Guidelines For Choosing the Right Functionality to Support Efficient, Automated, and Transparent Financial Consolidations Mr. Dan Sullivan focussap

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2 Guidelines For Choosing the Right Functionality to Support Efficient, Automated, and Transparent Financial Consolidations Mr. Dan Sullivan focussap 2010 Wellesley Information Services. All rights reserved.

3 In This Session How Business Consolidation (BCS) functionality compares to other functionality for meeting consolidation objectives How BCS can be used for data collection, validation, currency translation, corporate adjustments, and inter-company eliminations Compare and contrast Enterprise Controlling Consolidation System (EC-CS) and BCS Techniques to integrate BCS and SAP-based master data How BCS monitors and controls the consolidation process Options and best practices for integrating BCS with both SAP ERP and BPS/IP Avoid common BCS implementation pitfalls that can occur when converting historical data 2

4 What We ll Cover Introduction SAP NetWeaver BW-based vs. SAP ECC-based consolidations Integrating SAP SEM-BCS with SAP ECC, SAP SEM-BPS and SAP NetWeaver BW Performing and monitoring consolidations in SAP SEM-BCS Reporting capabilities with SAP SEM-BCS Key considerations and tips when implementing SAP SEM-BCS Wrap-up 3

5 SAP NetWeaver BW-Based vs. SAP R/3-Based Consolidation Functionality Data Model Automated consolidation functions Segment reporting Versions Subassignments SAP NetWeaver BW-based Customer-definable data model Role concept for defining semantics of characteristics/key figures Two characteristics for org. units, e.g., company, profit center (matrix organization) Arbitrary number of version characteristics Arbitrary number of subassignments SAP R/3-based Predefined database Functions implemented on predefined database One characteristic for org. unit; cons unit represents a combination of company and profit center Only one version characteristic Only five user-defined fields possible 4

6 SAP NetWeaver BW-Based vs. SAP R/3-Based Consolidation (cont.) Periods Functionality Group currency SAP NetWeaver BW-based Arbitrary number of periods Group currency is a characteristic in the database SAP R/3-based Up to 16 periods Group currency is a property of the ledger Master data integration Integration of transaction data Integrated master data with SAP NetWeaver BW Transaction data stored in SAP NetWeaver BW, no data redundancy Master data must be extracted to SAP NetWeaver BW Transaction data stored in own tables, must be extracted to SAP NetWeaver BW Installation One instance Two-instance scenario (SAP ECC and SAP NetWeaver BW) 5

7 SAP SEM-BCS, SAP NetWeaver BW, and SAP ECC Integration Scenario SAP ECC data is extracted into basic SAP NetWeaver BW InfoCubes SAP SEM-BCS pulls relevant consolidation data from these InfoCubes into SAP SEM-BCS SAP SEM-BPS pulls relevant planning data from these InfoCubes into SAP SEM-BPS SAP SEM-BPS and SAP SEM-BCS can share master data SAP SEM-BPS data can be pulled into SAP SEM-BCS for consolidation SAP SEM-BPS data can be retracted to SAP ECC for Cost Center planning SAP SEM-BCS data can be pulled into SAP SEM-BPS for planning Reports can include data from SAP SEM-BCS, SAP SEM-BPS, and any of the other source InfoCubes using MultiCubes 6

8 SAP SEM-BCS, SAP NetWeaver BW, and SAP ECC Integration Scenario (cont.) SAP ECC Non-SAP System SAP SEM FI-GL, PCA, COPA, etc. SAP SEM-BCS SAP SEM-BPS Reports Reports Reports 7

9 Consolidation Functions Available 1. Balance carryforward 2. Data collection 3. Validation of reported data 4. Standardization and top-side adjustments 5. Reconciliation task 6. Currency translation method 7. Allocation 8. Value Adjustments 9. Inter-unit (IU) elimination 10. Elimination of IU profit/loss in inventory 11. Elimination of profit/loss in transferred assets 12. Consolidation of Investments (COI) 13. Reclassification 14. Multi-period consolidations 8

10 1. Balance Carryforward Function Cumulative balances are carried forward into period (000) of the following fiscal year You can execute this function multiple times Carryforward logic Balance sheet items are always carried forward Carryforward to itself by default Carryforward to another assigned balance sheet item, not to itself Carryforward to another assigned income statement item, and to itself 9

11 1. Balance Carryforward Function (cont.) Carryforward logic (cont.) Income statement items are only carried forward if explicitly designated as carryforward items Statistical balance items are always carried forward Statistical flow items are only carried forward if explicitly designated as carryforward items Additional financial data is also carried forward Customizing requirements Define items to be carried forward Define carryforward transaction types in customizing of subassignments Define a specific task to be assigned to the monitor 10

12 2. Data Collection: Flexible Upload Availability Reported financial data and actual transactional data Can be uploaded on a periodic or cumulative basis Additional financial data Investment Equity Equity holding adjustments Goodwill Documents Adjusting reported data (posting level 01) Standardizing entries (posting level 10) 11

13 2. Data Collection: Load from Data Stream Load consolidations data directly from another SAP NetWeaver BW InfoCube/ODS Object E.g., Profit Center Accounting info in a PCA reporting cube SAP SEM-BPS plan data Data loaded directly to SAP NetWeaver BW from third-party legacy systems Source SAP NetWeaver BW can be either local or remote Data is retrieved, validated, and loaded as usual in Consolidation Monitor The InfoProvider s structure can be different than the consolidation structure Standard mapping functionality is part of the standard functionality If standard mapping is not sufficient, define a custom mapping with BAdI 12

14 2. Data Collection: Integration with SAP ECC Key functionality to consider within core SAP ECC (Enterprise Central Component) to validate, derive, and prepare data for consolidation Trading partner: Can automatically capture trading partner for company, profit center, and business area Group chart of accounts: Can capture/derive transactional results by local account number or group (consolidated) account Eliminates the need for subsequent mapping/translation 13

15 2. Data Collection: Integration with SAP ECC (cont.) Key functionality to consider within core SAP ECC (Enterprise Central Component) to validate, derive, and prepare data for consolidation (cont.) Movement/transaction type: Can capture movement type on long-term asset and liability transactions Both for cash flow and continuity schedule reporting Fully-integrated with Fixed Asset Accounting Currency: Can capture currency values in local and group currency (translated), as opposed to performing full translation within consolidations 14

16 3. Validation of Reported Data Validation of: Reported financial data and adjustments Consolidated data Additional financial data for investment and equity Local or group currency values Formula editor for definition of validation checks Basic/application functions Arithmetic operators Boolean operators Multiple key figures in the same check Key figure either defined in the check or determined by task Selection of periodic/cumulative values Selection of values of prior period/year 15

17 4. Standardization and Top-Side Adjustments Automatic postings Allocation Inter-unit elimination Inter-unit elimination of profit/loss in inventory Consolidation of Investments Reclassification Manual postings Reference an existing document Mass reversals Update document database (ODS) and totals (InfoCube) Selected Items Totals Data Totals Report Document types Number ranges Tasks Methods Posting Documents Deferred taxes posting Inversion 16

18 6. Currency Translation Method Reference Translation (per method) Source key figure Local Currency Transaction Currency Always cumulative Exchange rate determination Special Translation (per group of accounting objects) Currency translation key Exchange rate determination Assignments Assign special translations to groups of accounting objects Assign rounding method to currency translation method Assign currency translation method to task/to task per consolidation unit (time, version, and period category-dependent) 17

19 8. Valuation Allowances Capitalization and valuation allowances provide for automatic posting of documents for: Capitalization of assets/liabilities with option to record deferred taxes in the balance sheet Valuation allowances (write-ups and depreciation) of assets/liabilities Retirements of assets/liabilities Often referred to as purchase accounting adjustments Posts only the difference in valuations of financial statements between the corporate group and the individual subsidiary Must record additional financial data for this using manual data entry or automatic data collection methods 18

20 8. Valuation Allowances (cont.) Period initialization calculates depreciation charges for the differences These charges are posted in capitalization and valuation allowances task Capitalization and valuation allowances can post entries in local currency only or in both local and group currencies. Thus, you have two alternatives: Capitalization and valuation allowances in both local and group currencies from the start Carry assets and liabilities in local currency only and translate into group currency 19

21 9. Inter-Unit Eliminations: The Principle Key features: User-definable methods Payables/receivables, revenue/expense, etc. One-sided or two-sided eliminations Splitting of differences (currency-related and other differences) Strategy for posting differences Consolidation Unit from selection 1 or 2 Consolidation Unit with lower or higher value Limits for elimination differences Per currency key and/or per unit of measure Limits can be checked per pair of Consolidation Units or per difference line 20

22 10. Elimination of IU Profit/Loss in Inventory Lets you automatically calculate and post the elimination of unrealized profit in inventory Requires that selling and holding units provide certain key information E.g., selling unit supplies by product group IU markup % E.g., holding unit supplies carrying value by product group 21

23 11. Elimination of Profit/Loss in Transferred Assets Lets you automatically calculate and post the elimination of unrealized profit in transferred assets Similar to Profit/Loss in Inventory, but depreciation makes this a bit more complex Three transfer types: Transfer In-house production External sale 22

24 12. Consolidation of Investments: Functions Calculation of shares (post shares on statistical items into totals database) Calculation of goodwill Calculation of minority interests Overall customizing check 23

25 13. Reclassifications Automatic reclassification entries to: Adjust the financial data reported by Consolidation Units Reclassify already-consolidated data Consolidation group-dependent postings Components: Trigger Source (optional) Target Percentage rate (optional) Condition (optional) Trigger 500 Source Target Reclassification Entry 24

26 13. Reclassifications (cont.) Inheritance of: Selection conditions (from trigger to percentage rate; from trigger to condition) Values (from trigger to source; from trigger to target) Different type of data (with respect to the components) Transactional data from database (periodic or cumulative values) Explicit data from method customizing 25

27 14. Multi-Period Consolidations Available in SAP SEM-BCS 6.0 with Enhancement Pack 2 Concept and Motivation Provide better support for planning and forecast Easy processing of multi-period consolidation without changing the global parameters Easy upload of data for multiple periods 26

28 Key Reporting Capabilities Multi-dimensional consolidated management reporting Consolidated legal reporting Cash flow reporting Hint: Leverage movement types and statistical accounts to support cash flow reporting Hint: Consider a cash flow item hierarchy Consolidation data immediately available when data is loaded/processed 27

29 Key Reporting Capabilities (cont.) Audit trail analysis To help analyze data submitted for consolidation, use posting levels and document types Can be further enhanced using SAP NetWeaver BW s jump query capability to drill down to documents underlying consolidation adjustments Drill down to source transactional data for SAP ECC source systems Requires proper design of the overall SAP NetWeaver BW data model Dynamic restatement of historical data for management reporting Requires use of reference period and reference year 28

30 SAP SEM-BCS Key Implementation Considerations What are my informational/reporting requirements? Identify each of your key user groups and determine their specific requirements What are the key consolidation processes that need to be supported? Determine your key data sources (transactional/master data) Evaluate whether your source systems currently provide the info I.e., is work needed in the source systems (e.g., Trading Partner functionality in SAP ECC)? 29

31 SAP SEM-BCS Key Implementation Considerations (cont.) Conversion of historical data often consumes far more resources than expected up to 30% of project resources to translate, load, and validate Ideally, load and consolidate the implemented SAP SEM-BCS configuration with all data in one InfoCube (with the same characteristics) Another approach is to load data into a separate basic InfoCube and use MultiCube for reporting both historical and live SAP SEM-BCS results 30

32 Resources 4de b38f83b/frameset.htm SEM Strategic Enterprise Management Business Consolidation (SEM-BCS) * Follow: SAP ERP SAP ERP Analytics SAP Strategic Enterprise Management (SAP SEM) Business Consolidation Media Library Presentations * Follow: SAP ERP SAP ERP Analytics SAP Strategic Enterprise Management (SAP SEM) Business Consolidation Media Library How Tos Search for relevant SAP SEM-BCS topics * Requires login credentials to the SAP Service Marketplace 31

33 Your Turn! How to contact me: Mr. Dan Sullivan 32

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