Understand RCA Concepts to More Easily Evaluate Your Ever-Expanding CO Module Functionality Options

  • by Kurt Goldsmith, Senior Business Consultant, Enowa Consulting
  • November 15, 2002
SAPexperts'Financials
Since 1998, SAP has supported more than one costing philosophy in the R/3 CO module. This means that the CO user/designer has more and potentially confusing options when making scope decisions. The author focuses on one of those costing philosophies--Resource Consumption Accounting--and compares it to the better understood full absorption accounting so that you better understand the available CO options.
Key Concept
I’ve heard from readers wondering about CO module functionality options that they have never used: "Are we missing out on something good?" I discussed such points with this month’s guest expert, Dawn Sedgley, a senior consultant with the Alta Via consulting company. To her, it is no surprise that R/3 sites are noticing the ever-expanding list of options in the CO module. The next few pages are the highlights of my discussion with her, starting with a brief historical background on R/3’s CO module. I think you’ll reach the same conclusion that I did, which is that some of the stranger-sounding options in CO are actually there to allow implementation of a costing philosophy and practice known as Resource Consumption Accounting, or RCA.   —Kurt Goldsmith

Different R/3 sites believe in and practice different costing methodologies. SAP wanted all of you to be happy. Thus, the CO module is delivered with a variety of options to help each site decide for itself what will be the easiest way to get the data it needs to respond to commonly asked questions. This wasn’t always the case, though.

Did you know that the CO module in R/3 was developed based on a specific German costing philosophy known as "Grenzplankostenrechnung" (more easily pronounced as GPK1)? The functionality in releases 2.2, 3.0, and 4.0 adhered to this one philosophy.

In 1998, however, SAP stopped enforcing any single costing philosophy within CO and attempted to satisfy as many customer requirements as it could reasonably and technically support. This shift meant that a larger variety of mutually exclusive options confronted the CO user/designer, including some that provide potentially conflicting decision-support information. It is not your imagination — it has become more difficult to make scope decisions about what to use and what to ignore. These changes are not necessarily good or bad, but they definitely are confusing.

Kurt Goldsmith

Kurt Goldsmith is a senior business consultant for Enowa Consulting, specializing in the diagnosis and resolution of productivity-related integration issues between a company’s division of labor (end users, managers, executives) and SAP software (R/3, BW, APO, CRM). He also has a lifetime performance record of one win and two third-place finishes from five career starts as a thoroughbred racehorse trainer.

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