Managing Master Data

In Overhead Cost Controlling, there is a distinction between master data and transaction data.

Master data contains information that remains the same over a long period of time.

Transaction data is dynamic and changes constantly by postings. Transaction data is assigned to master data. Document numbers can be referred to as transaction data. In S/4HANA transaction data is stored as line items in transparent table ACDOCA.

G/L accounts of account type primary or secondary costs describe the origin of costs. G/L accounts of type Primary costs — in the following denominated as Primary Costs are related to processes in Logistics and Finance which both cause actual postings in Finance. Finance transfers these actual costs to Controlling automatically as the actual costs have an assignment to a controlling object like cost center or internal order. An exception is the Manual Posting of Actual Costs. G/L accounts of type Secondary Costs — in the following denominated as Secondary Costs are used in internal processes within Controlling. So all Costs either primary or secondary are G/L accounts in SAP S/4HANA.

Cost centers define areas of responsibility that incur and influence costs.

Activity types are production activities and services provided to the organization by a cost center. They are used for allocating costs of internal activities to the areas that incurred the costs.

Statistical key figures, which are values that describe a cost center, are used as a basis for allocations (for example, distribution, assessment) and for performing key figure analysis.

Before you can create cost centers, you must first define a standard hierarchy. Specify the name of the standard hierarchy when you create the controlling area.

The standard hierarchy is a structure to which all cost centers within the controlling area must be assigned. How you define your structure is generally up to you. We would, however, recommend that you define the structure to reflect the internal areas of responsibility and the controlling and decision-making structures within your organization. These are usually the same as the internal functional areas depicted in your company's organization chart.

The cost center is the location where the costs are incurred. Cost centers can be set up based on functional requirements, allocation criteria, activities or services provided, geographic location or areas of responsibility.

For the purposes of Overhead Cost Controlling, cost centers are grouped together in decision, control, and responsibility units. To map this structure, you create the cost center standard hierarchy.

Each level or node of the standard hierarchy is a cost center group. You can assign cost centers and nodes in parallel to one common hierarchy level.

The cost center category is an indicator in the cost center master data, which specifies the category of the cost center. Examples include administration, production, or sales and distribution. You can use your own cost center categories, or use those supplied by SAP.

Cost center categories enable you to assign the same attributes to similar cost centers. For example, you can allow particular activity types only for particular cost centers. This is useful to prevent production activities from being posted to administrative cost centers by mistake. You can also use the cost center category for cost calculation, where it controls what percentage of the overheads apply to that cost center category.

In Customizing, you can define lock indicators for each cost center category, or specify that the managing of quantities on cost centers is allowed. When you assign a cost center to a particular category (you do this when creating the cost center), the corresponding lock indicators and allowed values for this category are proposed as default values for this cost center.

With SAP S/4HANA all business transactions – both external and internal – are recorded on G/L accounts.

The Chart of accounts contains all the general ledger (G/L) accounts belonging to Financial Accounting and Managerial Accounting. G/L Accounts which represent CO costs are either set up as G/L Account Type Primary Costs or Revenue or as type Secondary Costs. Within these two cost types the SAP S/4HANA system provides special cost element categories for primary and for secondary costs.

The universal journal contains one field Account that covers G/L accounts and G/L accounts of type Costs. So costs are part of the chart of accounts and maintenance is executed via Account master data maintenance.

If you create a G/L account that represents costs you will always have to assign a CO object such as a cost center, a project, an internal order or a CO-PA segment when posting a document using this account.

Secondary costs are exclusively used in Management Accounting to identify internal cost flows such as assessments or settlements.

Reports such as the trial balance will display all posted costs (primary and secondary costs).

The following account types are available:

• Income statement account that records expenses or gains from activities that are not part of the main purpose of the company, such as gains realized from financial investments by a manufacturing company.

• Income statement account that functions as a cost element for primary costs or revenue. Primary costs reflect operating expenses such as payroll, selling expenses, or administration costs.

• Income statement account that functions as a cost element for secondary costs. Secondary costs result from value flows within the organization, such as internal activity cost allocations, overhead allocations, and settlement transactions.

• Account that is posted from business transactions. The balance of a balance sheet account is carried forward at the fiscal year-end.

• A G/L account that can be assigned to more than one house bank account (since SAP S/4HANA Release 2020). For each house bank account, a G/L account is required, to which payment transactions are posted. With the cash account, the number of such G/L accounts can be significantly reduced.

The overview in the preceding figure displays the enterprise organization of your exercise scenario. Here the portrayal of the method used for crediting cost centers seems to be presented too early. However, it is useful to provide a preview at this stage. To make an assessment or to allocate activity directly, you need secondary costs. As you can see in the figure, some of the cost centers in the exercise scenario will use assessments to make credits, or will allocate activity directly.

The activity type classifies the activities that are to be performed within a company by one or several cost centers.

If a cost center provides activities for other cost centers, orders, and so on, then this means that the resources of this cost center are being used. The costs of these resources need to be allocated to the receivers of the activity. Activity types serve as tracing factors for this cost allocation.

In an internal activity allocation, the quantity of the activity, such as the number of consulting hours, is entered into the SAP S/4HANA system (manually or automatically). The system calculates the associated cost based on the activity price and generates a debit to the receiver and a credit to the sender for both the quantity and costs. The internal activity allocation is carried out using a G/L account of type Secondary Costs, which is stored as default type in the activity type master data.

You can restrict the use of the activity type to certain types of cost centers by entering the allowed cost center categories in the activity type master record. You can enter up to eight allowed cost center categories, or change the assignment to "all" by entering an asterisk (*).

The activity type category is used to determine whether and how an activity type is recorded and allocated. For example, you can allow some activities to be allocated directly, but specify for others that they are either not allocated, or allocated indirectly only.

To enable internal activity allocation, you need to specify which cost centers provide which activity types at what price. You do this in the SAP S/4HANA system by planning the activity output/prices for a cost center. To enable this, the SAP system provides a wide range of options.

For direct activity allocation, you enter the quantity of the activity to be allocated manually. In order for a cost allocation and an activity allocation to be performed, the SAP S/4HANA system has to valuate the allocated activity amount using the sender's price for this activity type. For a direct activity allocation, the plan price for the combination "cost center/activity type" is used for this calculation.

You can enter the planned price either manually, or have it calculated by the system automatically within planning. To manually set the price, the plan price indicator (PPI) must be (manually) set to 3. You can use this procedure if your price calculation is not complex, for example where the prices required for your rates are determined within your organization and do not depend on internally produced activities, or where the rate depends on the prices of external suppliers and not on the costs of the cost center.

Statistical key figures are factors relating to cost centers, profit centers, and overhead cost orders (for example, the number of employees, the length of long-distance calls). Statistical key figures may also be a value representing the services provided by one particular cost center, for example, the number of employees in the Transportation cost center who carry out repairs. These types of key figures are known as activity-dependent statistical key figures.

You can post both planned and actual statistical key figures.

You can use statistical key figures both as a basis for periodic transactions, such as assessment or distribution, and for key figure analysis.

Statistical key figures are defined either as a fixed value or a totals value.

The fixed value (for example, employees) is carried over from the period in which it is entered to all subsequent periods of the same fiscal year. You only need to enter a new posting if this fixed value changes. The fiscal year total is an average of the period totals.

The totals value is only posted in the period in which it is entered (for example, for long-distance calls). The fiscal year total is the sum of all the period values.

You can store master data fields for cost centers, cost elements, and activity types as time-based. If you change one of these fields for a particular time frame, the system creates a new master record containing the new master record for this period. This means that several database records are maintained for each individual master record. In the example shown in the figure, the "Responsible person" field is time-dependent, meaning that you are able to enter the different cost center managers as they change over time.

You specify whether individual fields are time-based in Customizing. Certain fields, such as the assignment of a cost center to a company code, a business area, or to a profit center, are defined by SAP as time-dependent and this time cannot be reduced if you have made actual postings to this cost center in the current fiscal year. Since time-dependent data storage can result in large volumes of data, you should define only important fields as time-dependent.

The Cost center assignment to the standard hierarchy area is a non-time-dependent field. This means that, if the assignment is changed, historical as well as current cost center information will be reported based on the current assignment.

If you want to extend the validity period of a master data record, access master data maintenance and create a master record for the extended period in question. To avoid filling out the same master data fields, you can copy from the existing master record.

The SAP system provides you with collective processing functions for cost center master data.

You can select cost centers or Attribute fields from the cost center field, for example Person Responsible. When the relevant cost centers are selected you can change the value of the selected attribute field, for example from Becker to Miller as Person Responsible. When you save your cost center master data was changed.

You use master data groups to summarize the various types of master data in Cost Center Accounting for analysis, planning and allocation purposes.

You can use these groups to process more than one master data record in one transaction, for example when planning or in reporting. For example, you can plan all the Costs used by your cost center by specifying the corresponding Cost Element group. You could also specify your cost center group if you wanted to create a report containing the results of all the cost centers for your area.

The master data group function enables you to create a hierarchical structure. Master data is then assigned to the groups at the lowest level, and then summarized in groups belonging to the higher levels. You can create as many hierarchical groups as your business requires.

The cost center standard hierarchy is a special type of cost center group. All cost centers in a controlling area must be assigned to the standard hierarchy. Alongside the standard hierarchy, you can use the functions in group maintenance to create any number of alternative cost center hierarchies.

You can create new master data groups by using existing groups as a template from which you copy.

A selection variant is used for master data selection. You only need to enter the selection criteria for the object once and then save them in a selection variant. The system uses the criteria stored in the selection variant during runtime to determine the corresponding objects.

If you create or change Cost Element Groups, groups of cost centers, activity types, statistical key figures, orders or WBS elements, you can also assign a selection variant to an end node. This provides you with a dynamic group, in which the contents can change.

In the example shown in the preceding figure, you create a master data group that contains all the cost centers with cost center category 8 (Consulting). You do this, for example, to include this in a report. First of all, create a selection variant that selects the cost centers with cost center category 8. Then create the cost center group and allocate the selection variant to an end node. You can display an overview to check which objects are selected by this selection variant. If a new cost center is created with cost center category 8, then it is automatically part of cost center group "PR-TELE##".

Master data groups are not time-based. Therefore, if you change the group structure, then the system prepares current and historic information in the new structure. If you want to save a historical hierarchy, you should therefore save a copy of the hierarchy before each update.

You can copy the groups that have an existing hierarchy with a suffix. A period and a name up to four characters long is added to the name of the group. The hierarchy and its suffix are saved. Now you can make changes to the current hierarchy.

The standard hierarchy must not contain a suffix.

If you copy a group for which a suffix exists, this suffix is replaced by the new suffix specified by you.

The system carries out the same checks that are made under the function "Create Group/Hierarchy with Reference".

In the example shown in the preceding figure, "2023" is used as a suffix. Any other characters could stand in their place. The suffix name selected does not mean that the group is now time-based.

Groups created with for example the Manage Cost Center Groups app can‘t be used in Fiori Reporting. Fiori reports don't offer the group for selection.

If you want to use groups in Fiori Reporting there are several ways to do so. In the following we focus on cost centers as an example.

The first way is to additionally create a hierarchy using the Manage Global Hierarchies app. The hierarchy will contain nodes which represent cost center groups and leafs which represent cost centers. Both, the group and the hierarchy are technically not connected, e. i. if you change the group, the hierarchy is not updated and vice versa.

The second way is described in the preceding figure. You can import a cost center group into a Cost Center Hierarchy. Doing so will now be possible to select the hierarchy in reporting.

This hierarchy has the following characteristics:

• It‘s a physically created hierarchy, no run time hierarchy.

• If the source group is changed, the hierarchy is not automatically adapted as it is a static hierarchy and can only be changed in the Manage Global Hierarchies app.

• It‘s not possible to import the group several times with the same technical name.

The third way is to set the cost center group reporting-relevant. The necessary steps are described in the preceding figure.

When the cost center group is created and has to be used in reporting, you have to choose the Set Report Relevancy app and set the group Report Relevant and choose Autoreplicate.

With the help of the Replicate Runtime Hierarchy app you can then schedule the "on the fly" creation of a hierarchy for the group, i.e. schedule a runtime hierarchy. This runtime hierarchy can be selected in Fiori Reporting.

When you change the group you will have to run the replication again in order to also have the changes available in the runtime hierarchy.

Since cost center groups are changed from time to time you have to schedule the replication run regularly.

• Master data remains constant over time; transaction data changes with postings.

• Cost centers define areas of responsibility for incurring and influencing costs and are organized in a standard hierarchy.

• Activity types allocate costs of internal activities to responsible areas.

• Statistical key figures are used for allocations and key figure analysis.

• Master data groups summarize various types of master data for analysis, planning, and allocation.