Below is a snippet from one of hundreds of articles available to ERPtips subscribers.

If you would like a complimentary copy of the full article, please email Mark.Downs@ERPtips.com (include the title of the article in your email) To subscribe to ERPtips, go to www.ERPtips.com/Subscribe.asp. ERPtips Journal is published by Klee Associates, Inc. ERPtips University provides both public and onsite training for SAP clients. For more about ERPtips University, including the current schedule, click here: www.ERPtips.com/WorkshopSchedule.asp

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.

Click here to read this Snippet

Profitability, Final Frontier: SAPs Profitability Analysis for Profit

SAPtips Cover Story

April / May 2007 Volume V Issue 2

Profitability, the Final Frontier: Using SAPs Profitability Analysis to Increase Profit Margins
By Bill McNaughten, SAP FI/CO Analyst
Editors Note: Adding to his series on SAPs 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, youve got a recipe for complete configuration of your Controlling module. cover the 5th CO area of the Controlling module shown in Figure 1. In the PA series of articles, I will explain the purpose behind PA and also cover, at a detail level, the configuration that must occur to successfully implement PA.

Page 

The Purpose of Profitability Analysis

Introduction

PA offers a very robust reporting development tool that actually makes it fun to develop reports.

Profitability Analysis is used for margin reporting. These reports provide management the ability to review and analyze data that depict the companys profit margin by business segment. The postings to PA are populated at the time of billing, when the customer invoice is created. PA typically contains Revenue, Discounts, Freight, and Costs. PA offers a very robust reporting development tool that actually makes it fun to develop reports. To grasp PA functionality, it is important to understand the Characteristics and Values. Characteristics can be thought of as the dimensions used to accomplish drill-down reporting. The following fields would be considered typical Characteristics: product, product hierarchy, material, material group, customer, and customer group. Value fields represent amounts and quantities such as revenue and quantity sold. In this article, we cover Costing Based PA, which is much more popular than Account Based PA. Costing Based offers more detail. PA is a Profitability Analysis tool, however some users wish to reconcile to FI, which is the purpose of Account Based PA. The Controlling Module Structures To understand PA, youll need a basic understanding

Over the past four years, SAPtips has published a series of my articles covering the primary functions of the Controlling module, including the important components of the module such as: Cost Center Accounting (CCA), Profit Center Accounting (PCA), Internal Orders (IO), and Product Costing (PC). You can review the various article series in the FI/CO category of the SAPtips Document Library at http://SAPtips. com/AccessDocumentCategories.asp.

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 SAPs Profit Internal Order Processing - Part Center Accounting Feb 07 I Aug 06 Capital Internal Order Config Part II Oct 05 Capital Internal Orders Part III Dec. 06

Figure 1: CO Module Article Series

SAPtips.com

SAPtips 2007 Klee Associates, Inc.

SAPtips4On FI/CO
April / May 2007 Volume V Issue 2
Page 

of the Controlling module structures. Figure 2 demonstrates this. Figure 3 illustrates the Characteristics and Values that comprise the Operating Concern structure. 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. Detail table CE2xxxx is for plan line items (where xxxx = operating concern) and contains all plan data at a detail level. The segment table CE3xxxx (where xxxx = operating concern) is set up to provide indexes via the Profitability Segment, Date, and Value fields. The segment table CE4xxxx (where xxxx = operating concern) is set up to provide indexes via the Profitability Segment and Characteristics fields. Note: The Profitability Segment is a unique set of Characteristics.

Figure 2: Controlling Module Structures

SAPtips Journal

Once the Characteristics and Values shown in Figure 3 are established, the tables above are created when the Operating Concern is generated. Current Trends in SAP Reporting Lately with the widespread use of Business Intelligence (BI) (formerly known as Business Warehouse), PA is used as a major data source for BI reporting. BI does an excellent job gathering data from various sources and creating reports. While this eliminates some of the PA reporting requirements, PA remains as a critical component of the SAP ECC environment.
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.

Additionally, the Operating Concern may be used with multiple Controlling Areas and Charts of Accounts. Use the IMG menu path shown in Figure 4 to begin creating the Operation Concern.

SAPtips.com

SAPtips 2007 Klee Associates, Inc.