0

© 2010 Wellesley Information Services. All rights reserved.

Guidelines For Choosing the Right Functionality to Support Efficient, Automated, and Transparent Financial ConsolidationsMr. Dan SullivanfocusSAP

22

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

3

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

4

SAP NetWeaver BW-Based vs. SAP R/3-Based Consolidation

Functionality SAP NetWeaver BW-based

SAP R/3-based

Data Model Customer-definable data model

Predefined database

Automated consolidation functions

Role concept for defining semantics of characteristics/key figures

Functions implemented on predefined database

Segment reporting Two characteristics for org. units, e.g., company, profit center (matrix organization)

One characteristic for org. unit; “cons unit” represents a combination of company and profit center

Versions Arbitrary number of version characteristics

Only one version characteristic

Subassignments Arbitrary number of subassignments

Only five user-defined fields possible

5

SAP NetWeaver BW-Based vs. SAP R/3-Based Consolidation (cont.)

Functionality SAP NetWeaver BW-based

SAP R/3-based

Periods Arbitrary number of periods

Up to 16 periods

Group currency Group currency is a characteristic in the database

Group currency is a property of the ledger

Master data integration Integrated master data with SAP NetWeaver BW

Master data must be extracted to SAP NetWeaver BW

Integration of transaction data

Transaction data stored in SAP NetWeaver BW, no data redundancy

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)

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

7

SAP SEM-BCS, SAP NetWeaver BW, and SAP ECC Integration Scenario (cont.)

SAP ECC

SAP SEM-BCSFI-GL, PCA, COPA, etc.

Non-SAPSystem

Reports

SAP SEM-BPS

SAP SEM

Reports Reports

8

Consolidation Functions Available

1. Balance carryforward2. Data collection3. Validation of reported data4. Standardization and top-side adjustments5. Reconciliation task6. Currency translation method7. Allocation8. Value Adjustments9. Inter-unit (IU) elimination10. Elimination of IU profit/loss in inventory11. Elimination of profit/loss in transferred assets12. Consolidation of Investments (COI)13. Reclassification14. Multi-period consolidations

9

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

10

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

11

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)

12

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

13

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

14

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

15

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

16

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)

Document types

Posting

Number ranges

Tasks Methods

Selected Items

Totals Report Deferred taxes posting

Inversion

Documents

TotalsData

17

6. Currency Translation MethodReference Translation (permethod)• Source key figure

Local Currency Transaction Currency

• Always cumulative• Exchange rate determination

Special Translation (per groupof 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)

18

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

19

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

20

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

21

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

22

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

23

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

24

500

Trigger

500

Target

500

Source

ReclassificationEntry

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)

25

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

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

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

28

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

29

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)?

30

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

31

Resources

• http://help.sap.com/saphelp_sem60/helpdata/en/e1/8e51341a06084de10000009b38f83b/frameset.htm SEM – Strategic Enterprise Management Business

Consolidation (SEM-BCS)• https://websmp105.sap-ag.de/sem * Follow: SAP ERP SAP ERP Analytics SAP Strategic

Enterprise Management (SAP SEM) Business Consolidation Media Library Presentations

• https://websmp105.sap-ag.de/sem * Follow: SAP ERP SAP ERP Analytics SAP Strategic

Enterprise Management (SAP SEM) Business Consolidation Media Library How Tos

• https://forums.sdn.sap.com/forum.jspa?forumID=278&start=0 Search for relevant SAP SEM-BCS topics

* Requires login credentials to the SAP Service Marketplace

32

Your Turn!

How to contact me:Mr. Dan Sullivan

dan.sullivan@focusSAP.com

33

DisclaimerSAP, R/3, mySAP, mySAP.com, SAP NetWeaver®, Duet®, PartnerEdge, and other SAP products and services mentioned herein as well as their respective logos are trademarks or registered trademarks of SAP AG in Germany and in several other countries all over the world. All other product and service names mentioned are the trademarks of their respective companies. Wellesley Information Services is neither owned nor controlled by SAP.