Perform Customer and Product

Profitability Analysis

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 Table Contents
1. Overview
2. Enterprise Structure
3. Key concepts and Terminology
4. Master data
5. Integration Overview
6. Profitability analysis – Models
7. Account Vs Cost based COPA
8. Characteristics Derivation rules Concept
9. Actual data flow
10. Planning
11. New with S4 HANA

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 Perform Profitability Analysis – Overview
Description:
Profitability Analysis module allows to analyze the profitability of specific market segments, such as products, customers and their
summarizations along with other characteristics and organizational units (Company Code, Plant, Profit Center, etc.).

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 Perform Profitability Analysis – Enterprise Structure

Operating Concern Plants

Plants
Profit Center
Group

N:1 N:1

Cost Center N:1 Plants

Profit Center Plants
Controlling Area Segments

N:1

N:1
CostCenter
Cost Center
N:1
Purchasing
Org 1:1 or 1:N Company Code
Company Code N:1
Company Code
N:1 N:1

Plants
Plants
Plants

N:1 N:1

Financials
Distribution N:1 SalesOrg
Sales Org
Channel 1
Sales
N:1

Sales Logistics
Sales
Division
Division
Sales Area N:1 = Many to 1

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 Perform Profitability Analysis – Key Concepts and Terminology
SAP Concept/Terminology Definition

Operating Concern Store Characteristics and Value Fields

Characteristics "What do I want to report on?" Examples: Divisions, Regions, Products, Customers

“What values can I have for these characteristics?” Examples: Region South; Region
Characteristic value North.

"What performance measures do I want to track and analyze?" Examples: Gross Sales,
Value Field
Surcharges, Discounts, Cost-of-Sales/Cost of Goods Sold

"What is the technical definition of my sales channel?" Examples: Combination of

Region North, Product Prod1, Sales Rep Miller . These are the market channels or
strategic business units that are to be analyzed in CO-PA. They may be combinations of
Profitability segment product, customer, and sales structure information, and may encompass company
code, and profit center information.

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 Perform Profitability Analysis – Master data

Fixed Characteristics
Characteristics
delivered
by SAP
Predefined Characteristics

Characteristics copied from SAP

Characteristics Reference Tables
created
by Customer
Custom
Characteristics

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 Perform Profitability Analysis – Master data

Value Fields
delivered Predefined Value Fields
by SAP

Value Fields
created Custom Value Fields
by Customer

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Perform Profitability Analysis – Integration Overview

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 Account Vs Costing based COPA
Account Based
Invoice information and financial postings are performed at the same
time when calculating the cost of sales.
The cost of sales is no longer exactly matched with the revenue that is
posted at the time of invoicing.
This is now available as of S/4 HANA
The cost of sales is not captured when invoicing a customer because it
was already done when doing the financial entry.
Revenue is posted into CO-PA during billing.
Production variances (order settlement and cost collector hierarchy)
are not available, but variance is captured via one account. This is
now available as of S/4 HANA
It is more detailed than costing-based because it discloses the
different G/L accounts and cost elements.
The postings are recorded in a standard controlling document.
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Costing Based
Cost of sales captured at the time of invoice but the financial posting
is done at the time of delivery, meaning there is a time lag between
these two transactions.
The cost component detail for variances is available for production
order settlement and production cost collector hierarchy.
Cost elements and G/L accounts are not available.
Reconciliation using value fields and high-level characteristics (such
as region, profit center, and others).
The postings are recorded in a CO-PA document.
Costing-based CO-PA uses a cost-of-sales approach, where the
standard cost of sales is not recognized until a product is sold.
 COPA – Characteristic derivation rules
Characteristic derivation –

Supplements or overwrites certain automatically mapped characteristic values.

Some derivation steps are created by the system at generation time, of which some are modifiable. Others
are created by the configurator from the beginning

Characteristic Derivation Concept

Characteristic Derivation from a Customizing Standpoint

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Actual data flow – Account and Cost based COPA
Costing Based COPA – Value Fields

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 Actual data flow – SD to COPA

Incoming Sales Order (Only to Costing Based COPA and

optional)
Goods Issue

Billing Differences in Data Flow

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 Actual data flow – FI/MM to COPA

•Examples of Direct Postings from MM:

Inventory Revaluation Postings
Price Difference Postings during Invoice
Receipts and Stock Transfers
Inventory Scrapping

Direct Posting from FI to COPA

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Actual data flow – Production Variance to COPA

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 Actual data flow – Overheads to COPA

Assessing Cost Center and Process Costs to COPA

Overview of Overhead Costs to COPA

Settlement of Internal Order to COPA

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Perform Profitability Analysis Planning

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 New with S4 HANA
Margin Analysis - A new type of Profitability Analysis
Margin Analysis is the new name introduced by SAP for the simplified COPA. In S/4HANA, development efforts for
profitability analysis only target Margin Analysis. There are no efforts to enhance costing-based CO-PA.
IMG activity: SPRO - Controlling - Profitability Analysis - Flows of Actual Values - Activate Profitability Analysis - Choose
“account-based”

Though new type of profitability is

called as ‘Margin Analysis’, the type of
profitability description at operating
concern is still referring to ‘Account-
based’.

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 New with S4 HANA
Margin Analysis - A new type of Profitability Analysis
Profitability Analysis solutions availability:

• Margin Analysis is perfectly integrated into the overall concept of the Universal Journal and is fully in line with SAP
Financial Accounting development strategy. All upcoming innovations will be in this area only.
• Dedicated operational reports from S4 HANA Embedded Analytics for multi-dimensional Margin Analysis allows
drill-down to the line item details

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 New with S4 HANA
Margin Analysis – SAP Statement of direction
Consistent financial information without reconciliation
• The Universal Journal combines financial and managerial accounting and directly records all dimensions including
custom fields.

Real-time visibility into margins

• All revenue and cost of goods sold postings are automatically assigned to the relevant dimensions at the time of
posting. Together with real-time processing of former period-end procedures, this approach provides real-time
visibility into margins during the period.

Embedded analytics
• Through S/4HANA embedded analytics dedicated operational reports for multi-dimensional Margin Analysis but
also regular G/L reports, such as P&L by market segments, make use of all profitability dimensions

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 New with S4 HANA

Contd.. 20
 New with S4 HANA

Contd.. 21
New with S4 HANA

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 New with S4 HANA
New App in S4 1909 - Realignment Results App (App ID: F2549)
The App provide the visibility of the adjustments that were posted profitability reporting dimensions. The
organizational changes are reflected in the posted profitability characteristics, or after corrections were made to master
data, or to enrich the profitability data with information that was not available at the time of the original posting.

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