Obtain An Understanding of The Customer's Key Business Processes Define The Client's Organization Structure in SAP Based On Those Business Processes

GOAL OF ORGANIZATION STRUCTURE WORKSHOP

Obtain an Understanding of the Customer’s Key Business
Processes

Define the Client’s Organization Structure in SAP based on
those Business Processes
 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 1

AGENDA - Session 1
Integrated Business Process Overview

Customer High Level Business Overview

Customer Visions and Goals

Business Process Review
 External Accounting Legal Entity

 Sales Logistics
 Procurement, Logistics Planning
 Financial/Asset Management

AGENDA - Session 2
Defintion of Organization Structure

Define the Organizational Elements in SAP based on the
Company’s Business Processes and Reporting
Requirements obtained in Session 1

Document the Company’s SAP Organization Structure

Integrated Business Process Review
Business Overview

Company’s Mission Statement

Markets

Customer Base

Products and Services

SAP Implementation Drivers

Legal Entity Structure


What are the legal entities that constitute your business?

Do you produce legal financial statements for each one
of these legal entites and do they have separate Federal
Id Numbers?

Which one of these entities are true operating companies

Of these legal entities, which ones are Holding
Companies?

How do these legal entities relate to each other?

Integrated Business Processes Overview
Procurement
Logistics Planning
Sales Logistics
Production
Finance / Asset Management

Sales Logistics
FI
AR
AR
G/L
G/LCOS
COS// Invoice
Invoice// Customer
Customer
Inventory
Inventory GL
GL Payment
Payment
Revenue
Revenue
SD
Pre-Sales
Pre-Sales Sales
SalesOrder
Order Inventory
Inventory Delivery
Delivery Billing
Billing
Activities
Activities Processing
Processing Sourcing
Sourcing
Financial
Financialand
andManagerial
ManagerialReporting
Reportingand
andAnalysis
Analysis

Production
Fore-
Fore- Sales
SalesOper
Oper Manufacturing
Manufacturing Order
Order
MPS
MPS MRP
MRP
cast
cast Planning
Planning Execution
Execution Settlement
Settlement
Capacity Inventory
Inventory
Capacity
Costing
Costing
Financial
Financialand
andManagerial
ManagerialReporting
Reportingand
andAnalysis
Analysis

Procurement
FI
G/L
G/L G/L
G/LGRIR/
GRIR/ Vendor
Vendor
Inventory
Inventory// Expense
Expense
GRIR AP Payment
GRIR APInvoice
Invoice Payment
SD
Requirement
Requirement Purchase Goods Invoice
Purchase Goods Invoice
for
forGoods
Goods//
Services Order
Order Receipt
Receipt Verification
Verification
Services
Financial
Financialand
andManagerial
ManagerialReporting
Reportingand
andAnalysis
Analysis

Finance Management /Accounting & Reporting
FINANCIAL FINANCIAL MANAGEMENT

ACCOUNTING REPORTING REPORTING
(FI / AM) (FI) (CO)
COST CENTER
ACCOUNTING (CCA)
ACCOUNTS
SD RECEIVABLE
INTERNAL ORDER
ACCOUNTING (OPA)
PROJECT
GENERAL ACCOUNTING
ACCOUNTS LEDGER
MM PAYABLE NATURAL
PRODUCT COSTING
ACCOUNT
PROFIT CENTER
ACCOUNTING (PCA)
ASSET
MANAGEMENT
PROFITABILITY
ANALYSIS (PA)
AGENDA - Session 2
Defintion of Organization Structure

Define the Organizational Elements in SAP based on the
Company’s Business Processes and Reporting
Requirements obtained in Session 1

Document the Company’s SAP Organization Structure

Session 2 - Organizational Structure Review
Organizational Structure
3000
Motor Sports Motor
Motor Sports
Sports International
International
International, Inc US
Business 02
02 90
90
Area Motorcycles
Motorcycles Accessories
Accessories 4000
4000
Motor
Motor Sports
Sports
3000
3000
Purchasing
Organization
US
US#1#1
International,
International, Inc
Inc
Canada
Canada
Division/ 02
02 3000
3000 90
90 4000
4000
Plant Motorcycles
Motorcycles New
NewYork
York Access.
Access. Seattle
Seattle
Sales 3000
3000
Organization US
USSales
Sales
Distribution 03
Channel Retail
Division 02 90
Motorcycles Assess.

Organizational Elements -Client
The Client
Motor
Motor Sports
International

Organizational Elements - Client
Client Characteritics

Highest Hierarchical Level in SAP(e.g. a corporation)

Can be Used to Differentiate between a Development, Quality
Assurance, and Production System within R/3

All Areas of an Organization that are to be Integrated into the
SAP R/3 Production System should be Included Under one
Client

Organizational Elements - Client (Cont.)
Client Characteritics

Common Set of Rules
 Common Tables
 Common Master Files
 Common Data Bases

Standardized Data Across the Client
 a vendor number and name is common across the client
 a customer is common across the client
 a general ledger number and description is common across the
client
 a material number and description is common across the client

Organizational Elements - FI
Client Strategy for Name of Customer


Clients: Identify the proposed productive clients for
customer being evaluated.

Benefits: Identify the benefits of recommended strategy.

Costs: Identify the costs of recommended strategy.

Issues: Identify any open issues/questions.

Company
Motor
Motor Sports
International
3000
3000 4000
4000
Motor
Motor Sports
Sports International,
International, Inc
Inc Motor
Motor Sports
International, Inc
Inc
US
US Canada
Canada
(Company)
(Company) (Company)
(Company)

Company

Represents a legal/tax entity - Where do you legally
represent the financial events of transacting business?

Arms Lenghts Transactions

Level of External Reporting or Legal Sets of Books

Company Assignment Considerations


A Company is Assigned to:
 Credit Management Area to allow for either Centralized or
Decentralized Credit Management(Credit Control Area)
 Financial Management Area-Treasury
 Departmental Accounting/Cost Center Area to allow for
Centralized or Decentralized Departmental Reporting(Controlling
Area)

Companies for Name of Customer


Company Codes: Identify the proposed company codes
if any for customer being evaluated.

Consolidation Company Codes: Identify the proposed
consolidation company codes if applicable.

Benefits: Identify the benefits of recommended usage of
company codes.

Costs: Identify the costs of recommended usage of
company codes.


Business Area
Motor
Motor Sports
International
3000
3000 4000
4000
Motor
Motor Sports
International, Inc
Inc Motor
Motor Sports
International, Inc
Inc
US
US Canada
Canada
(Company)
(Company) (Company)
(Company)
02
02 90
90
Motorcycles
Accessories
(business
(business area)
area) (business
(business area)
area)

Business Area

Subset of Companies

Used for Segment Reporting in Accordance to FAS 14

Represents a Separate Area of Operations or Responsibility within an
Organization

Could be Shared Across Companies or Specific to a Single Company

Lowest Level within FI that an Internal Balance Sheet and Profit and
Loss Statement can be Developed

Typically does not Have Shareholder Equity

Business Area for Name of Customer


Business Area: Identify the proposed business area if
any for customer being evaluated.

business areas.

business areas.
 business areas are only in balance at the end of the period
when the business area clearing program is executed.


Chart of Accounts

There are Three Chart of Accounts Concepts in SAP
 Operating Chart of Accounts
 Country Chart of Accounts
 Group Chart of Accounts

Operating Chart of Accounts


G/L Account Master Records Required in One or Several
Company Codes

Postings are Made to these Accounts

Maximum of a 10 Digit Code

A company Must be Linked to One Operating Chart of Accounts

An Operating Chart of Accounts can be Linked to Many
companies

Linking of Chart of Accounts to Company Codes
OPERATING
CHART OF ACCOUNTS
1
1
Motor Sports Motor Sports

International, Inc. US International, Inc. CA
1 Company Codes are linked to Chart of Account

Country Chart of Accounts


Represents the Account Structure Prescribed under National
Regulations

Optinal Usage in SAP

Could be the Same as the Operating Chart of Accounts or the
Operating Chart of Accounts at the Company Level can be
linked(mapped) to the Country Chart of Account

Group Chart of Accounts


Could be used for:
 Consolidation Chart of Accounts
 Corporate Group Rollup

The Operating Chart of Accounts Master(not Company) is
Assigned to a Corporate Chart of Accounts

Optional Usage in SAP

Linking of Chart of Accounts to Company Codes
GROUP
CHART OF ACCOUNTS
OPERATING
1 CHART OF ACCOUNTS 1
COMPANY CODE 1 COMPANY CODE 2
1 Company Codes are linked to Chart of Account
2 The Operating Chart of Accounts is Linked to the Group Chart of Accounts

Operating Chart of Accounts = General Ledger

Different from a lot of other Financial System Applications in
that the G/L account is strictly comprised of the natural account
code.

The management reporting structures (i.e. cost centers,
divisions, regions, and job orders) is not embedded within the
chart of accounts.

In SAP there is a relative relationship between the chart of
accounts profit and loss natural account code and the cost
centers.

Organizational Elements - CO
Controlling Area
Operating
Operating Controlling
Controlling
Chart
Chart of
of Accounts
Accounts Area
Area
3000
3000 4000
4000
Motor
MotorSports
Sports Motor
MotorSports
Sports
Company International,
International, Inc
Inc International,
International, Inc
Inc
US
US Canada
Canada
Business 02
02 90
90
Area Motorcycles
Accessories

Controlling Area

An organizational unit within a corporation in which
comprehensive independent management accounting can be
performed.

Allows you to group companies from a Cost Accounting View.

It links the financial accounting module (FI) to the management
accounting module(CO) in SAP.

Linking of FI and CO

The Operating Chart of Accounts Links Financial
Accounting(General Ledger) to Management Accounting in the
following way:
 A Company Code is Linked to the Operating Chart of Accounts
 The Controlling Area is Linked to the Operating Chart of Accounts
 A Company Code then can be Linked to any Controlling Area as
long as they are both Linked to the Same Operating Chart of
Accounts

Several Companies can be Linked to a Single Controlling Area
regardless of the Companies Functional Currency. AGAIN, THE
ONLY REQUIREMENT IS THAT ALL COMPANIES WITHIN THE
CONTROLLING AREA MUST USE THE SAME OPERATING
CHART OF ACCOUNTS.

Controlling Area

Highest Reporting Level under Cost Center Accounting across
which Information can Shared and Viewed within the
Controlling Module
 Departmental Cost Information withing a Single Controlling Area
can be Viewed using the Standard Cost Center Reports in CO.
 Departmental Cost Information Across Controlling Areas can be
viewed by Building User Definable Reports in the Special Ledger
 Interdepartamental Cost Allocations can only be performed in CO
across Companies in the Same Controlling Area.

Recommended Controlling Area & Chart of Accounts

Strategy for Name of Customer

COA/Controlling Area: Identify the proposed
COA/controlling area strategy(i.e. single v.s. multiple)

Benefits: Identify the benefits of recommended strategy.

Costs: Identify the costs of recommended strategy


Profit Centers
Operating
Controlling
Chart
Chart of
of Accounts
Accounts Area
Area
3000
3000 4000
4000
Motor Profit
ProfitCenter
CenterHierarchy
Hierarchy
MotorSports
Sports Motor
MotorSports
Sports
International, Inc
Inc International,
International, Inc
Inc
US
US Canada
Canada
Paint
Paint Pumps
Pumps
Business 02
02 90
90
Area Motorcycles
Accessories

Profit Center Accounting


Used to Calculate the Profit of an Area of Responsibility within the
Organization(e.g. Division)

The Areas of Responsibility(Profit Centers) could be Based on
Regions, Functions, or Products.

Supports Calculating Operating Profit using the Cost of Goods
Sold P/L Format and/or the Period Accounting Method

A Profit Center can also be Viewed as an Investment Center since
it is Possible to Transfer at Period End the Balance Sheet
Positions for Assets, WIP, AR, AP, and Inventory

Profit Center

A Profit Center is not an Independent Account Assignment Object
at the Moment of Entering a Transaction in SD or MM;It is Derived
from Existing Objects

As a Default, Revenue and Costs for Profit Centers are Derived as
follows:
 Sales Order Line Item based on the Product being Sold
 Direct Costs Based on the Assignment of Production Orders and
Direct Costs. The System Proposes the Profit Center Based on the
Profit Center of the Material Being Produced.
 Overhead Costs Based on the Assignment of the Cost Center or
other Cost Object

Substitution Rules can be Used to Change the Default Derivation

Supports both Actual and Planned Data

Profit Centers for Name of Customer

Profit Centers: Identify the proposed profit centers if any
for customer being evaluated.

profit center.

Costs: Identify the costs of recommended usage of profit
centers.


Cost Centers
Operating
Controlling
Chart
Chart of
of Accounts
Accounts Area
Area
3000
3000 4000
4000
Motor Profit
ProfitCenter
CenterHierarchy
Hierarchy
MotorSports
Sports Motor
MotorSports
Sports
International, Inc
Inc International,
International, Inc
Inc
US
US Canada
Canada
Cost
CostCenter
CenterHierarchy
Hierarchy
Paints
Paints Pumps
Pumps
Business 02
02 90
90 Marketing
Area Motorcycles
Accessories
Information
Information
Systems
Systems
Sales
Sales--Paints
Paints

Cost Centers

Departmental Breakdown of your Legal Entity Structure

Lowest Level of Organization where you want to Collect and
Analyze Costs/Departmental Performance

Departmental Budgets and Expense Analysis of P & L Accounts

Interdepartmental Cost Allocations

Each Cost Center is Assigned to a Company Code, Business Area
and Profit Centers

Cost Centers are Structured into Organizational and/or Functional
Hierarchical Groups

Cost Centers - Hierarchies


Can Create Physical Hierarchy for Operational Management (ie..
Phila or Atlantic City)

Can Create Multiple Alternate Hierarchies for Functional
Management (i.e. Accounting department in Stanford and the
Accounting department in East Alton can be grouped together to
form the corporate Accounting department or the operations
accounting department)

Can Get Selected Balance Sheet Items at the Cost Center Level if
the Right Modules have been Installed, specifically Fixed
Assets(AM) . In the Fixed asset master record you can cross
reference the asset to the cost center and see historical cost,
accumulated depreciation and depreciation expense.

Linking the G/L P/L Accounts to Cost Centers


In SAP, a Cost Account is either Linked or not Linked to a Cost
Center

The Linking is Performed by Creating the G/L Cost Account as a
Cost Element under the CO Module

All Cost G/L Account Numbers can be Linked to One or Many
Cost Centers(Depatment Codes)

Organizational Elements - MM
Purchasing Organization and Plants
Motor
Motor Sports
International
3000 4000
4000
Motor Sports Motor
Motor Sports
Sports
International, Inc US International,
International, Inc
Inc
Canada
Canada
Purchasing 3000
3000
Organization US
US #1
#1
Plant 3000
3000 3400
3400
New
New York
York Seattle
Seattle

Purchasing Organization

Responsible for Procurement for One or More Plants

Responsible for Negotiating Pricing and Delivery Terms
with Vendors

Purchasing Organization is Assigned to A Company
where Inventory is Legally Tracked or Costs are Legally
Incurred.

Purchasing Organization for Name of Customer

Purchasing Organization: Identify the proposed
purchasing organization if any for customer being
evaluated.

purchasing organization.

purchasing organization.


Plant

Usually a Manufacturing Facility, Warehouse, or a
Location that Stocks , Manages, and Valuates Inventory

May be a Physical Site with Multiple
Manufacturing/Production Lines

May be Multiple Manufacturing/Production Lines at One
Physical Site

Can be a Physical Location
(cost centers may or may not be associated to a plant,
i.e. administrative vs. manufacturing cost centers)

SD Availability Checking is Normally Done at the Plant
Level

Plant (Cont.)

Links to Production (PP), Materials Management (MM),
and Sales and Distribution (SD)

A Plant is Assigned to A Company

Purchasing Organization are Assigned to Plants

Plant for Name of Customer


Plant: Identify the proposed plants if any for customer
being evaluated.

plants.

plants.


Storage Location

A Location within a Plant where Inventory is Stored

Storage Locations for Name of Customer


Storage Locations: Identify the proposed storage
locations if any for customer being evaluated.

storage locations.

storage locations.


Organizational Elements - SD
Sales Organization, Distribution Channel and Division
Motor
Motor Sports
International
3000
Motor Sports 4000
4000
International, Inc US Motor
Motor Sports
Sports
International,
International, Inc
Inc
3000 Canada
Canada
Sales
Sales 3000
Organization
Organization US
US Sales
Sales
Distribution 03
03
Channel Retail
Retail
02
02 90
90
Division Accessories
Motorcycles

Sales Organization

Legal Selling Unit Responsible for Revenue and Product
Liability

Sales Orders belong to One Sales Organization(Header
Level Assignment).

Master Data Maintenance for Customers, Pricing at Sales
Organizatin Level

Sales Organization Assigned to a Company where Sales
Revenue is Recognized(Links SD & FI)

Plants Assigned to a Sales Organization

Sales Organization for Name of Customer


Sales Organization: Identify the proposed sales organizations
if any for customer being evaluated.

Benefits: Identify the benefits of recommended usage of sales
organizations.

Costs: Identify the costs of recommended usage of sales
organizations.


Distribution Channel

Breakdown within Sales for Different Product
Disbursement Methods, such as Wholesale vs Retail or
National vs International

Master Data Maintenance for Materials, Pricing, at Sales
Organization/Distribution Channel

Sales Order belong to one Distribution Channel (Header
Level Assignment)

Distribution Channel assigned to a Sales Organization

Distribution Channels for Name of Customer

Distribution Channels: Identify the proposed distribution
channels if any for customer being evaluated.

distribution channels.

distribution channels.


Division

A way of Grouping Materials, Products, or Services

Sales Orders belong to One Division (Header Level
Assignment)

Division for Name of Customer

Division: Identify the proposed divisions if any for
customer being evaluated.

divisions.

divisions.


Sales Area
 Sales Area is a Combination of:

 Sales Organization
 Distribution Channel
 Division
 Used to View Sales-Related Master Data
 Sales Orders belong to One Sales Area (Header
Level Assignment)
 Links the Order Entry System(SD) to the
Financial/Managerial System(FI/CO)

Complete Organizational Structure
3000
Motor Sports Motor
Motor Sports
International
International, Inc US
Business 02
02 90
90
Area Motorcycles
Accessories 4000
4000
Motor
Motor Sports
Sports
3000
3000
Purchasing
Organization
US
US#1#1
International,
International, Inc
Inc
Canada
Canada
Division/ 02
02 3000
3000 90
90 4000
4000
Plant Motorcycles
Motorcycles New
NewYork
York Access.
Access. Seattle
Seattle
Sales 3000
3000
Organization US
USSales
Sales
Distribution 03
Channel Retail
Division 02 90
Motorcycles Assess.

Obtain An Understanding of The Customer's Key Business Processes Define The Client's Organization Structure in SAP Based On Those Business Processes

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GOAL OF ORGANIZATION STRUCTURE WORKSHOP

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 1

Integrated Business Process Overview

 External Accounting Legal Entity

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 2

Defintion of Organization Structure

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 3

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 4

Legal Entity Structure

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 5

Finance / Asset Management

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 6

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 7

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 8

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 9

FINANCIAL FINANCIAL MANAGEMENT

Defintion of Organization Structure

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 11

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 12

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 13

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 14

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 15

Client Strategy for Name of Customer

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 16

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 17

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 18

Company Assignment Considerations

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 19

Companies for Name of Customer

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 20

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 21

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 22

Business Area for Name of Customer

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 23

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 24

Operating Chart of Accounts

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 25

Linking of Chart of Accounts to Company Codes

Motor Sports Motor Sports

1 Company Codes are linked to Chart of Account

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 26

Country Chart of Accounts

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 27

Group Chart of Accounts

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 28

Linking of Chart of Accounts to Company Codes

COMPANY CODE 1 COMPANY CODE 2

1 Company Codes are linked to Chart of Account

2 The Operating Chart of Accounts is Linked to the Group Chart of Accounts

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 29

Operating Chart of Accounts = General Ledger

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 30

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 31

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 32

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 33

 SAP AG 2002, AcceleratedSAP, Title, Speaker Name 34

Recommended Controlling Area & Chart of Accounts