Managing Hierarchies in Cost Center Accounting

Objectives

After completing this lesson, you will be able to:
  • Create global hierarchies
  • Outline run-time hierarchies

Global Hierarchies

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.

Global Hierarchy Creation

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.
The graphic explains the main steps when creating a global hierarchy.

Set up G/L Account Hierarchies for Allocation

Create a Cost Center Reporting Hierarchy

Runtime Hierarchy

As already stated, a customer starting with SAP S/4HANA Cloud Public Edition 2502 has to assign new cost centers to the global hierarchy "1 – Standard Hierarchy" of type Cost Center Hierarchy. If you need further cost center groups they have to be created using the Manage Global Hierarchies app as well.

Both, the"1 – Standard Hierarchy" as a whole or subnodes of it as well as further global hierarchies can directly be used in reporting and allocations.

For these customers, the following section "Runtime Hierarchy" is not relevant!

Instead, the following section is relevant for customers who have already been using SAP S/4HANA Cloud Public Edition before release 2502 and don’t want to migrate their set-based groups to global hierarchies.

Runtime 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.

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.

The graphic shows the two applications with the help of which a cost center group can be generated as a runtime hierarchy.

The figure above shows the steps and settings to make the cost center group CCG a runtime hierarchy.

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.

Create a Runtime Hierarchy

In this exercise, you will see how to manually create a runtime hierarchy for a group maintained in the Manage Cost Center Groups tile.

Log in to track your progress & complete quizzes