Best Practices to Manage a Smooth Chart-of-Accounts Conversion in an SAP Environment

  • by Mitresh Kundalia, Director — SAP Practice, Quality Systems & Software
  • December 27, 2017
You are a massive global organization with a complex system landscape and want to embark upon an SAP General Ledger (formerly known as new G/L) or SAP S/4HANA journey. These best practices help you clean up and standardize key processes or data to prepare for a chart-of-accounts (COA) conversion.
Learning Objectives

Reading this article you’ll learn:

  • The business as well as technical aspects of a chart-of-accounts conversion
  • Key considerations for general ledger (G/L) account conversion, with different scenarios for source and target accounts, to keep the business processes seamless
  • Checks that need to be performed for the audit controls and business validations
Key Concept
Once the SAP system is live and transactions are posted, it is not possible to make changes to some critical and foundational setups, such as chart-of-account setup, currency settings, Controlling area changes, or fiscal calendar changes. The System Landscape Optimization (SLO) approach offers the most effective way to manage such transformation initiatives. Although the conversion approach sounds technical in nature, it has a significant business impact.

In this ever-changing world, finance departments have to play a much bigger role than just regular bookkeeping. The CFOs of organizations, whether small or large global companies, have to constantly keep on reorganizing to the changing environment. Gone are the days when you would consider a finance transformation initiative just one time and hope that you are done.

Consider a very common scenario. You have already gone live in the SAP system a few years ago. You would have started with an initial base configuration setup and then over time built on that. Maybe you expanded into different countries and rolled out more functionalities. Within finance that means you would have started with the base chart-of-accounts (COA) setup and then gradually expanded the use of general ledger (G/L) accounts. It is very common to see that in very short span of time, your COA would have expanded considerably. Add to that the complexities that the same account is being used differently by different groups or, if you are a global organization, by different divisions with multiple ERP instances using different standards.

In a situation like this you have only two options – completely reimplement the SAP system from scratch with a fresh new COA, which is a complex scenario and a non-starter in many situations, or a conversion.

The most effective and viable option is to consider a COA conversion. The standardization and rationalization project is a considered as a System Landscape Optimization (SLO) initiative in which you convert the G/L accounts in the live SAP system, including all the associated transactional data. This transformation and data conversion make the system transform to global standards, including the historical transactions that will look as correct as if they were from day one.

COA Rationalization

A point has come at which a simple configuration decision made many years ago is inhibiting the useful life of an organization’s system.

For example, one of our customers has a four-digit COA. Its old legacy system had fewer than 1,000 G/L accounts and setting of an SAP system with 10,000 G/L accounts sounded reasonable to accommodate the possible future expansion. Accordingly, this client set the four-digit G/L accounts (0000 to 9999). Over the period of years, the business has expanded and realized limiting the COA to four digits is not enough and now, you want to expand the G/L accounts use and want to convert all the Financials including the historical balances.

Another customer is a global giant with a complex technical landscape, with each business unit having multiple ERP systems. Each business unit has its own COA master data. You want to establish global enterprise-wide standards for COA and want to convert all the ERP systems, including all the application data.

Another customer wants to embark upon an SAP General Ledger and SAP S/4HANA journey. You want to take the opportunity to clean up and standardize key processes or data and as part of that, you want to rationalize COA and want to do the COA conversion to get ready.

Note
In this article, I demonstrate the approach with an example of a COA for a G/L account; however, the concept, approach, and methodology are the same for other transformation initiatives, such as a currency conversion, fiscal year/period conversion, Controlling area (CO) merger, and standardization of other SAP objects.

Mitresh Kundalia

Mitresh Kundalia heads the SAP practice at Quality Systems & Software (www.QSandS.com), a consulting firm specializing in SAP S/4HANA, SAP General Ledger, and complex System Landscape Optimization (SLO)-type reorganizations. Mitresh is widely acknowledged as a leading SAP expert, with multiple publications and an SAP-PRESS book to his credit. He has published more than 50 peer-reviewed articles and white papers, and he has given presentations at various SAP conferences and events. Mitresh is the chief solutions architect of General Ledger Migration Optimizer (GLMO), a leading product to accelerate and jump-start the SAP S/4HANA and SAP General Ledger initiatives; SAP Data Reorganization Optimizer (SDRO), an SLO-type product for managing complex system landscape reorganizations; and Group Currency Activation and Conversion (GCAC), a product suite to manage introduction of parallel currencies and conversion of data in a live SAP system.

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