ONE Controlling Area for a multinational company

[fredwebel]

Hi folks,

We are planning the steps of migration from ECC60 to S4HANA. Big question is: can we manage ONE controlling area for our company which is globally situated? We are an Automotive company. Use case examples in ECC60 today::

1. We do our factory close process where we calculate our WIP, variances and settlement for production cost collectors which is not possible to do on a selected plant, but only on controlling area. Imagine starting the closing process in China and Brazil are still booking inventories..

2. Even in one controlling area (we have 4 plants linked to one controlling area today), we have costing variants with marking and releasing + IMG settings which again are done on controlling area level. We have today real case examples that makes this very tricky to manage, but that is only legal entiity for 4 plants, imagine if this was for the “whole world”?

Looking in a HANA sandbox system I have not seen the possibility to manage this differently than today in ECC60.

What is best practise coming from SAP?

[Paulo_Vitoriano]

Hi Fred,

As far as I am aware WIP, Variances, Settlement you can always do by plant. Maybe you should give specific example of a transaction which is of your concern.

Regards,

Paulo

[Cloudsen]

Hello Fred,

If all the global companies are on the same fiscal year , e.g. same as calendar year, in SAP term, fiscal year variant K4. Maybe you could further toy the idea of one controlling area thing.

Otherwise check SAP notes 2220152 , 2490222 and 1977513 to see how complicated things are for ledger setup, restrictions on fixed assets, material ledger.

Regards,

Sen

[fredwebel]

Hi Sen,

I see that indeed fiscal year variant is connected to both company code as well as controlling area. We do follow the group fiscal year globally, so that should be no problem. Then we have local legal reporting leglislation that needs to be adhered too.

To summarize: we would need a very strict CO data governance model accross the globe to secure consistency. Technically, I still don't have a good feeling about the product cost component, but thanks for your answer...

Regards,

Fred

[Cloudsen]

Hi Fred,

Since we got fiscal year out of the way, let me share something that could improve your comfort level towards one controlling area.

In SAP S/4HANA Cloud edition, it is only possible to have one controlling area in one client/tenant. There is already a sizeable customer base from manufacturing industry. There are no major complaints, so other must have managed it well.

Apparently, SAP does recommend to set up one controlling area for the whole corporation, this approach will obviously have the group's controlling process more connected.

You mentioned the difference in S/4 compared to ECC, one thing I can think of is in S/4, CO periods can be managed by company codes. Manage Posting Periods – Cost Accounting.

If you could elaborate a bit more about why one controlling area would threaten strict CO data governance, maybe I could think of more comments to add.

Regards,

Sen

[fredwebel]

Hi Sen,

Thanks for your answer. To be honest, I am really surprised that SAP say that that is the way forward with one controlling area. In my old days with SAP R3 rel. 4, I was learnt that Controlling was for internal managerial processes hence by site or OEM, and external accounting as today, by company or company code.

But still, I appreciate this dialogue we are having :-).

The restriction (that could happen) is the MD governance. We would need a central organ that controls CO number ranges, master data on global alignment level etc..

Regards, Fred

[fredwebel]

Hi Paolo,

I have looked again and I use these transactions today:

KKA0 KKAO KKS1 CO88

And you are correct, it is by plant (surprise).

On my point 2 above, I still have that as an open question. Do you have advice on that?

Regards,

Fred

[Paulo_Vitoriano]

There are so many global companies within Manufacturing industry starting from Siemens and more locally you can check maybe with Tetra Pak or Electrolux and using same CO Area. Overall I believe there are more benefits for same CO Area compared to disadvantages or better say limitations. Ultimately there is always a chance to create a Z version of specific transaction or have a separate CO Area for a very exceptional cases.

But this is not how a decision should be done, you have to list specific processes and check mark/validate against them with pros and cons.

Yes, there can be too many variants and too many settings (especially if your business processes are not streamlined), but the system will push you to make it more standard. That is called a system-enabled reengineering.

Apparently you would need to use quite extensively authorisations and smart naming conventions everywhere to facilitate further...