Putting Group Operations on Track

Groups that operate internationally increasingly view the consequences of their strategic and operational group decisions in light of the global economic environment. Rather than thinking in terms of national companies, the group is treated as a unified, “virtual” company that comprises all associated individual companies. Effective group contribution margin accounting provides decision-makers with relevant numbers for operational group receipts and profit controlling in a timely manner.
The business administration requirements of group contribution margin accounting can be flexibly and powerfully implemented with SAP Business Information Warehouse (SAP BW), a component of the SAP NetWeaver open integration platform, and SAP Strategic Enterprise Management – Business Planning and Simulation (SAP SEM-BPS), a component of mySAP ERP Financials. Compared to profitability analysis in SAP R/3 Controlling (SAP R/3 CO-PA), groups can use SAP BW and SAP SEM-BPS together to realize numerous benefits.

Data storage in InfoCubes

Data cube in SAP BW
Data cube in SAP BW

With SAP Business Information Warehouse (SAP BW), data from SAP solutions or non-SAP systems can be centrally combined in the same way. Data structures, data capture, and data storage in SAP BW are flexibly configured to meet the needs of any given customer. For example, analysis characteristics and key figures can be defined. The definitions are assigned to data cubes (InfoCubes) that store the relevant data, which avoid redundant storage of master data.
Processes can also be defined with SAP BW. For example, assembling group data can occur in two stages. Data from the source system is first transferred into an initial layer — a data cube — in a detailed structure by item, item group, customer, customer group, distribution channel, country, region, and company. After transferring the information from the initial layer into a second layer — another data cube — the data is processed and summarized according to the needs of each group and its business application. This approach creates one database that can, if necessary, serve multiple accounting needs for different applications. Data from non-SAP systems can also be integrated.

caption: Architecture model in SAP BW
caption: Architecture model in SAP BW

Corporate groups usually store sales quantities, receipts, and costs in different initial systems. Profit and loss accounting in SAP R/3, SAP R/3 CO-PA differs from with SAP BW. The former is primarily oriented toward contribution margin accounting based upon the Sales & Distribution (SD) component of SAP R/3. To a large extent, data structures and data storage in SAP R/3 are predefined. Although data from non-SAP initial systems can be integrated into SAP R/3 CO-PA, the amount of data to be loaded into SAP R/3 is significant; and generating a monthly statement often requires SAP R/3 resources for an entire night. In SAP BW, a similar amount of data can be loaded in less than an hour.
Compared to SAP R/3, SAP BW requires significantly less time to generate reports. SAP BW report data is displayed directly in Excel, which makes it unnecessary to download the report data, as is the case with SAP R/3. To define reports, users employ Drag&Drop functionality to assign analysis characteristics and key figures to rows and columns in the Excel table.

Data formatting with SAP SEM-BPS

In practice, some data, such as specific group items, must be accessed manually (top entries); here SAP SEM-BPS lends a helping hand. This application enables data capture in SAP R/3 or processing of existing data in SAP BW. SAP R/3 can capture manual items with a predefined transaction. The transaction is problematic because it displays all analytical terms and key figures for capture, and input errors often occur. SAP SEM-BPS enables users to create customer-specific capture templates that display only the section of analysis concepts and key figures required for processing. The capture templates can also be provided via intranet and Internet for decentralized capture. In addition, SAP SEM-BPS allows users to define validation and plausibility checking to prevent capture errors.
In the practice of contribution margin accounting, for example, group items must be calculated on the characteristics of region and product group. Other shared costs must also be calculated at the analysis layers. SAP SEM-BPS provides features for conducting allocations and settlement. The distribution functions can also be used for some special cases that occur in practice. For example, credits are not always assigned to the item number and product group, and are thus given a dummy item number. You can then distribute these credits to the product groups in proportion to revenues to obtain a complete picture at the product group level.

Planning processes on an integrated platform

Within the scope of the planning process, planning data must generally be captured in individual companies within the group. In SAP SEM-BPS planning, data acquisition templates are available that can be defined for specific customers. Planning data is aggregated from the bottom up at the group level and coordinated with strategic planning at the group headquarters. Worldwide product managers confer with those responsible for different regions. Different plan numbers are distributed to individual companies from the top down for coordination. In addition, SAP SEM-BPS provides the required planning function for distributing the annual plan figures to monthly figures (distribution according to months and seasonal offerings).
Any component of SAP R/3, such as cost center accounting, profitability analysis, project management, and others, has its own planning structures and functions. SAP SEM-BPS, however, uses the same methods and functions for all planning areas. Furthermore, one planning area can access the data of another planning area. In this way, data from profit and loss planning (which is a component of contribution margin planning) can be used, and balance sheet planning can be added to profit and loss planning. Liquidity and cash flow planning can be derived from receivables planning. SAP SEM-BPS provides an integrated platform for all fiscal planning that, in practice, is distributed across different planning systems and Excel-based planning sheets.
In addition to system requirements, consolidated and consistent group contribution margin accounting also requires that all group companies use and adhere to certain standards. For example, the rows of the contribution margin schema must have the same content characteristics. Further, specifications are needed for all individual companies to determine if transportation costs are considered part of sales deductions or general and administrative costs
By defining individuals responsible for worldwide products or regional sales, international companies increase their global orientation. Group contribution margin accounting enables transparent demonstration of the consequences of revenue and profit structures in group decisions. In addition to a one-dimensional profit center or branch profitability analysis, you can also perform group contribution margin accounting for products, product groups, customers, customer groups, distribution channels, countries, and regions.

Dipl.-Kfm Nicolas Pradel