Reasons to Perform a Controlling Area Reorganization

  • by Rohana Gunawardena, SAP Practice Director, Quality Systems & Software
  • February 27, 2013
Learn about the options to change the controlling area structure in an SAP Financials system post go-live.
Key Concept
The key element of the CO enterprise structure is the Controlling Area. At the initial stages of any project the analyst defines the organizational relationship between controlling areas (CO) and company codes (FI). The decisions made at this early stage of the project affect the whole life cycle of the SAP system. Often processes that are completely unknown at go-live are implemented later and are negatively affected by earlier enterprise structure decisions. The decision about whether to have separate controlling areas per company code or to integrate multiple company codes under a single controlling area has consequences for the available functionality in logistics as well as finance. However, the CO enterprise structure can be reorganized post go-live, so all is not lost and costly reimplementation projects can be avoided.

Many users don’t understand the CO module as well as the FI module. Their lack of knowledge can affect the initial setup of CO at go-live and cause difficulties later on (e.g., if a company wants to implement cross-company controlling). It is difficult, but possible to change controlling area structures post go-live (e.g., merge or split controlling areas). I discuss the reasons for going through this process.

The Initial Design of the Controlling Area Structure

During the initial SAP implementation the project team has to consider many business requirements, resource availability, and system functionality. The project team makes multiple basic configuration decisions that affect the life of the SAP system, based on the best options available to them at the time:

  • Company code to controlling area mapping
  • Controlling area currency
  • Group currency
  • Chart of accounts (length of account)

These decisions may have been the correct choice at go-live, but the business process or organizational requirements have changed over time, and in retrospect, the project team realizes that it could have made better choices. Of course, the project team is not omnipotent and cannot anticipate activities such as the company merging with another company, starting a new line of business, or acquiring a foreign subsidiary.

Rohana Gunawardena

Rohana Gunawardena is the SAP practice director at Quality Systems & Software, a specialist SAP consulting firm. Rohana has been working with SAP since 1992, focusing on the order-to-cash process with emphasis on global rollouts, business segment reporting, cross-module integration, and the financial impact of supply chain management transactions. He also has helped many clients on detailed system correction projects (e.g., correcting inventory balances, retrospectively activating group currency, and cleaning intercompany accounting transactions). Rohana has spoken at many SAP conferences and has published more than 20 magazine articles on various aspects of SAP. He is a fellow of the Institute of Chartered Accountants in England & Wales.

Rohana will be presenting at the upcoming SAPinsider Financials 2017 conference, June 14-16, 2017, in Amsterdam. For information on this event, click here.

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3/6/2013 11:25:18 AM
Sinu Varghese

HI Rohanna,

good article.

Slight correction: Prior to Figure 1, the transaction code mentioned for maintaining controlling area is OKKP.OKP1 is used for period control in CO. I am sure this is a typo.

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