Financial Enterprise Structure
- Provide an overview of SAP Enterprise Structure and some of the specific finance related organizations
SAP Enterprise Structure Overview
- Enterprise Structure is the system representation of your business structure
- SAP has a number of organizational unit elements that help you portray the Accounting, Logistics, Sales, and Human Resources structure of your company
- The structure of your company, business processes, and implementation scope will guide the SAP organizational units that will be required
- Example Org Units are: Company Code, Sales Organization, Purchasing Organization, Plant, Segment, Profit Center, Cost Center, etc
Key Considerations/Notes For Enterprise Structure
- SAP Enterprise Structure is a fundamental and key step in your implementation
- The process should start by analyzing the business structure and processes in your company and then mapping them to the SAP structures
- Enterprise Structure is made up of a combination of configuration settings and master data. Example – Company Code is Configuration and Profit Center is Master Data
- Four Keys:
Simplicity – do not use more organization units than necessary
Acceptance – all levels of the project team should have input and acceptance
Ownership – limit the group that has ownership of the org structure and implement governance early in the project
Importance – once the enterprise structure is set it is not easy to change and will impact future setup decisions
Main Areas Where Enterprise Structure Elements Exist
- SAP traditionally divides Enterprise Structure into 8 Areas
- Financial Accounting – Structure for G/L Accounting, AP, and AR
- Controlling – Structure for Cost Center Accounting, Cost Controlling, and Profitability Analysis
- Material Management – Structure for Material Valuation, Material Planning, Purchasing, Inventory Management, Invoice Verification, and Warehouse management
- Sales and Distribution – Structure for Sales, Shipping, and Billing
- Human Resources – Structure for all HR related activities
- Logistics – General – Structure for general logistics activities including those relating to purchasing
- Logistics Execution – Structure for the execution of logistics i.e. loading points, transportation points, and warehouses
- Plant Maintenance – Structure for facilities maintenance
Example Enterprise Structure
Taken from SAP Best Practice Baseline Template for ECC 6.0
Enterprise Structure – SPRO Path
- SAP has grouped Enterprise Structure activities together in SPRO
- This is not 100% complete some objects are found elsewhere in SPRO or in master data transactions
Finance and Controlling Enterprise Structure
- Let’s take a closer look at the Financial Accounting and Controlling Enterprise Structure Elements
- Note – A single implementation will not use all of these elements only the ones that best fit the business model
SAP Enterprise Structure – Financial Accounting – Company
- SAP Definition – The smallest organizational unit for which individual financial statements are created according to the relevant legal requirements. A company can include one or more company codes.
- Think of it more as a Hierarchy of Company Codes
- This is an optional organizational unit that tends not to be used in new installations
- Was used in previous SAP versions when GL consolidation functionality was less developed
- Function now typically done with other objects like segments or profit centers
SAP Enterprise Structure – Financial Accounting – Company Code
- SAP Definition – Smallest organizational unit of external accounting for which a complete, self-contained set of accounts can be created. This includes the entry of all transactions that must be posted and the creation of all items for legal individual financial statements, such as the balance sheet and the profit and loss statement.
- Best Practice – 1 Financial Legal Entity = 1 Company Code
- This is the core organizational unit for SAP FI it is required on all financial postings
SAP Enterprise Structure – Financial Accounting – Company/Company Code Example
SAP Enterprise Structure – Financial Accounting – Business Area
- SAP Definition – Organizational unit of external accounting that corresponds to a specific business segment or area of responsibility in a company.
- Movements in value entered in Financial Accounting are assigned to business areas.
- Used primarily for reporting purposes, cannot assign responsibility like some other objects (i.e. Profit Center)
- Business Area is independent of Company Code
- Role has diminished with the introduction of the New GL as the distinction between the objects used for internal and external reporting has diminished
- Optional and not as commonly used as previously – Role is taken more by profit center or segment
SAP Enterprise Structure – Financial Accounting – Company/Company Code Example
SAP Enterprise Structure – Financial Accounting – Profit Center
- SAP Definition – an organizational unit that reflects a management-oriented structure of the company and for which an individual period result can be determined
- The division of a company into profit centers makes it possible for management responsibility to be delegated to these local organizational units
- Profit center acts like a company within the company
- Traditionally had a stand alone ledger in SAP, now can be activated directly in the New GL
- Business Area and Profit Center are not typically used together
- SAP focus for future developments in profit center vs. business area
SAP Enterprise Structure – Financial Accounting – Segment
- SAP Definition – Division of a company for which you can create financial statements for external
- Used to satisfy GAAP or IFRS requirements for some companies to disclose segment reporting
- Profit Centers can be used to replace or in conjunction with Segment to satisfy this requirement
- Profit Centers are assigned to a segment
SAP Enterprise Structure – Financial Accounting – Profit Center/Segment Example
SAP Enterprise Structure – Financial Accounting – Credit Control Area
- SAP Definition – An organizational unit that represents the area where customer credit is awarded and monitored.
- This organizational unit contains either a single or several company codes, if credit control is performed across several company codes.
- One credit control area contains credit control information for each customer.
- Customers can be created in different company codes – the credit control area responsible for a given customer depends on which credit control area the company code is assigned. Customers that are created in company codes with a common credit control area are controlled by this one control area for all company codes.
- Basic Decision – If the same customer needs a different credit limit if they are assigned to multiple company codes then multiple credit control areas are required.
SAP Enterprise Structure – Financial Accounting – Credit Control Area Example
SAP Enterprise Structure – Financial Accounting – Functional Area
- SAP Definition – Account assignment characteristic that sorts operating expenses according to functions, for example:
- Research and development
- Used to produce what SAP calls Cost of Sales Accounting
- Assigned based on the other objects involved in the transaction or through rules.
- For example – $10 posted to an office supplies GL with a R&D cost center is tagged with the Research and Development functional area
SAP Enterprise Structure – Controlling – Controlling Area
- SAP Definition – organizational unit in an organization that represents a closed system used for cost accounting purposes
- A controlling area may contain one or more company codes, which can operate in different currencies, if required
- The company codes within a controlling area must all use the same operational chart of accounts and fiscal year variant
- Cost Centers and other controlling master data objects are assigned to a controlling area
- All internal allocation transactions refer only to objects from the same controlling area
SAP Enterprise Structure – Controlling – Operating Concern
- SAP Definition – An operating concern represents an organizational unit in your company for which the sales market has a uniform structure.
- It is the valuation level for Profitability Analysis (CO-PA).
- Profitability Analysis has a flexible structure based on characteristics derived from the various Sales, MM, and financial postings
- Controlling Areas are assigned to one Operating concern
- Fiscal year variant must match
SAP Enterprise Structure – Segment Assignment Example