What you should know about controlling in SAP S/4HANA. (Part 2)
The second part of this blog post is a team work. I asked two of my RIG colleagues to help with the Planning Part and the Material ledger Part. In the first part of this blog I promised i would have talked about FIORI Reporting as well, but since this second part has become again long enough I have decided to talk about FIORI in a third part.
Flexible Hierarchies App is able to create hierarchies based on fields in master data. For example you want to create a cost center hierarchy by responsible person.
This App is available since S/4HANA 1709 and while until now (August 2020) you can create hierarchies for Cost Centers, Profit Centers and Company Codes.
You can do it in the Manage Flexible Hierarchies Fiori App.
I know a customer that has circa 21000 Cost Centers so he has created custom procedures and has a dedicated person to maintain the hierarchy. This app would definitely help the customer.
Hierarchies can also be created using custom fields and in different order (meaning that you can decide the order in which you use custom field information to create hierarchies).
Showing master data attributes in reporting has never been easy in the past. Nowadays with Fiori adoption, it has become simpler (please see the FIORI part on this blog) to structure master data with Flexible Hierarchies.
Moreover this functionality can also be used to upload custom fields content to master data.
PLANNING PROCESSES (By Christian Rainer)
The concept, benefits and impacts of one Universal Journal in Controlling are discussed in part 1. But the Universal Journal only keeps actual data. Usually planning is one of the main and important processes in Controlling. So what should you know about planning in SAP S/4HANA?
It is nowadays well known that from SAP S/4HANA 1610 onwards it is possible to store the results of planning in the new table ACDOCP. This table has the same structure as the universal journal table ACDOCA. Let me start with the main changes and the classical planning transactions in Controlling.
When I explored SAP S/4HANA, I realized that some classical planning transaction disappeared in the menu. But many of them like the following well known and often used transactions can still be used in SAP S/4HANA:
- KP06/KP07 (cost center planning)
- CJ40/CJ42 (overall planning on projects)
- CJR2/CJR3 (project planning)
- KPF6/KPF7 (order planning)
These changes are described in detail in the simplification list and SAP note 2270407 – S4TWL – Profit and Loss Planning, profit center planning, cost center planning, order planning, and project planning. Only FI-GL planning and Profit Center planning transactions are not available anymore and would have to be reactivated as described in this SAP note.
So you can continue to use classic planning transactions for Cost Center Planning, Order Planning and Project Planning. But these classical planning transactions still write into classical tables and do not use the new table ACDOCP. On the other side the new Analytical Apps do not read plan data from these classical tables but from ACDOCP only. Before I discuss the new planning options that have been introduced and integrate with the new planning table ACDOCP, let me start with one exception.
Plan data for production/process orders
One exception is cost planning of production or process orders (aka object based planning). Planned data for production and process orders are in addition to the classic tables also stored in the new planning table ACDOCP. They provide the basis for target cost calculation in the SAP Fiori apps Production Cost Analysis and Analyze Costs by Work Center/Operation. The last one provides a nice overview of the planned vs. actual operations from a work center with further drill down options and possibilities to adapt the layout as you can see in the picture:
Be aware that as already mentioned information shown in the SAPGUI transactions is still based on the old tables! So you will not see costs by work center or operation in these transactions even though the additional detail is stored in the ACDOCP table (see screenshot with main columns below).
Plan data are stored in ACDOCP when a production or process order is saved with planning category PLANORD01. The planning category has been introduced in ACDOCP to store different kind of plan data and it is like the planning version. For order plan data (application type 2 = Production Order) the following default plan categories are delivered
If these categories are not configured in your system, you must maintain them in the IMG under Controlling -> General Controlling -> Planning -> Maintain Category for Planning.
For more information see SAP Help Categories for Order Plan/Standard Costs.
Universal Allocation in Planning
Another new application that is based on ACDOCP is the new Universal Allocation in SAP S/4HANA that is also available for Actuals. In the Fiori App Manage Allocations you can create an allocation cycle with many options and one of them is the selection for plan as shown in the picture:
What are the new options for the other planning areas in Controlling like cost center, internal order or project planning in SAP S/4HANA?
A complete summary of SAP planning applications, you can find in the blog Financial Planning Options in S/4HANA. I will only focus on the options available for planning in Controlling in SAP S/4HANA and not on the stand-alone planning solutions (like SAP BPC11 for BW/4HANA).
The following pictures illustrates the overall architecture for Financial Planning with the main table for planning ACDOCP that serves as the single source of truth for plan data:
Within SAP S/4HANA in addition to production orders (as already explained above) Commercial Project Management (CPM) also uses the new ACDOCP table as persistency for plan data.
SAP BPC for SAP S/4HANA
The first option that was available with the first release of SAP S/4HANA was SAP BPC for SAP S/4HANA (aka SAP BPC Optimized for SAP S/4HANA). It is based on the embedded BW in SAP S/4HANA and comes with the known functionalities from BPC and with pre-delivered content. Master data and actuals are directly available without the need of any replication. Since SAP S/4HANA 1610 it is possible to store the results of planning not only in a plan infocube but also directly in table ACDOCP as shown in the picture above.
With the provided content and workbooks in Analysis for Office you can do primary cost planning and also activity planning for cost centers, internal orders, projects, P&L and CO-PA like planning on characteristics. Analysis for Office is an Excel-Add-Inn and thus offers the well-known user interface of Microsoft Excel front-end. All planning areas are using table ACDOCP and are thus automatically reconciled and integrated by design. That is why the first version of this planning solution was also called Integrated Business Planning for Finance (IBPF). This was a little bit confusing because it should not be mixed up with SAP IBP for Supply Chain, which is the new Integrated Business Planning solution for supply chain planning like demand, inventory, sales and operating planning.
BPC also provides further functionalities like simple allocations. But what can you do if you want to use classic planning functionalities like allocations or activity rate calculation that are available in ECC in SAP S/4HANA? In these cases, you have to retract data from SAP BPC for S/4HANA into the classic totals tables. These extracted data can then be used as a basis for cost center allocations and activity price calculation and order/project budgeting and settlements. At the end you can also transfer the data back from SAP S/4HANA to SAP BPC for S/4HANA so that it is available for reporting when the planning cycle is complete.
More information about SAP BPC for SAP S/4HANA is available here:
- SAP note 2081400 – SAP BPC Optimized for S/4 HANA Finance (aka: Integrated Business Planning for Finance): Compilation of Information
- SAP Help: SAP Business Planning & Consolidation for SAP S/4HANA
Important: SAP BPC is a mature, fully-functional planning and also consolidation application and it continues to be supported and maintained (timeline please check in SAP Product Availability Matrix). But major new planning enhancements will be delivered in SAP Analytics Cloud which is SAP strategic planning solution.
SAP Analytics Cloud
A lot of innovations have been developed in SAP Analytics Cloud (SAC) for planning recently. It is a browser-based application offered as software-as-a-service (SaaS) to model planning scenarios, capture plan data and perform (basic) planning functions with a modern user interface.
SAP Analytics Cloud for Planning is fully integrated with SAP S/4HANA and enables integrated financial planning processes. It has its own plan data persistency and does not directly write into ACDOCP. Master data and transaction data from S/4HANA can be loaded into SAP Analytics Cloud and planning results can be written back into S/4HANA.
Similar like in SAP BPC for SAP S/4HANA there is also a business content available in SAP Analytics Cloud for Financial planning. The content has been enhanced continuously and the latest Financial planning content covers the following processes:
- Cost Center Planning
- Product Cost Planning
- Sales and Profitability Planning
- Project Planning
- Internal Order Planning
- Financial Statement Planning
The picture shows the processes of the business content and how they are integrated (more on SAP Help Financial Planning in SAP Analytics Cloud):
Each planning area consists of a model, stories and planning functions. A model is like an infocube in BPC and a representation of business data and its relationships. A story is a collection of pages, each consisting of tables, charts and graphs that are based on models. Stories are like a workbook in BPC to maintain plan data, but they are also used for analysis and reporting. SAP Analytics Cloud also supports the creation of simple allocations and there is also a planning function to calculate an activity price.
There are of course many more new features, that I cannot cover in this short blog post. I think it is clear that in future an SAP Controlling Consultant has not only to know the news in SAP S/4HANA but also to learn and know the business content and features offered by SAP Analytics Cloud.
Useful further information and documentation:
Import Financial Plan data Apps
If you are searching for another solution to import plan data into ACDOCP then you should check the Fiori App Import Financial Plan Data. With this App you can import plan data from csv file into ACDOCP.
Another useful app is the Import Statistical Key Figures Plan Data app. With this app you can upload plan data into table FINSSKF, that can be used as reference in the Universal Allocation. This table is also used for transferring statistical key figures from SAC. Unfortunately, it is only for cost centers and not for WBS-elements.
Financial Plan data API
There is also a public API “Financial Plan Data – Write” for Data transfer into ACDOCP available. More information is available on SAP API Business Hub: api.sap.com/api/API_FINPLANNINGDATA_SRV/overview
UNIVERSAL ALLOCATION IN S/4HANA
With Universal allocation SAP decided to keep different allocations techniques under the same umbrella and to have one single allocation procedure in FIORI.
Of course this is not a one shot result but a development process. While I write, Cost Centers, Profit Centers Plan and Actual Distribution, Overhead Allocation are available in FIORI and since S/4 HANArelease 1909 FPS01 Top Down Distribution is now part of Universal allocation. As previously written by Christian in this blog post, the Universal Allocation is also valid for Planning.
To use the COPA Top Down Distribution you must include the account/cost element in the selection criteria and reference data for the distribution must be account-based (As per OSS 2349278 – S4TWL – Profitability Analysis)
Universal Allocation will also in the future try to solve challenges like possibility to execute simulation capabilities, traceability of allocated costs through cost objects (For this Allocation Flow app is already available in Cloud and it may be released in the future in SAP S/4HANA On Premise as well).
MATERIAL LEDGER (By Alina Vranceanu)
As you all know by now, in SAP S/4HANA, Material Ledger has become mandatory and it is responsible for inventory valuation. The reasoning behind this decision stays in the idea of having all information’s related to inventory in one place.
In ECC the inventory valuation was done in MM and for the customers with Material Ledger active, was done in Material Ledger. Because SAP wanted to have a unitary solution, inventory valuation was moved for all customers in Material Ledger, leveraging the universal journal (table ACDOCA).
Actual Costing it is still optional.
Most of the customer, which did not have Material Ledger active before the conversion, are asking what the benefits of Material Ledger are, knowing that in SAP S/4HANA had become compulsory:
- Material Ledger enables the support of parallel valuations for inventory (up to 3 currencies) and parallel accounting standards
- Tracking historic rates in material master
- Additionally, a reduction of required system resources is reached
- Real time insights, better reporting capabilities
- Actual costing and Transfer prices can also be activated with Material Ledger, are optional functionalities.
Material Ledger in Conversion.
If you are converting from an existing SAP system, where Material Ledger was not active, to SAP S/4HANA, the Material Ledger will be activated during the conversion process.
You always need to migrate the Material Ledger, even if you were not using it in the source system. Purchase Orders for example, needs to be migrated to the new data structure. To do that, before running the conversion you need to set up the customizing.
Bellow I am mentioning the customizing steps which needs to be performed before the conversion:
- It is very important to set up the Material Ledger update structure, otherwise you won’t be able to do the rest of the customizing.
During the Material Ledger update, the system collects data from valuation-relevant transactions such as goods receipts, invoice receipts, and settlement of production orders. This data is collected in different categories in the Material Ledger in accordance with the material update structure.
The influence that these transactions have on the valuation price upon material price determination depends on the category to which they were assigned. The following categories are available: Receipts, Consumption and Other Receipts/Consumption.
A receipt always effects the valuation price. With consumption, you can determine whether or not it influences the valuation price of a material: the category Other receipts/consumption has an effect, the category Consumption does not.
In the standard setup, the categories are defined in material update structure 0001 such that the valuation price from material settlement corresponds to the weighted average price. My recommendation is to use the standard update structure, do not create additional ones.
- After the update structure was defined it needs to be assigned to the valuation areas:
- Next step it is to Assign Currency Types and Define Material Ledger Type (OMX2) – here you create Material Ledger type and assign currency types to them.
You can assign up to 3 currency types to Material Ledger (if you are doing greenfield or selective data migration), but if you are doing conversion and you did not had Material Ledger active before, you only have the possibility to assign the local currency type (10) and the group currency type (30) to the Material Ledger.
If you had Material Ledger active before the conversion, you need to perform the conversion with the same currencies you had in the source system, it is not possible to change or add additional currencies during the conversion.
Some examples of currencies which can be assigned to the Material ledger Type:
- Conversion without ML active in ECC, the mandatory currencies in S4 HANA for ML are 10 (local currency) and 30 (group currency)
- Green field implementation without parallel valuation you can set up to 3 currencies: currency type 10 (local currency), 30 (group currency) + an additional currency based on your needs
- Green field implementation with parallel valuation, local and group valuation, you have to set up: 10 (legal valuation), 30 (legal valuation, group currency), 31 (group currency, group valuation)
- Green field implementation with parallel valuation, local, group and profit center valuation, you have to set up the following currencies: 10 (legal valuation), 31 (group currency, group valuation), 31 (profit center valuation). Profit centre valuation can have as base currency either 10 or 30, you can set up that in the Currency and Valuation profile.
- Assign Material Ledger Types to Valuation Area (OMX3)
Always check the status, it shows the currency consistency. If the status is red it means the currency between ML and FI are not consistent and you won’t be able to activate Material Ledger.
- Activate Material Ledger for Valuation Areas (OMX4)
With this step you have the possibility to check the ML set up for every valuation area (Check Material Ledger Settings) and do the necessary set up to activate Material Ledger (Activate Material Ledger)
Keep in mind the step Activate Material Ledger it is only a customizing step, the activation of the Material Ledger it is done during the conversion.
Default price determination it is always set by the system as 2 – Transaction-Based.
In Transaction-Based material price determination (option 2 in the material master), with price control V the material is valued at the moving average price. With price control S, the material is valued at the standard price. The moving average price is calculated for information purposes. If you did not use Material Ledger before the conversion and you are not using actual costing it is recommended to keep it as 2.
- Last step in customizing is to create the Material Ledger number ranges.
After the customizing has been done, you can move one with Preparations and Migration of Customizing, which can be found under Conversion of Accounting to SAP S/4 HANA. Run the 2 steps, if no inconsistency has been found you are good to go to the Data Migration Activities.
These 2 steps are also mandatory in case you had ML active in ECC.
After the preparation steps have been executed, you can continue with the conversion.
Relevant steps for Material ledger conversion under Start and Monitor Data Migration, Transaction FINS_MIG_STATUS – Migration Monitor are:
M10 – This activity ensures that the Material Ledger is activated for all valuation areas, since it is mandatory in SAP S/4HANA. The activity creates Material Ledger master data (tables: CKMLHD, CKMLPR, CKMLPP and CKMLCR) in all Material Ledger currencies for periods more recent than the last period of the previous year.
M20 – this activity checks and verifies the migrated data. For instance, existing values from the inventory and Material Ledger tables are compared with aggregation via table ACDOCA.
M11- If the Material Ledger was not active in any valuation area before SAP S/4HANA conversion, this activity ensures that all existing purchase order history table records (tables EKBE, EKBEH, EKBZ, EKBZH) and production order history table records (tables MLAUFCR and MLAUFCRH) are converted into the Material Ledger currencies.
M21 – this activity verifies whether all production and purchase order history records have been converted into the Material Ledger currencies.
For the customers which used Material Ledger before the conversion it is very important to know the data model has suffered changes. You can find the changes in the notes mentioned bellow:
For the customers which are doing greenfield implementation the note 2577551 Material Ledger Production Setup in S4HANA (Green field approach) is explaining the implementation steps.
Actual costing is not mandatory, it can be activated at any point in time prior and after the conversion to S4 HANA.
Benefits of Actual Costing for those willing to activate the solution:
- Material Ledger captures all price variances (like purchase price variances, production variances etc) and allows, as optional period end activity, revaluation of ending inventories at period end and optionally releases it as standard price for next period/quarter/year depending on the customer needs
- With Material Ledger & Actual Costing, multiple valuation can be achieved. Material Ledger offers the option of three different levels of valuations for a corporate group operating in multiple countries:
- Legal valuation represents the local valuation at the level of legal entity – local currency,
- Group Valuation represents the legal valuation minus the intercompany profit in the group currency,
- Profit Center valuation focuses on management prices agreed e.g. between divisions, or market price (optional)
- COGS splitting – The COGS posting includes all costs for manufacturing the product such as labor or material costs. These costs are calculated by the costing and at the moment the sales are recorded in the system, the COGS can be split providing details for different kinds of costs.
Brought to you by the S/4HANA RIG
SAP S/4HANA Regional Implementation Group