General Availability OP 2022: Organizational Flexibility in Financial Accounting
In an age of transitory competitive advantage, market turbulence and unprecedented disruption such as covid-19 are radically reshaping business. Companies urgently need tools to support them coping with continuous market changes and business transformations, such as the frequent organizational changes triggered by strategy adjustment or risk and regulations.
For the finance department the key success factors are not only the time to close but also the time to change.
SAP has answered this challenge providing newly designed capabilities delivered within SAP S/4HANA (both Cloud and On Premise) as Organizational Flexibility in Financial Accounting.
This refers to changing legal entities, management structures or project structures which are cut along the line of organizational responsibility and most importantly transactional data. It plays a significant role in supporting companies implementing new business models and reporting structures quickly and efficiently without impacting operational Business. At the same time, automating the entire process and hosting the complexity in the integrated processes by reducing the overall efforts and creating value and trust.
We are glad to announce the general availability of Organizational Flexibility in Financial Accounting in OP 2022, and the generic scope are (will be) as well available for Cloud since CL 2208/CL 2302.
Solution Overview and Business scope
Figure 1: Business scope and solution overview for S/4HANA Organizational Flexibility in Financial Accounting as of OP 2022, Cl2208
This is the current available scope for Profit Center Reorganization. We have different scope for on premise and cloud, you can find the details by colors in above figure:
- Bule part are the available cloud(only) scope
- Orange part are the available OP (only) scope
- Green represents the scope which both available for OP and cloud
The EPPM project scope are planned with CL 2302 for cloud.
Figure 2: Solution overview and apps, scope item information
Above you can find the process overview with the new apps(green) delivered/related apps(grey) as well as the scope item information for S/4HANA Organizational Flexibility in Financial Accounting.
Manage Organizational Changes act as the control tower supporting you to manage the overall process for an organizational change. For example, you can use this app to divide up, combine, and replace profit centers that are assigned to objects, such as WBS elements, projects, products, and orders. Two analytical apps for master data and financial data can assist you to analyze the impacted objects and the financial impact of the ongoing organizational changes.
Use cases in Organizational Restructure
In SAP S/4HANA, profit center can be used to represent Product, Function, Product Group or location. Segment usually represents the division of a company for which you can create financial statements for external reporting.
Besides a controlling object, the profit center is also an important object in financial accounting as it is the object used to derive and fulfill the requirements for segment reporting. It was designated for that role because it’s an account assignment that was integrated into not only fully in Finance and as well most other operational components. The current focus entity of Organizational Flexibility in Financial Accounting is profit center. Segment reorganization will come as future scope.
The use case which covered by OrgFlex in Financial Accounting includes profit center corrections and complex reorganization with regards to profit center replacement, divided up, merge. The first use case Profit Center Structure changes which existing profit centers are regrouped or reassigned to new groups of responsibilities, are supported by Global Accounting Hierarchy tool, where no need to use OrgFlex tool.
Figure 3: Use cases in Organizational Restructure
Figure 4: snapshot of the handy and guiding app Manage Organizational Changes, S/4HANA On Premise
The solution process of Organizational Changes includes:
- Identify the objects/prepare the organizational changes
Create the Organizational Changes
- Simulate the organizational changes to assess completeness of object list, get preview of transfer posting, check log and resolve the errors if any
- Execute the changes: including the user steps Activate and Process
With Activate: the listeners are switched on for adding dependent objects to the org change; and the time-dependency will be activated, postings at or after effective date are posted with the new profit center (and vice-versa with old profit center for postings before effective date).
With Process: Processing reassign the profit center for master data/business objects, and transfers balances to the new profit center.
- Complete the organizational changes
Figure 5: Process Overview
Figure 6: Process Steps of an Organizational Change
Steps Activate v.s. Process
The Change for Balance Sheet and Profit&Loss during an Organizational Changes
For Balance Sheet Account
When you process an organizational change, transfer postings from the old profit center to the new profit center are generated for selected balance sheet accounts, and for open items related to the affected objects.
- Accounts that w/o open-item managed: account balances are transferred from the old profit center to the new profit center, based on the level of detail of account assignments in the balance carryforward.
- Open items: in customer, supplier, or selected general ledger accounts are transferred from the old profit center to the new profit center.
For P&L Account
- Profit and loss (P&L) amounts from historic transactions, will not be corrected or transferred to the new profit center due to the follow-on processes in Controlling.
Time-dependent derivation ensures that journal entries, which are posted with a posting date after the effective date and, which have an entry date before the organizational change is processed, are already posted with the new profit center. This is available for both profit and loss (P&L) and selected balance sheet postings.
- In-depth session in Open Course/Partner portal: Steering Organizational Flexibility in Financial Accounting(S-User)
- Demo/Tutorial: task tutorial for Organizational Flexibility in Financial Accounting
- SAP Demo Store(S-User): S/4HANA Cloud – Organizational Flexibility in Financial Accounting
- SAP Help Portal for OrgFlex: Cloud 2208; OnPremise 2022
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