Reports Based on an Identical Foundation

The code of corporate governance and the effort to standardize accounting standards internationally has caused increased reporting and auditing requirements in companies. That’s why publicly traded companies in Europe have had to produce their annual reports according to International Accounting Standards and International Financial Reporting Standards (IAS/IFRS) since 2005. And the obligations include additional requirements like segment reporting, reports on capital equity, and cash flow statements for a complete annual report.
At the same time and because of their global group structure, many companies must satisfy additional accounting standards, such as Generally Accepted Accounting Principles (GAAP) in the United Sates or the commercial code (HGB) in Germany. And because various business units have their own controlling systems, the situation becomes even more difficult. The numbers reflect this difficulty. Individual areas possess additional information that is relevant to the annual report in Microsoft Excel workbooks. All these issues stand in the way of transparency and integration of the figures.
Uniform and near-real-time reporting is also essential for making fast management decisions to uncover and counter deviations from business plans. But this kind of management reporting makes sense only when it is based on the same figures that are used for legal reporting.

A common basis of data in SAP BW

With the business consolidation functionality of SAP SEM, SAP provides flexible consolidation capabilities for mySAP ERP. Because it is anchored in the management cockpit of SAP SEM, it enables access to the same data used for global and local management and for legal and corporate reporting. Business consolidation with SAP SEM differs from the earlier SAP consolidation tool (enterprise controlling – consolidation) in two important ways. SAP SEM does not manage the data in the standard software itself, but in external software based on online analytical processing (OLAP). It supplies data using InfoCubes in SAP Business Information Warehouse (SAP BW). Reporting queries always refer to this data. The tools in SAP SEM therefore operate independently of the enterprise resource planning (ERP) solution in use. And the tools can use all the options of SAP BW. The business consolidation functionality of SAP SEM is available at various release levels.
Because all SAP SEM tools use SAP BW as their primary source of data, it is easy for the tools to exchange data directly. For example, the business consolidation functionality can process the planning data generated in the planning and simulation functionality of SAP SEM and then analyze it and compare it with the actual figures of consolidation. The corporate performance monitor in SAP SEM uses the consolidated actual data to depict the current performance of the company.

Adjust the totals as needed

Users can also map matrix organizations and flexibly set up almost any kind of hierarchy using company-specific characteristics to structure the data. It’s possible to assign system-defined roles, such as consolidation group or consolidation unit, to define the consolidation functions. Users also define the characteristics used for creating reports and the options for drilling down into the data. Organizational characteristics include subgroup, company, business area, and profit center.
From a geographical perspective, for example, users can distinguish between a global view, individual countries, or regions. For a product-related view, it’s possible to differentiate according to brand, product line, or individual products. Both legal controlling and internal reporting require that users assign dimensions in hierarchies to obtain totals for a continent or region in addition to totals for a country. Users can also create several parallel hierarchies for a characteristic. For example, the revenue of the chemicals industry in Germany can be part of legal controlling for Germany and part of worldwide reporting for the chemicals industry. SAP SEM stores the data for any conceivable type of consolidation in the same multidimensional, OLAP-based InfoCubes. The InfoCubes also offer additional levels of detail, such as customer groups or distribution channels. The level of detail of the data might change, depending on the type of consolidation, but the common data guarantees that companies can adjust the totals.

Central work environment

Consolidation Monitor
Consolidation Monitor

With the consolidation monitor as the central work environment of SAP SEM, customers can control their business consolidation processes. The monitor offers a graphical overview of previously defined consolidation units and their assignment to consolidation groups – like the assignment of all companies to the pharmaceutical area of a business. It can also provide a graphical overview of measures like functions for the consolidation of debts.
The tool is structured as a matrix. By default, the hierarchies of the company’s organizational units are assigned to rows and the hierarchy of measures is assigned to columns. The hierarchy of measures sets the sequence for execution in the consolidation monitor.
Users must make some settings at the very start. The various data sources from the operating system feed the foundational, company-specific data model in consolidation. The data model must contain at least one field with the consolidation-relevant role, version, area currency key, consolidation unit, consolidation area, partner unit, position, document type, account assignment level, time characteristics, and value in the area currency. For each type of data flow (such as totals records, documents, or delivery data), users define a data target in the InfoCube. In other words, the software stores the transaction data relevant to consolidation.
For example, the obligatory data flow essentially sets the data basis because it defines the characteristics and key figures available in the data model. SAP BW uses InfoCubes internally for totals records. Documents and similar items are stored in operational data store (ODS) objects where they form consolidated and integrated transactional data at the highest level of detail. To limit a desired consolidation area, users must select some characteristics and key figures from those available. As soon as they define the data source for a data flow, the software independently generates the internal InfoCube or ODS structure. The only remaining task is to define an remote function call (RFC) destination in SAP BW to contain the consolidation transaction data. If no destination is specified, the software uses the client of the system that contains SAP SEM as the RFC destination.
The business consolidation performance of SAP SEM primarily depends on the multidimensionality of the OLAP data storage and the functions of SAP BW. The most important feature here is the integration of the meta and application data of all SAP SEM tools in a uniform database. All components read their data from there and write their results to there. SAP BW also allows users to navigate from the hierarchies of the organizational units down to the level of the consolidation unit. The enterprise controlling – consolidation tool of SAP R/3 summarized only upward and considered the consolidation group as the most detailed unit. SAP SEM supports decentralized reporting on the units and subgroups for business consolidation. It relieves the central office of labor-intensive work on closing – work that the local controller can perform better.

Dr. Andreas Totok
Dr. Andreas Totok
Peter  Neisius
Peter Neisius