Organization structure of CSN
In the above context of Company CSN, one Controlling Areas CS00 will be created to
represent the Comserve Network group of companies.
Company code CSN1, CSN2 with respective currency code GBP and EUR will be assigned
to controlling area CS00.
An Operating Concern CS00 will be created to represent the CSN group of companies.
As per the requirement this operating concern will provide the profitability information
captured in COPA can also be extracted to Business Objects (BOBJ) to facilitate further
analysis using the reporting tools within BOBJ.
Respective Plant as per the above context CSUK1 and CNNL1 is created and uniquely
assigned to the Company Code CSN1 and CSN2 respectively. As each of the company
code is always assigned uniquely to a Controlling area which is CS00 in this case, so
the relationship of Controlling area and Plant can easily be derived.
6
SAP Certification Tutorial
From controlling area perspective the organization structure mainly includes Controlling area, setting
standard hierarchy of cost centers and profit centers (which includes identification of cost center/profit
center groups, cost element groups etc.
In order to understand the Organization structure from Controlling perspective it is better to take up a
business scenario and try to understand the process.
Management of CSN group is considering to extend their Organizational structure in order to facilitate
robust internal cost reporting process. Following model is the present practice of CSN group:
Company CSN
Operational
Dept. Warehouse, Management, Logistics , Repair Center
Product Line PC , Laptop, GPS , LCD Monitor,
Service type Repair , Refurbishment
Reporting Cost Center Reporting, Profit Center Reporting,
Requirements Profitability Analysis Report
Based on the above understanding a consultant can come up to the following assumptions relating to
the actual requirement of Organizational structure creations for company CSN
CSN (HQ) is suppose to be the highest node within the group organization structure and is
responsible for Internal reporting like segment reporting which is the prime requirement of
Profitability Analysis report (Reports to be discussed in next Chapter). In this term CSN > CS00
is considered as Operating Concern
CS00 is still considered as controlling area as it is responsible for internal reporting like Cost
Accounting, Profit Center Accounting.
7
SAP Certification Tutorial
CSN contains various operational departments which incurs various cost. So it is essential to
create those department as separate Cost center e.g. Warehouse CCWH, Logistic - CCLOG ,
Management CCGM, Repair Center CCRC so on. All responsible for cost Accounting report.
Similarly CSN has its income through providing services like refurbishment and Repair of various
electronic products as listed above e.g. PC, Notebook, and LCD. So it is recommended to
create those products as separate Profit Centers since this cost object will help to generate Profit
Center Accounting containing Revenue and Cost report based on each of the product.
Finally CSN has mentioned its 2 imported channel precisely Segment of business through which
it earns revenue an perhaps that gives the requirement of Profitability Report which will say
which service type is more Profitable Repair or Refurbishment?
Finally from controlling perspective we can conclude the creation of CSN Organization Structure
consisting of related organizational units which will at the end will indeed help to cater to the respective
reporting requirements as given above.
END..