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Teach yourself series

SAP
Cross-Application

Integration
Made Easy
SAP-003A-Integration Made Easy 2

Table of Content

SAP Integration Made Easy .............................................................. 3


1. Organisation structure / relationships between elements across modules ........ 4
1.1. FICO organizational elements & their relationships ................................... 4
1.2. Logistics organizational elements & their relationships .............................. 5
2. Representing your Organization Structure in SAP ...................................... 7
2.1. Key SAP Organization Elements / Structures: .......................................... 8
2.2. Relatively "Uninteresting" SAP Organization Elements ................................ 9
2.3. SAP Master Data which represents the Organisation Structure ...................... 9
3. Direct Assignment of Relationships..................................................... 10
3.1. Determining the FI Business Area from SD ............................................ 17
4. Indirect Assignment of Relationships .................................................. 19
4.1. Profit Centre Relationships .............................................................. 19
5. Relationships created in CO-PA (Profitability Analysis) ............................. 23

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SAP
Integration Made Easy
The integration of the various modules within SAP is sometimes an area where design
and configuration is the weakest. As you might be aware of, the project teams are often
divided into sub-teams by modules which results in inadequate attention being paid the
way that the modules need to work together.

Problems occur for a number of reasons:

SAP analysts sometimes lack the big picture view of the total business
requirements
There is an inadequate understanding of the
o Impacts that decisions in their modules may have on other modules, and
o The demands that requirements in their area may make on other areas

The key integration areas between the SAP modules are:


Organization structure
The representation of the enterprise in the SAP modules and definition of
relationships between elements in the various modules
Periodic Processing and Integration
Automatic Account Determination
The definition of how and to what level of detail the modules should post
through to the GL accounts. You may see more information in Automatic
Account Determination e-book available at ebay.com at
http://cgi.ebay.com/ws/eBayISAPI.dll?ViewItem&item=110204009553

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Account assignments
This relates to the daily or ad-hoc transactions, primarily from financial
accounting to controlling.

1. Organisation structure / relationships between elements across


modules

It is presumed that you are familiar with the various organizational elements across
modules. In case, you are not familiar with the organisation elements and master data,
it is recommended that you review those sections first before proceeding further. You
may however, take a look at the following to have basic understanding of the
organization structure.

1.1. FICO organizational elements & their relationships


The FICO organizational elements and their relationships can be depicted as in Figure-1:
the operating concern sits at the top of the structure with one or more controlling areas
attached to it. The controlling area - used in internal managerial accounting - can have 1
or more credit control areas, 1 or more financial area etc. A company in SAP can consist
of 1 or more company codes, and the association so goes that under a single controlling
area you can have a single company code (1:1 relation) or multiple company codes. The
requirements of controlling area - company code assignments are detailed in Appendix-
1. You may define your business areas in such a way that they all cut across many
company codes. On the HR side, you can define one or more personnel area under a
single company code, and each of the personnel areas, in turn, can have more than one
personnel sub-areas...

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Figure 1: FICO Organizational Elements & their association

1.2. Logistics organizational elements & their relationships

Similarly, the Logistics organization elements and their relationships can be depicted as
in Figure-2. Pay attention to the way with which you need to define the purchasing
organization:
Do you need cross-plant purchasing organization?
Do you just need a plant-specific purchasing organization?
Is it necessary that you need to go in for cross-company code purchasing
organization?

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Figure 2: Logistics Organizational Elements

It is not just the elements that SAP defines as organisation elements (SAP Customizing
Implementation Guide>Enterprise Structure>Definition) that we use to represent our
organisation, but also master data. This means that although the " SAP Customizing
Implementation Guide>Enterprise Structure> Assignment " section is our first point of
call, when considering integration, there is more to it:
Direct assignment of Relationships

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Figure 3: Direct Assignments (via IMG)

Indirect Assignment by Substitution or by Master Data (Not all organization


element fields shown on master data control relationship integration - for
example orders have requesting costs centres primarily for grouping and
reporting purposes.)
Periodic Integration: This may seem like a strange reference for this chapter,
because people expect to see up-front definition or assignment of relationships.
However some mappings are actually done in SAP under the 'Periodic
Processing' menus or configuration.

2. Representing your Organization Structure in SAP


At the start of any project one of the first and most important things to be done is that
your current best guess of your businesses organisation structure must be configured in
the SAP System. The sooner you do this and the more accurately you do this, the
quicker and better the project team can get on with prototyping or configuring the rest
of the system. Some functionality is quite dependent on which SAP organisation
elements you chose to represent various aspects of your organisation. So to avoid

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wasting too much time, it is very important to get appropriate skills working on this
design ASAP in order to ensure that the initial configuration is reasonably appropriate.
Each module of SAP tends to have its own organisation elements, although some are
shared across modules (plant, division etc).

The organisation structure decisions and issues are presented as:

Key SAP Organization Elements / Structures


SAP Master data which represents the Organization Structure
Flexibility Considerations - designing for or understanding the implications for
organizational change after "go live".

2.1. Key SAP Organization Elements / Structures:


Following is a summary of the key elements for organisation structure and functionality
decisions.

Element Owning Module Brief Description

Company Code FI Mandatory, used for lowest legal entity

Business Area FI Optional, used for sub or cross company Balance


Sheet reporting

Profit Centres CO-PCA Optional, used for profit and return on investment
reporting. See also module decision on CO-PCA vs
CO-PA.

Cost Centres CO Mandatory for responsibility level overhead expense


reporting

Sales Areas SD Mandatory, actually a combination of the SD


elements: Sales Organization, Distribution Channel

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and Division

Purchasing MM Mandatory - could be just one. See R/3 library.


Organization

2.2. Relatively "Uninteresting" SAP Organization Elements


Several SAP organisation elements are required purely as the top node of the module
providing an environment under which a single set of data exists. Data can usually not
be shared across these 'top node' elements. These elements are usually invisible to the
users and can often be excluded from training or explanatory diagrams.
These elements are:

Controlling Area CO - Controlling

Operating Concern CO-PA - Profitability Analysis

Financial Management Area TR - Treasury

FI-AR & SD (Credit


Credit Control Area
Management)

2.3. SAP Master Data which represents the Organisation


Structure

In controlling, the Cost Centre and Profit Centre Hierarchies are also used to represent
the organisation or enterprise structure. SAP considers these as 'master data' though
not as organisation elements. Therefore maintenance of these is not found in the
Enterprise Structure area of the IMG.

Organisation Structure issues relating to these are presented in two sections:

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Use of Profit Centres to provide some balance sheet information


Cost Centres and Profit Centres

The important question is: Do you need both?

3. Direct Assignment of Relationships

These are all the organisation structure relationships that are directly assigned in the
SAP configuration (SAP Customizing Implementation Guide > Enterprise Structure >
Definition).

It may not look like it, but this is actually quite easy except for a couple of areas with a
lot of flexibility (and remember: flexibility = complexity). These relationships can further
be divided into:

Core / essential relationships that you should understand or address as a first


priority and the
Secondary relationships (or module specific) ones you can worry about later if
you need to.

We have also grouped the relationships in what we hope is more logical (since FI is
where most of the integration is heading (because of the financial postings). We have
sorted by FI elements and listed them first. Apart from that you should still be able to
follow along fairly easily in the IMG:

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Table of Direct Organization Structure Relationships


SAP Customizing Implementation Guide>Enterprise Structure>Definition / Assignment

Module/
module Element 1 Element 2 Relationship Comment

Core or Primary Relationships:

Financials, Controlling, Treasury

If you have complex currency /


organization reporting
requirements then you should
Company Controlling many to probably read the IMG help
FI / CO
code Area one carefully and test out your
scenarios before you get too
far down the track. Refer to
Appendix-1 for more details.

Even if you are not really using


Financial Treasury, you may want to
Company many to
FI / TR management assign this to use the Basic
code one
area functions (useful if using AR, AP
and doing banking)

Controlling Operating many to


CO / CO-PA Only required if using CO-PA
Area Concern one

many to All company codes assigned to


Financial
Controlling one, usually the controlling area must also
CO / TR management
Area only one be assigned to the Financial
area
each Management Area. Required if

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though costs etc needed in TR.

Logistics (Materials Management and Sales and Distribution)

Required so the system knows


Company many to
LO / FI Plant which legal entity to post
Code one
financial stock values.

Sales Company many to


SD / FI
Organization Code one

Distribution Sales many to


SD / SD
Channel Organization many

Sales many to
LO / SD Division
Organization many

This is a unique setup. A sales


area is not a new organization
element, but defines a valid
combination of Sales
Organization / Distribution
Channel / Division. This is how
Many to
SD / SD Sales Areas you control what products can
many
be sold by what methods of
delivery and by which selling
groups. This also has a
significant impact on the
customer master data
requirements.

MM / FI Purchasing Company many to Optional - if the company code

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Organization Code many or is not assigned it will be


none determined from the plant.
This allows the setup of
purchasing responsibility

Corporate wide
By company or
By plant

Human Resources

Required so the system can


post financial impact of HR
postings. Note that personnel
areas in different countries
Personnel Company many to
HR / FI cannot map to the same
Area Code one
company code. It is usual that
different countries would have
different company codes (legal
entities) anyway.

Secondary Relationships:

Financials, Controlling and Integration with FI/CO

Optional
Useful for financial statements
Company (group) many to
FI by group company; however
code company one
can also just use ranges or
selections of company codes.

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Optional
Required only when using
Company Credit many to
FI credit management or creating
code Control Area one
the credit management section
of the customer master.

FI / EC-CS or Business Consolidation many to Only required if using the


FI-LC area business area one consolidation modules.

Here you have great flexibility


= some complexity - worthy of
a separate SD/Business Area
page to explain what's
possible. Briefly for each Sales
Area you could specify :

Rule 1: By plant and


Depends on
division
Business rules chosen many to
FI / SD Rule 2: By sales area
Area (Rule 1) for each one
Rule 3: By sales
Sales Area
organization,
distribution channel
and item division. Note
that the item division
could be different from
the Division in the Sales
Area. Divisions are a
little 'strange' in

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Logistics - they have


either a sales SD
emphasis or a product
MM emphasis.

Only required to enable


If Valuation
automatic business area
Level =
account assignment. If you
Company
Business many to are valuing stocks at a
LO / FI code, then
Area one company code level, you can
Plant /
map each plant to a business
Valuation
area. Note the Valuation Area
Area
is then the company code.

Only required to enable


automatic business area
If Valuation account assignment. If you
Level = Business many to are valuing stocks at a plant
LO / FI
Plant, then Area one level, you can map each plant
Plant and division (essentially
groupings of products) to a
business area

Logistics / Sales and Distribution

Optional. Used as defaults


many to
SD / SD Sales Offices Sales Areas only. Note sales office is usually
many
a geographical distinction.

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Optional. Sales groups are


many to
SD / SD Sales Groups Sales Offices responsibility groupings rather
many
than geographic.

Sales Essentially defines which


Organization many to selling organizations can sell,
LO / SD Plants
/ Distribution many by which methods out of which
channel plants

Shipping many to Defines which plants can ship


SD / LO Plants
Points many from which locations

Materials Management

Allows a variety of purchasing


Purchasing many to responsibilities and gives
MM / MM Plant
Organization many control over who can buy for
where.

The system will use the


Standard or
information associated with
Reference one to
MM / MM Plant this purchasing organization for
Purchasing many
source determination of
Organization
materials.

Allows use of the contracts etc


Standard or
negotiated by this purchasing
Purchasing Reference many to
MM / MM organization as a reference if
Organization Purchasing one
another purchasing
Organization
organization is buying.

WM / IM Warehouse Plant / one to one Defines which storage

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number Storage locations are controlled by the


Location warehouse management
system.

Plant Maintenance

Maintenance Defines which plants do the


Maintenance many to
PM / PM Planning planning of maintenance for
Plant one
Plant other plants.

Human Resources

Determines the valid


Employee Employee many to
HR / FI combinations for the country
subgroup Group many
groupings

3.1. Determining the FI Business Area from SD


There are 3 ways of determining the business area for an SD posting that is trying to
post to FI (i.e. when the system does the revenue account determination. You can
define a different way for each SD Sales Area. This means that you first have to tell the
system which 'rule' you want to use for which Sales Area.

Module/ Element
module Element 1 2 Relationship Comment

Plant /
FI / SD Business Area one to one Rule 1: By plant and division
Division

FI / SD Business Area Sales Area one to one Rule 2: By sales area

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Rule 3: By sales organization,


distribution channel and item
Sales
division. Note that the item
Organizati
division could be different from
on,
FI / SD Business Area one to one the Division in the Sales Area.
Channel
Divisions are a little 'strange' in
and item
Logistics - they have either a
Division
sales SD emphasis or a product
MM emphasis.

For example, we could have the following configuration:

Sales Area (Sales Organization, Channel, Rule Plant or Business


Division) Division Area

1000, 01 (internet), 01 (books) 2 (sales area) n/a INET

1000, 01 (internet), 02 (music) 2 (sales area) n/a INET

ELNS
Sydney (Electronics
1 (Plant / in Australia)
2000, 02 (retail), 03 (electronics)
division) ELVC
Korea (Electronics
in Korea)

3 (Sales
SPEC
2000, 03 (wholesale), 05 (specialty Organization / all item
(Specialty
products) Channel / Item divisions
Products)
division)

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It may look complex and cumbersome, but it will only be so if you have a complicated
business and of course you want to have business areas. If you have a fairly
homogenous organisation, then at worst you will have to put several partially repetitive
entries in the configuration table.

With a bit of luck and a stable organisation you will never have to come back to this!!

4. Indirect Assignment of Relationships

In addition to the organisation structure relationships that are directly defined in the
Enterprise Structure / Assignment section of the IMG, there are further ways that one
may need to define these relationships. These definitions are still done in the IMG, but
are buried in a module somewhere. These are module specific: i.e. only required if one
is using that module.

Profit Center Relationships


Relationships created in CO-PA (Profitability Analysis)

Note that pure master data relationships and account determination configuration is
covered in other chapters.

4.1. Profit Centre Relationships


When one is using profit centre module and the various logistics modules, then one has
to define the relationships in IMG / Enterprise Controlling / Profit Centre Accounting /
Assignments to Profit Centres. However before we get too deep into that...

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If you are using SD and not using CO-PA (Profitability Analysis) either instead of
or in addition to Profit Centers you should have a good business reason. Please
see my chapter on Profit Centers vs. CO-PA for more information.
If you are not using SD and using EC-PCA (Profit Centers) for Profit Reporting
only, then I suggest you read my chapter on Profit Reporting

Table Describing how transactions and balances are assigned to profit centres

Element /
Module Comment
Item

One of your first steps in PCA configuration is to define the


any
dummy profit center. If the system at any stage cannot identify a
Default unassigned
profit center from your configuration, then it will post to the
item
dummy profit center instead.

The first time you do anything in CO (IMG or user menu), the


system will prompt you to choose a controlling area. This defines
Controlling
CO the environment for all further CO work. All profit centers will
Area
therefore be created relative to one and only one controlling
area.

The profit center is defined on the material master record in the


Plant /
Sales: General/Plant Data or Storage views. There are tools to do
Material
'fast assignment' of material masters by plant and then by
(see Sales
MM material type, a material group or a product hierarchy. See IMG.
Order
substitutions These assignments are used :
too)
to propose a default profit center when you create a sales

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order item or a production order (to eventually post the


revenue or costs); or
to derive the profit center from the material master for
internal goods movements (such as stock transfers or
goods issues) and profit-related postings in Materials
Management (such as inventory differences) if no other
assignment is available; or
When material stocks (raw material, finished and semi-
finished goods) are transferred to Profit Center
Accounting (PCA can do some balance sheet item
reporting at period end).

The sales order default is taken from the profit center on the
delivering plant / material master combination. If you do not
want this, you can define substitutions to override this. A
Sales Order substitution is basically where the system allows you to specify
SD
substitutions your own piece of conditional logic to determine which profit
center to post to. You can base your conditions on a variety of
fields available on the Sales Order. Usually used if you want to
base your mapping on Sales elements rather than on products.

The next 4 menu options in the IMG are to do with assigning an


individual business transaction to the profit center. This is
Business something that should happen at the time of entering the
Transactions business transaction if it cannot be determined from the default.
Therefore for configuration purposes, it is suggested that you
ignore the "assign to sales orders, production orders, process

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orders, CO Production orders".

Master data The next 6 menu options in the IMG relate to master data
assignments: assignment to a Profit center. Basically the profit center should
be assigned when you create the master data record. Some
special comments :

If not done manually, there is a 'create profit centers' from cost


centers program which will create an equivalent hierarchy for
you - only really possible at start up of the system - thereafter
manually maintained. I suggest that if you do have such a one to
one mapping then the following is probable:
Cost Center
You have too many profit centers or not enough cost
centers - their business definition should be different
If you are not using SD, then maybe you don't need profit
centers?

Fixed Assets Implicitly assigned by assigning every asset to a cost centre.

Assignments needed for Balance Sheet Items in Profit centers

System will determine from the assignments made on the Sales


FI AR Debt
Order - similar to business area processing.

are assigned to the profit center of the material ordered for


FI AP Payables purchase orders to warehouse and to the profit center of the
posting for orders which receive direct postings.

Other The profit center is actually specified by individual GL journal line


FI
Balance item (like the business area). It is not possible (other than by

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Sheet Items substitution) to assign a GL account to a profit center.


not in a sub-
module

Work in
CO Assigned via the relevant project or order.
process

AM/IM Assets Implicitly assigned by assigning every asset to a cost center.

Material
MM Assigned to profit centers via their master records (see above)
stocks

5. Relationships created in CO-PA (Profitability Analysis)


In CO-PA it is possible to 'derive' relationships for use in CO-PA. This could be useful for
groupings that are only required for CO-PA reporting. The derivation could be of entirely
new elements or fields that are not being used elsewhere, or perhaps using an existing
SAP field that is not being used by other modules. The derivation can be based on any
or a combination of fields in the data that is being passed to CO-PA.

A sophisticated example might be a derivation based on the SD Customer hierarchy. It is


not a good idea to try 'overwriting' values assigned in other modules as this would be
confusing and complicate any reconciliation attempts. See the configuration
documentation on CO-PA for more information. Note that there are 'standard
derivations' that the system does too. We were talking here about creating new
derivations.

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The sales order default is taken from the profit center on the
delivering plant / material master combination. If you do not want
this, you can define substitutions to override this. A substitution is
Sales Order basically where the system allows you to specify your own piece of
SD
substitutions conditional logic to determine which profit center to post to. You
can base your conditions on a variety of fields available on the
Sales Order. Usually used if you want to base your mapping on
Sales elements rather than on products.

The next 4 menu options in the IMG are to do with assigning an


individual business transaction to the profit center. This is
something that should happen at the time of entering the business
Business
transaction if it cannot be determined from the default. Therefore
Transactions
for configuration purposes, it is suggested that you ignore the
"assign to sales orders, production orders, process orders, CO
Production orders".

Master data The next 6 menu options in the IMG relate to master data
assignments: assignment to a Profit center. Basically the profit center should be
assigned when you create the master data record. Some special
comments :

If not done manually, there is a 'create profit centers' from cost


centers program which will create an equivalent hierarchy for you
- only really possible at start up of the system - thereafter
Cost Center manually maintained. I suggest that if you do have such a one to

one mapping then the following is probable:

you have too many profit centers or not enough cost

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centers - their business definition should be different


if you are not using SD, then maybe you don't need profit
centers?

Fixed Assets Implicitly assigned by assigning every asset to a cost center.

Assignments needed for Balance Sheet Items in Profit centers

System will determine from the assignments made on the Sales


FI AR Debt
Order - similar to business area processing.

Are assigned to the profit center of the material ordered for


FI AP Payables purchase orders to warehouse and to the profit center of the
posting for orders which receive direct postings.

Other
Balance The profit center is actually specified by individual GL journal line
FI Sheet Items item (like the business area). It is not possible (other than by
not in a sub substitution) to assign a GL account to a profit centre.
module

Work in
CO Assigned via the relevant project or order.
process

AM/IM Assets Implicitly assigned by assigning every asset to a cost centre.

Material
MM Assigned to profit centers via their master records (see above)
stocks

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Appendix-1

Essentials of Company Code-Controlling Area Assignments

Controlling area - 1:1 assignment 1: many assignment


Company Code (cross Company Code cost
assignment accounting)
Chart of accounts The chart of accounts should The operative chart of
be the same between the accounts of the Company
controlling area and the Codes, and the controlling
Company Code area should be the same
Fiscal year variant The number of special periods may be different, between the
(special and posting Company Code and the controlling area, but the number of
periods) posting periods should be the same.
Also, the period limits of posting periods should be identical.
Controlling area Same as that of the Company You may use the same
currency Code currency currency as that of the
Company Code
You may also use another
currency in controlling
Object currency Additional currency, besides You can choose any object
the controlling area currency, currency if all the assigned
can be used for each account Company Codes have the
assignment objects in CO. same currency which is
same as that of the
controlling area currency.
Else, the system
automatically assigns the
Company Code currency to
the account assignment
object as an object
currency.
Transaction currency Documents are posted in CO in the transaction currency.
Allocations Cross Company Code cost Cross Company Code
allocation in CO is not possible allocation in CO is possible

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