SAP Simple Finance: New Options in Profitability Analysis

  • by Janet Salmon, Product Manager, SAP AG
  • December 29, 2014
Discover what changes in profitability analysis (CO-PA) when you use SAP HANA as a database. Learn how to link the general ledger and CO-PA and see what functional enhancements have been made to account-based CO-PA to provide greater transparency. Ensure that you get the best of both worlds: figures in the income statement that match the lines in CO-PA, but with sufficient detail to explore your manufacturing costs properly.
Learning Objectives

By reading this article, you’ll learn how:

  • The use of SAP HANA as a database impacts profitability analysis (CO-PA)
  • The data structures for costing- and account-based CO-PA differ
  • New configuration allows you to record more detail in account-based CO-PA than was previously possible
Key Concept
A key component of SAP Simple Finance is the SAP Simple Finance Add-on for SAP Business Suite powered by SAP HANA. This is a new product, powered by the in-memory capabilities of SAP HANA that allow you to use in-memory technology to further optimize Financials core business processes. (For further details, refer to SAP Note 1968568). The business processes feeding into profitability analysis (CO-PA) have been enhanced to provide better transparency.

SAP Simple Finance links the profit and loss items in Financial Accounting with the relevant items in Managerial Accounting. Thus expense items link with Cost Center, Order, and Project Accounting. Revenue and cost items link with account-based profitability analysis (CO-PA).

In the past, SAP tended to advise companies to use costing-based CO-PA rather than, or in addition to, account-based CO-PA. SAP’s latest product offering, SAP Simple Finance, uses SAP HANA as its primary database, opening up new options for profitability reporting. In this context SAP is choosing account-based CO-PA over costing-based CO-PA. With SAP Simple Finance, you get one version of the truth for profitability reporting with the transparency you previously only got with costing-based CO-PA.

Account-based CO-PA has been enhanced in SAP Simple Finance to provide detailed information on the cost of goods sold, production variances, and invoice quantities that were previously only available in costing-based CO-PA. Costing-based CO-PA continues to exist as an additional option alongside account-based CO-PA.

The characteristics you use for profitability reporting are the same in both types of CO-PA. You set up an operating concern that defines the characteristics that your organization will use (typically products, customers, customer groups, divisions, and plants). These are stored in table CE4. The difference is in the way the transactional data is stored with reference to these characteristics.

In costing-based CO-PA you store the values (revenues, cost of goods sold, production variances, overhead, and so on) for reporting as value fields or key figures in the CE1 table. The configuration steps essentially map your accounts (such as revenues and sales deductions) and cost elements (such as cost of goods sold, production variances, assessments, and settlement) to value fields. For many years the limit was 120 fields, rising to 200 fields in recent releases (see SAP Note 1029391).

By contrast, account-based CO-PA uses accounts or rather cost elements for the revenues, sales deductions, cost of goods sold, and so on. There’s actually no limit to the number of accounts you can use, but there was a limitation in the posting logic such that cost of goods sold and variances were always assigned to a single account/cost element and it is this limitation that SAP has removed with SAP Simple Finance.

Janet Salmon

Janet Salmon joined SAP in 1992. After six months of training on R/2, she began work as a translator, becoming a technical writer for the Product Costing area in 1993. As English speakers with a grasp of German costing methodologies were rare in the early 1990s, she began to hold classes and became a product manager for the Product Costing area in 1996, helping numerous international organizations set up Product Costing. More recently, she has worked on CO content for SAP NetWeaver Business Warehouse, Financial Analytics, and role-based portals. She is currently chief product owner for management accounting. She lives in Speyer, Germany, with her husband and two children.

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Comments

1/15/2017 8:54:34 AM
NASIR RASHID

Very useful article, thanks for clarifying many of the COPA related concepts.
1/15/2017 8:54:29 AM
NASIR RASHID

Very useful article, thanks for clarifying many of the COPA related concepts.

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