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Author's profile photo Pavalavel Kanagavel

Managing Intercompany Professional Services Projects with Two-Tier integration in S/4HANA Cloud


Joint work of Pavalavel Kanagavel, Sahil Grover, Prasanth Padmanabhan Menon

This Blog is focused on providing a detailed process on two tier ERP solution for Managing Intercompany Professional Services Projects with headquarters and subsidiary.

Professional services companies executing customer projects usually execute them in a multitier mode in headquarters and multiple subsidiaries model for better cost, quality, and time benefits. The headquarters executes a customer order for delivery of services and material. The headquarters decides a part of the project to be executed in a subsidiary based on predefined criteria. The subsidiary usually delivers a part of the customer project executed by the headquarters. The subsidiary invoices the headquarters for the service provided.

Below are the common issues faced while executing projects in a headquarters and subsidiary scenario

  1. Projects become cumbersome and hard to manage, resulting in delays in identifying, tracking, and solving issues
  2. Lack of control over subsidiary scope and budget tracking leads to overruns or delays
  3. Too many complications in invoicing services provided by subsidiary
  4. Revenue leakage at the subsidiary due to lack of tracking of services provided

Customer projects in professional services are complex and the execution is tracked with a well-defined project plan. In this case the Headquarters is the customer for the subsidiary, hence it makes sense for the subsidiary to execute the part of the project from Headquarters as an individual project in the subsidiary.

Through two tier integrations, it is possible to seamlessly orchestrate between headquarters and subsidiary.

Process flow Case 1:

The Integration can be setup with SAP Cloud Integration for data services and best practice explorer Scope Item 2EL.

  1. The headquarters creates a purchase order in SAP S/4HANA On premise system
  2. The purchase order in the headquarters S/4HANA On premise system creates an IDOC which triggers API in subsidiary S/4HANA Cloud system
  3. The API Commercial Project – Create, Update is triggered in Batch Requests to create Customer project, Workpackage and role required to execute the project in subsidiary S/4HANA Cloud system
  4. Upon successful execution of the project create API, Cloud integration triggers the creation of the sales order using Commercial Project – Create, Update
  5. The fields required for creation of Project, Workpackage, Role and the sales order can be derived by maintaining mapping in SAP Cloud Integration, the mapping will be maintained between the headquarter Purchase order fields and the subsidiary Project, Workpackage and sales order fields
  6. The flow of customer Invoice raised in subsidiary will be interfaced to headquarters via SAP Cloud Integration.

Process flow Case 2:

The Integration utilizes the best practice explorer Scope Item 2EL. This Intergration focusses on Standardized projects executed in headquarters. Assembly processing is leveraged to automatically create projects and WBS elements out of the box similar to ETO process. For assembly processing, Material master needs to be replicated between headquarters and subsidiary.

  1. The headquarters creates a purchase order in the SAP S/4HANA Cloud system
  2. The Purchase order in the headquarters SAP S/4HANA Cloud system automatically creates a sales order in the subsidiary SAP S/4HANA on premise
  3. In subsidiary SAP S/4HANA on premise system, the material has to be linked to a standard network and standard Work breakdown structure in CN09 to follow the Assembly processing
  4. The sales order will trigger creation of an operational network and operational project in Subsidiary SAP S/4HANA on premise system
  5. Project manager can be assigned to the project in subsidiary who can go ahead and create a detailed project plan and assign the resources working in the project
  6. The services can be delivered from the subsidiary SAP S/4HANA on premise system to the customer(headquarters) and the same can be recorded in project as timesheets
  7. Based on the type of invoicing, subsidiary can proceed with the resource related billing for time and material project execution between headquarters and subsidiary. Fixed price billing can be also processed appropriately
  8. The billing and invoicing can be proceeded in the approach as per 2EL.

The Project execution between headquarters and subsidiary can be integrated as per the process flow mentioned above,

Business Benefits

  • Integrated project execution between Headquarters and subsidiary
  • Reduced manual intervention in the business process between Headquarters and the subsidiary by automated project creation
  • No replication of projects and flexibility is provided to subsidiary in project execution
  • Reduce chances of revenue leakage at subsidiary
  • Real-time automation of the invoicing process between the subsidiary and headquarters

Please share your feedback or thoughts in the comments


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  • OData API in SAP Cloud Integration for Beginners here
  • SAP S/4HANA Cloud release info here
  • Best practices for SAP S/4HANA Cloud here
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  • Feature Scope Description here
  • What’s New here
  • Help Portal Product Page here

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Source of all the images : Author’s own asset

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      Author's profile photo Saumitra Deshmukh
      Saumitra Deshmukh

      Great Explanation Pavalavel Kanagavel, Sahil Grover & Prasanth Padmanabhan Menon !

      Author's profile photo Sunil Yadav
      Sunil Yadav

      Thanks Pavalavel Kanagavel  for sharing

      Author's profile photo Avik Mazumder
      Avik Mazumder

      Please find below question - What if the  Part of service needs to be done by HQ for a Project?

      In this case HQ will bill to SUBS after completion of service. Can we create PO in SUBS  and interface it to HQ?  Also Create Projects in HQ? Just opposite flow of Scenario -1

      • HQ using S4/HANA On-Premise and
      • Subsidiary using S4/HANA Public Cloud.

      Note- Scope item 2L showing Empty- any reason?