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Adding to his series on SAP`s Controlling module, Bill McNaughten delves into Profitability Analysis (PA), the fifth primary area of the module. In this article, Bill provides the background on PA, how it works within the module, creation of an operating concern, and the creation and display of Fixed Characteristics. Put all of these series together, and well, you`ve got a recipe for complete configuration of your Controlling module.

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Profitability, Final Frontier: SAP’s Profitability Analysis for Profit

when the customer invoice is created.Part Center Accounting – Feb 07 I – Aug 06 • Capital Internal Order Config Part II – Oct 05 • Capital Internal Orders Part III – Dec. which is much more popular than Account Based PA. Bill McNaughten delves into Profitability Analysis (PA). In this article. at a detail level. . and Product Costing (PC). Inc.asp. the fifth primary area of the module. material. we cover Costing Based PA. com/AccessDocumentCategories. Internal Orders (IO). You can review the various article series in the FI/CO category of the SAPtips Document Library at http://SAPtips. and Costs. PA typically contains Revenue. Freight. Characteristics can be thought of as the dimensions used to accomplish drill-down reporting. customer. Discounts. Value fields represent amounts and quantities such as revenue and quantity sold. In the PA series of articles. 06 Figure 1: CO Module Article Series SAPtips. Put all of these series together. Profit Center Accounting (PCA). The postings to PA are populated at the time of billing.SAPtips Cover Story April / May 2007 Volume V Issue 2 Profitability. the Final Frontier: Using SAP®’s Profitability Analysis to Increase Profit Margins By Bill McNaughten. To grasp PA functionality. creation of an operating concern. These reports provide management the ability to review and analyze data that depict the company’s profit margin by business segment. SAP FI/CO Analyst Editor’s Note: Adding to his series on SAP’s Controlling module. PA offers a very robust reporting development tool that actually makes it fun to develop reports.com SAPtips © 2007 Klee Associates. however some users wish to reconcile to FI. including the important components of the module such as: Cost Center Accounting (CCA). SAPtips has published a series of my articles covering the primary functions of the Controlling module. The following fields would be considered typical Characteristics: product. In this article. you’ve got a recipe for complete configuration of your Controlling module. the configuration that must occur to successfully implement PA. PA is a Profitability Analysis tool. The Controlling Module Structures To understand PA. product hierarchy. you’ll need a basic understanding Over the past four years. Profitability Analysis is used for margin reporting. and the creation and display of Fixed Characteristics. it is important to understand the Characteristics and Values. I will explain the purpose behind PA and also cover. Bill provides the background on PA. material group. cover the 5th CO area of the Controlling module shown in Figure 1. how it works within the module. SAPtips Journal The Profitability Analysis (PA) articles will finish the series as they SAP CONtrOllINg MODule SerIeS Cost Center Accounting • Converting LIS Data into CO April 04 (White Paper) • Cost Planning Functionality I – Apr 05 • Cost Planning Functionality II – June 05 • Cost Planning Functionality III – Oct 05 • Cost Planning Functionality IV – Dec 05 Profit Center Accounting Internal Orders Product Costing • Product Costing I – June 04 • Product Costing II – Aug 04 • Product Costing III – Oct 04 • Product Costing IV – Dec 04 • Product Costing V – Feb 05 Profitability Analysis Beginning April 07 • Implementing SAP’s Profit • Internal Order Processing . Costing Based offers more detail. Page  The Purpose of Profitability Analysis Introduction PA offers a very robust reporting development tool that actually makes it fun to develop reports. which is the purpose of Account Based PA. and customer group. and well.

• The segment table CE4xxxx (where xxxx = operating concern) is set up to provide indexes via the Profitability Segment and Characteristics fields. Current Trends in SAP Reporting Lately with the widespread use of Business Intelligence (BI) (formerly known as Business Warehouse). • Detail table CE2xxxx is for plan line items (where xxxx = operating concern) and contains all plan data at a detail level. PA remains as a critical component of the SAP ECC environment. PA is used as a major data source for BI reporting. and Value fields.SAPtips4On FI/CO April / May 2007 Volume V Issue 2 Page  of the Controlling module structures. Date. the Operating Concern may be used with multiple Controlling Areas and Charts of Accounts. Figure 3: Characteristics and Values Create an Operating Concern The Operating Concern (shown in Figure 2) is the largest CO structure and houses the tables that are generated when the characteristics and vales (shown in Figure 3) are defined. Note: The Profitability Segment is a unique set of Characteristics. Use the IMG menu path shown in Figure 4 to begin creating the Operation Concern. Figure 2 demonstrates this. Additionally. . Inc. While this eliminates some of the PA reporting requirements. Figure 3 illustrates the Characteristics and Values that comprise the Operating Concern structure. the tables above are created when the Operating Concern is generated.com SAPtips © 2007 Klee Associates. The Tables Generated by PA Following are tables generated by PA: • Detail table CE1xxxx is for actual line items (where xxxx = operating concern) and contains all the actual data at a detail level. BI does an excellent job gathering data from various sources and creating reports. SAPtips. • The segment table CE3xxxx (where xxxx = operating concern) is set up to provide indexes via the Profitability Segment. Figure 2: Controlling Module Structures SAPtips Journal Once the Characteristics and Values shown in Figure 3 are established.