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# Purpose of this Blog

SAP has started recommending Account Based CO-PA in S/4HANA products (S/4HANA and S/4HANA Finance) based on three main innovations (COGS split, variance posting Categories wise, and additional quantity fields) in Account Based CO-PA. We need to understand first if these three things were only missing in Account Based CO-PA earlier, and because of it all the organizations (at least all manufacturing org.) were using Costing Based CO-PA and SAP also used to recommend Costing Based CO-PA before advent of S/4HANA products or there was more? Let’s find out.

Secondly I have always liked SAP Controlling over SAP Finance and this is the area where I have been more comfortable. I realised that I have written more blogs on S/4 HANA Finance than S/4 HANA Management Accounting. Trying to balance out with this.

Fairly, we will cover below items:

* Understanding of costing based CO-PA and account based CO-PA
* Actual Data in COPA
* Planning Data in COPA
* What’s New in S/4HANA
* Comparison between costing based and account based CO-PA

# Comparison Between Costing Based and Account Based CO-PA

This comparison table is for them who just skim and don’t go into the details, rest can go through entire article.

Base
Costing Based CO-PA
Account Based CO-PA

Postings
Data is transferred to COPA as soon as sales order is created
Data is transferred when accounting document is posted to Financial Accounting

Data Carrier
Data is transferred with Value Fields to costing based COPA tables
Data is transferred with Cost and Revenue elements to ACDOCA tables

COGS Posting
COGS is posted with billing document posting
COGS is posted with post goods issue (PGI)

Reconciliation
Reconciliation value field with GL is difficult
Always reconciled with Financial Accounting

COPA Currencies
Storage in operating concern currency and company code currency
Storage in controlling area currency and company code currency and transactional currency

Variance Settlement
Settle the variance categories to costing-based CO-PA, assign the combination of variance categories and cost elements to the specific value fields.
Settle the variances to account-based CO-PA, use the Price Difference Splitting Profile to assign the combination of cost elements and variance categories to the scheduled target accounts.

Other Settlement
In costing-based CO-PA, costs are settled from the original cost elements to the value fields to which they are assigned in the PA transfer structure.
Settlement – In account-based CO-PA, costs are settled to the settlement cost element specified in the settlement structure.

Parallel Valuation
Costing based COPA provides 6 parallel valuations for calculating the cost of goods sold (COGS). This enables you compare the standard cost for sales processes with different production opportunities in different plants.
NA

Top Down Distribution (Actual)
Top Down Distribution for actual postings is available at detailed level in costing based COPA
Top-Down distribution works in account based COP as well, selection criteria must be account/cost element

Top Down Distribution (Plan)
Top Down Distribution for plan data is available in costing based COPA
Top Down Distribution for plan data is available in account based COPA

Sales Order Analysis
In the costing-based Profitability Analysis, you can transfer the sales order data to Profitability Analysis so that an early analysis of profit forecast can be carried out.
This Function not available in account based COPA

Planning
In costing-based CO-PA, you use the SAP Fiori apps for planning. The data is updated in the CO-PA tables
In account-based CO-PA, the plan data is updated in tables COEJ (plan line items) and COSP (plan total).

Bottom Up Planning
Plan values are planned bottom-up, and merging of plan values can occur in several steps.
Plan values are planned bottom-up, and merging of plan values can occur in several steps.

SAP COPA Tables & Data Structure
Costing based COPA Stores Data in CE1XXXX to CE1XXXX tables:

* CE1XXXX is actuals data
* CE2XXXX is Plan data
* CE3XXXX & CE4XXXX contain aggregated and segment level data

XXXX = Operating Concern Account based COPA Stores data in general CO tables, as below:

* Line item actual data in ACDOCA
* Line item plan data in ACDOCP
* Actual line item in COEP value type, not equal to 4 and not equal to 11
* Plan line item in COSP & COEJ specific value types

Future Innovations in S/4HANA
No future innovation for costing based COPA in S/4HANA
Account based COPA will be innovation path always in S/4HANA. Since ACDOCA is the primary table in S/4HANA and account based COPA only update ACDOCA tables

 # Basic Concept of COPA

The basic concepts of CO-PA include the following:

* Characteristics

Characteristics are those entities that you want to report on. These include divisions, regions, products, and customers.

Note: In addition to the fixed characteristics, up to 50 non-fixed characteristics can be added to an operating concern. So use them wisely. Refer SAP Note. 10293911029391.

* Characteristic Values

Characteristic values are the values that the characteristics in your report should display. For example, region is a characteristic with south as its value, and company code is a characteristic with 1000 as its value.

* Profitability Segments

Profitability segments are the technical definitions of combinations of several characteristics and their values. For example, a combination of North region, T-F100 product, and Sales Rep Miller.

* Value Fields (Costing Based COPA)

Value fields are the amount and quantity fields with which performance can be measured and analysed. Examples include gross sales, surcharges, discounts, and cost of sales.

Note: Maximum 200 values fields can be created, so use them wisely. Refer SAP Note. 10293911029391.

* Cost Elements (Account Based COPA)

Cost Elements plays similar role account based COPA as Value fields in costing based COPA. Amount and quantity fields with which performance can be measured and analysed are posted to account based COPA through Cost Elements.

# Data Structure and COPA Tables

Copy the required characteristics and value fields (applicable for costing-based CO-PA) to the operating concern, save them, and activate the data structures. With activating the data structures, all the necessary tables are created. When assigning characteristics and value fields, activation is required. Otherwise the assignment will be lost.

During the generation process, the system creates the tables CE1XXXX through CE8XXXX

Note that the data in costing-based Profitability Analysis (CO-PA) is stored in separate tables, and the data for account-based CO-PA is stored in the same tables as the other Controlling (CO)modules.

# COPA – Actual Data

Revenues and discounts are transferred to profitability segments in Profitability Analysis (CO-PA) at the point of billing in sales order management.

The value fields in the costing-based CO-PA contain the amounts and quantities that you want to report on. The value fields represent the finest level of detail at which costs and revenues are broken down. One of the most important tasks in Customizing for the costing-based CO-PA is to assign your costs and revenues to the required value fields. This assignment enables you to calculate the contribution margins that your organization requires in Information System. Contribution margin can also be analysed in account-based CO-PA. This analyses the COGS (using define splitting scheme) and also the different variance categories (using define Accounts for Splitting Price Differences).

# Top Down Distribution

Top-down distribution of actual data is a periodic function. This function enables you to distribute the aggregated data to extensive levels (such as the division level or the customer level in CO-PA), based on reference information (such as the data from the previous year).

 

Periodic valuation is only available in costing-based CO-PA. It requires Material Ledger (ML), which is automatically activated in SAP S/4 HANA

The actual costing, which previously could only be performed after a final closed period, can now be transferred to costing-based CO-PA after the actual costing run. This function does not update the FI-Table ACDOCA.

Note: Actual top-down distribution cannot be performed across business areas.

# COPA – Plan Data

The Integrated Business Planning (IBP) for SAP Simple Finance applications provide a consistent view of the planning process. From the UI perspective, all planning applications can be accessed by a Microsoft Excel front-end to provide a homogeneous look and feel. There are no longer silos for the planning data. All planning data is now contained in a real-time info cube of the local Business Warehouse (BW), which is optimized for SAP HANA. Actual data and master data are accessed directly in real time without any replication that would be necessary in a standalone BW.

In costing-based CO-PA, you use the SAP Fiori apps for planning. The data is updated in the CO-PA tables.

In actual release 1610, you cannot transfer the data to FI GL and Profit Center Accounting (PCA) in New GL.

In account-based CO-PA, the plan data is updated in tables COEJ (plan line items) and COSP (plan total).

# Bottom Up Planning

Plan values are planned bottom-up, and merging of plan values can occur in several steps. For example, the default plan values can be created automatically (copied or revaluated) and then used as a plan basis for individual sales representatives.

Integrated Microsoft Excel allows sales representatives to create their sales plan data locally.

Finally, the individual plans can be merged into a single version and valuated with the operative prices and costs of goods manufactured. 

# What’s New S/4HANA

There are some glaring changes in S/4HANA in regard to account based CO-PA, mentioned below.

* Define Accounts for Splitting the Cost of Goods Sold

In this Customizing activity, you can refine the settings for changes in inventory or COGS postings to split the amount and post it to different accounts according to the cost components that are used in the underlying costing sheet. The respective cost component amount is then used for the corresponding journal entry line item.

Path: IMG → Financial Accounting (New) → General Ledger Accounting (New) → Periodic Processing → Integration → Materials Management→ Define Accounts for Splitting the Cost of goods sold.

2. Define Accounts for Splitting Price Differences

This customizing helps in posting production variances as per variances categories.

 Path: IMG → Financial Accounting (New) → General Ledger Accounting (New) → Periodic Processing → Integration → Materials Management→ Define Accounts for Splitting the Cost of Goods Sold

3. Define Additional Quantity Fields

This customizing helps you having additional quantity fields in your transactions and reporting.

Path: IMG à Controlling à General Controlling à Additional Quantities à Define additional quantities

# Conclusion

Has Account Based COPA Evolved Enough to be Recommended?

Having jotted down all the points I am not very comfortable to advise a manufacturing organization to implement account based COPA over costing based COPA. There are many values need to be taken to COPA starting from sales order and many of them are statistical too (though for this also workaround is there in Account Based COPA, like create extra condition types with GL postings to FI twice during billing which will post to COPA and it won’t have impact on the FI. Later on select required data in the COPA reporting).

I have discussed this scenario and my experience with SAP on this matter in one of my blog on SAP Community https://blogs.sap.com/2018/02/02/first-s4-hana-enterprise-management-implementer-how-it-feels-to-be-a-success-story/

Secondly comparison sheet is also giving weightage to Costing based COPA, but on the other hand it is also true that all the innovations in S/4HANA will be made available for account based COPA. So, ‘choose wisely’. http://bit.ly/2BWT6X7 #SAP #SAPCloud #AI

The latest SAP S/4HANA Cloud update is now available. We’re pleased to announce more intelligent functionality in machine learning, in-memory analytics, in-context collaboration, and much more.

New features will bring impact to the entire enterprise, including all-new abilities for finance, procurement, sales, manufacturing, and professional services. Here’s how your feedback shaped this release and the next generation of intelligent cloud ERP.

Crowdsourcing Improvement Requests Using Customer Influence

Starting February 12, customers can influence product innovation for SAP S/4HANA Cloud by submitting improvement requests using the Customer Influence site. In addition to submitting new requests, users can explore existing improvement requests and vote on them on the site. This engagement shows SAP which requests are of the most interest for their customers. A comment section enables customers to interact with each other as well as with SAP’s Product Management. Furthermore, SAP is planning to integrate the Customer Influence site to SAP S/4HANA Cloud software during the first quarter of 2018 by using SAP CoPilot, the company’s digital assistant software. Customers would then be able to submit improvement requests within the application.

Finance

Gathering, analyzing, and posting A/R payment information advice from files is time consuming and prone to errors. The new automated payment advice processing is powered by machine learning and  SAP Leonardo. You can now turn documents into structured data in your cloud ERP with automated extraction of payment information from PDF documents.

If you’re in a company that wants to monetize IoT, cloud services, or digital content through on-demand payment, meet the SAP S/4HANA Cloud for contract accounting and invoicing. It offers compliant features to automate payments, manage high-volume convergent invoicing, and embedded analytics — all of which optionally integrates with the SAP Hybris Revenue Cloud.

For the first time, accountants can look forward with predictive accounting for incoming sales orders. This automates an update each time a new sales order is created, posting pipeline revenue to a predictive ledger.

Sourcing and Procurement

A new situation handling tool for purchase order confirmations and professional purchases requisition proactively alerts users to risks and automates proactive customer communications when delivery dates are at-risk. You can also benefit from one-click insight into risks and opportunities, and start requisition activities the moment new contracts are created.

The central SAP S/4HANA procurement hub centralizes your purchasing activities with features for contracts, requisitions, purchases, and returns. You can now create and distribute purchases among subsidiaries in a connected ERP backend system, improving conditions with on-demand, local purchases. You’ll also get a graphical overview of documented down payments on purchase orders, which allows drill-down insights to optimize your liabilities and intelligently plan cash flow. Organizations can improve the grip on purchase order spend with a single dashboard in the SAP Analytics cloud.

Sales

Sales managers can use machine learning to understand probable orders and predicted sales volume for better forecasting with the predictive quotation conversion rates calculator.

We’ve also added two new features for organizations with sales subsidiaries that don’t manage inventory on-site. Advanced shipment notifications (ASNs) eliminate a lot of manual paperwork by automated purchase orders to headquarters and client invoicing.

New two-tier ERP purchasing feature allows HQ to perform more efficient inventory management by creating automated sales orders when purchase orders are sent by subsidiaries.

Asset Management

The new maintenance planning overview allows you to plan work, monitor time-sensitive processes, and analyze trends time. It’s an all-in-one environment to understand maintenance health and time-sensitive follow-up needs with real-time insight into reports, maintenance orders, and potential bottlenecks.

The technical object damages app provides a 360-degree view of frequent damages and root causes, with both key performance indicators (KPIs) and drill-down features. It’s built to show you which assets have become a bottleneck, and most importantly, help you take corrective action.

Building on release 1708, we’ve also added all-new technical objects for task lists and task lists operations. Say goodbye to manual data entry and meet simpler task management with filters, advanced search, and layout management.

Manufacturing and Supply Chain

SAP S/4HANA Cloud for demand driven replenishment is now certified for compliance with the Demand Driven Institute for demand driven material requirements planning (DDMRP) implementations. Users can protect material flow with features to monitor buffer status and recommendations on replenishment actions. There’s also flexibility when you need to account for seasonality, new product releases, or discontinued products.

There are fewer surprises in store, thanks to the release of new features to track production yield, scrap, and quality in real time. You’ll also gain the ability to confirm complete or partial production, manage quantities with batched production, and record the use of components.

We listened when you said you need more simplicity and transparency over product allocation, including visibility into your sales documents. You can now check allocation against orders, change sales orders, plan quantities, and see quantities assigned to your sales orders — all without charge.

Speaking of visibility, a new statistical process control makes it simpler than ever to monitor processes using quality control charts. We’ve built a lot of freedom and flexibility into features to document, analyze, and monitor with graphs and charts. You can define KPIs, track changes in values over time, and both calculate and set warning limits for upper and lower thresholds, in addition to tools for Shewhart and acceptance stats like mean values, standard deviation, and qualitative characteristics.

Other features in this release include support for remotely monitoring of picking activities — simple, real-time insight into order status and tools for corrective action when there are deviations, delivery cancellations, or goods issues. Finally, you’ll communicate smarter with public APIs for return deliveries and automated messaging for advanced shipping notifications.

Portfolio and Project Management

Project financial controllers need visibility across teams of project managers to monitor these projects’ financial health. With the new overview page, you can understand the present and future. Controllers can easily compare planned and actual costs to date by cost component, understand commitments over time, and access an overview of planned projects.

Professional Services

Professional service firms often elect to offer non-billable services to accommodate use cases like onboarding, client support, meetings, or training. Resource managers now have transparency around non-billable services in the release billing proposal application. You can flexibly plan and verify non-billable hours in work packages and proposals, and automatically write-off these hours before billing the client.

SAP S/4HANA Cloud User Community

The SAP S/4HANA Cloud User Community is an interactive platform available to all SAP S/4HANA Cloud customers, partners, and SMEs to exchange information with one another about products, solutions, and best practices. Customers can gain real time access to information, crowdsourcing for Q&A, and self-service knowledge base, as well as gather advice from peers, partners and experts. Empowering customers to be successful with a new leading-edge product, community members have access to content, support, and resources to drive success through knowledge sharing and collaboration. Users can access community from SAP S/4HANA Cloud using web assistant.

Conclusion

1802 is the first of four releases scheduled for 2018. With three more updates, there’s much more value in store. To learn more, visit the SAP S/4HANA Cloud website or check out our high-level 1802 release videos on the SAP S/4HANA Cloud playlist on YouTube.

Christian Pedersen is chief product officer for SAP Cloud ERP. http://bit.ly/2ovllEL #SAP #SAPCloud #AI