Managing Hierarchies in Cost Center Accounting

In this lesson, we go over the concepts of global hierarchies and runtime hierarchies and describe how to create and use them.

In the Bike Company, you want to group G/L accounts and account assignment elements like cost centers, activity types, and statistical key figures to make quick filtering selections in reporting and in cost allocations. These groups are often different than the grouping provided in the chart of accounts or standard hierarchy.

In SAP S/4HANA, you use the app to create cost center hierarchies and G/L account hierarchies.

Hint

With the same app you can also maintain other hierarchies, such as for profit centers and group reporting.

The basic idea of the Manage Global Hierarchies app is to have one common hierarchy creation tool for many object types. These universal hierarchies can then be used by all relevant embedded reporting apps.

Note

These hierarchies can be used by default for reporting and in allocations but not for planning.

To summarize, here is the way to create a global hierarchy:

1. Use the Manage Global Hierarchies app.
2. Select create and choose the type of hierarchy (cost centers, G/L accounts, and so on.).
3. Insert group subnodes and the relevant master data.
4. Save.
5. Activate the hierarchy.

Previously, we added a node in the cost center standard hierarchy for the e-scooter business using the app Manage Cost Center Groups. You use this app to for the cost center standard hierarchy that includes all cost centers in the system. In addition, you can also use this app to create and edit alternative cost center groups which contain grouping structures different to the standard hierarchy.

In the figure below, there is a walk-through of the procedure to use the app:

Due to legacy system reasons, groups created with the Manage Cost Center Groups app can’t be used directly for reporting and allocations.

To be able to use these groups (including the standard hierarchy) for reporting and for allocations, a runtime hierarchy must be generated for them. In productive systems, the runtime hierarchy is commonly generated automatically through a batch job in order to reflect all potential group changes. In our case, you will generate the runtime hierarchy manually to be able to use the groups in hierarchy in reports and for allocations.

Hint

When you modify the group structure in a cost center group using the Manage Cost Center Groups app, the runtime hierarchy is not regenerated automatically. Since cost center groups changes can be done often, the replication should be scheduled to run automatically on a recurring basis by the system administrator.