Organizational Management Setup for Segment Reporting
Usually, when setting up companies, you will, in Org Management, assign the “SEGMENT” property to the org unit of the company or below.
In case your company is split into divisions where companies are executing for several divisions, an alternative implementation approach is possible.
The figure below outlines an approach, where aspects of operational responsibility are not influencing the legal structure.
On the left, you see the “legal structure”, on the right, the “Reporting Structure”. In case a transaction takes place in, e.g. “Consulting Division I”, it will determine a cost center (in this case, it is “SaaS Consulting”). At this level, assign a “deviating business residence”, which will led to a business residence derivation in the legal structure, and a company by climbing up in the left tree. From a profitability perspective, it will assign org unit “SaaS” as profit center and “Cloud Services” as segment. This allows you to avoid a multiplication of profit centers and segments.
In the legal structure, you will need a profit center and a segment as well. But it can be a single one called “administration” or similar capturing activities from the indirect cost centers (those in the legal structure).
Thanks for this, interesting and intriguing possibility. If I understand correctly, in this case you basically create 2 separate organization structures in Org Management, one for the legal structure and one for the reporting structure, right?
And they are linked through the "Deviating Business Residence"?
yes, this is correct. It seems as if they are independant org structures, but in case a posting is done in one of the consulting teams, it will find segment and profit center "upwards" the reporting structure, but based on the "deviating BR", it is led into the legal structure for legal aspects (company, business residence) and the structure of cost centers.
The profit center you see at the right can be neglected - this is only to fullfill some veto checks when activating OM.
Can we assign the same segment/profit center to more than one legal Company?
With kind regards,
this is exactly what I've described above. It allows to have segments and profit centers across companies.
it is possible i assign budget amount base on reporting structure, it also could show on legal structure just post one transaction.