Profit Center Process
Short Description
PC...
Description
Cost Center Master Data Design in Exploration & Production Companies
You might have already noticed my previous blog on Key Master Data elements in Upstream Industry In case you !ant to" you can still re#er$ Key Master Data Element’s in Upstream SAP Implementation
I !ould li%e to tal% about more speci#ic topic no! ie about Cost Center Master Data Design in the Upstream Industry
henever !e go #or any implementation !e need to create the master data in this case master data being cost center
'o!ever the #ollo!ing generic (uestions automatically comes to our mind$ · hat do business mean by cost center master data & !hat does it represent in this particular industry in (uestion) · 'o! to establish the design #or the same) · hat are the dependencies dependencies) ) · hat is the process #or Maintenance *Create+Change,) · hat are the important considerations) considerations)
Now let see how can we address these questions & considerations.
Probably its worth to know What is a Cost Center & ow !o we !e"ine that in E#ploration & Pro!$%tion Companies -he de#inition o# cost center master data depends on !here costs and revenues are incurred -ypically #or an Exploration & Production companies this !ill highlight the lo!est organi.ational unit li%e ell" department" component" prospect or portion o# a pipeline or plant" !ell completions" segments o# pipelines or #acilities etc
/o! !e might be in a position to appreciate the related detailed discussions #or the Cost Center Master data
Cost Center Master Data has many #ields ho!ever some o# the important #ields that contributes to the %ey design considerations are as #ollo!s$
· · · · · ·
Cost Center Category Cost Center 'ierarchy 0usiness 1rea 2unctional 1rea Pro#it Center 3oint 4enture & related #ields ie E(uity 5roup
Cost Center Master Data important "iel!s
Cost Center Cate'ory Cost center category determines the type o# cost center It could represent division" district o##ices or #unctional departments In upstream industry !e may #ind the #ollo!ing types ie
· · · · · · · ·
Development Exploration Production 2acility 1dministration 5as Plant -erminals Mar%eting etc
6ystem !ise" cost center category controls the loc% indicator #or di##erent posting types and also !hich #unctional area it is lin%ed to
($n%tional Area 0y de#inition" 2unctional 1rea is an 1ccount assignment characteristic that sorts operating expenses according to #unctions Each industry !ill have its o!n operating expenses #or example$
1 ma7or 8il & 5as Upstream company might have the #unctional area in the #orm o# 9
· · · · · · · · · · ·
Production Expense 5as Plant Exploration 6eismic Dry 'ole -erminals & :ail 1bandonment Drilling Corrective Maintenance Preventive Maintenance :e#urbishment
Cost Center Stan!ar! ierar%hy -he cost center standard hierarchy in any organi.ation represents a roll up o# the management responsibilities o# the company and this is the reason !hy it is considered as the driving #actor to prepare the management reporting
Cost Center 6tandard hierarchy could as !ell be ideal to prepare 6EC segment & divisional reporting
)$siness Area 0usiness 1rea could represent a geographical location or area in terms o# country or more speci#ically could also represent states i# !e are saying about big country li%e U61
Pro"it Center 1 pro#it center group can represent an asset Many organi.ations aspire to have balance sheet vie! at the pro#it center level and pro#it center can represent$
•
5as Plant
•
Pipeline
•
2ield etc
*oint +ent$re e all %no! a 7oint venture partnership consists o# an operating partner *operator, and one or more non;operating partners !ho combine monetary or personnel resources to share a pro7ect
6et Controlling area 9 8KK6
?
Maintain Controlling area settings ; KEB o
In this IM5 activity you de#ine the general control parameters #or the controlling area
o
-he #irst step you need to ta%e is to enter the name o# the standard hierarchy o# pro#it center master data -he system creates the standard hierarchy automatically !hen you save
o
-he dummy pro#it center receives all the postings in your system to ob7ects" !hich are not assigned to a pro#it center -his ensures that your data !ill be complete in Pro#it Center 1ccounting -his #ield is displayed here #or in#ormational purposes only You create the dummy pro#it center under Master data ;F Dummy center
o
-he chec%box Elimination o# internal business volume #or Pro#it Center 1ccounting is tic%ed #or the controlling area 8P>
o
Currencies$ o
Pro#it Center =ocal Currency -ype
G Controlling area currency
o
Pro#it Center =ocal Currency G U6D *as this is the group reporting currency,
o
6tore -ransaction currency$ Yes
o
4aluation vie! G =egal valuation
o
1=E Distribution method$ /o distribution to other systems
o
Currency -ype changed to @ -his is as per 866 /ote >>HA?-his note recommends %eeping the PC1 currency type to @ i# the currency type #or the controlling area is @ since the currency type in Controlling area settings is @ the PC1 Currency type is changed to @
@
1ctivate 1verage 0alance =edger 9 KE$ -he average balance ledger is not being used hence
the J ledgers have been %ept as deactivated A
PC1 91llo! balance C+2$ In PC1 the balances have been con#igured to allo! carry #or!ard -he
Pre re(uisite are that retained earnings accounts have been maintained
B
6et Control Parameters #or 1ctual Data ;>KE2$ 1s soon as 2inancial 1ccounting entries are
been made the PC1 9 1 =edgers !ill be updated simultaneously
Maintain Document -ypes$ 5C0 ;F Document type maintained is 1 -he three chec% boxes
are #or$ a
-he transaction currency"
b
=ocal+company code currency and
c
-hird c urrency determines !hich currencies a re stored # or this document type has
been used 6=$ Maintain additional document type -his needs to be used !hen correction documents" *to recti#y data posted #rom 2inance and other modules, are posted during the test phases #or the period end scenario -his process !ill be used only during the test phases and hence this document type !ill not be transported to Production L
Maintain /umber ranges #or local documents ; 50?$ -he number assignment is dependent on the company code
Maintain 1utomatic account assignment 9 8K0H
H
Choose 1ccounts$ @KE'$ In this activity" you de#ine !hich accounts or account intervals you !ant to trans#er to Pro#it Centre 1ccounting I# no pro#it center is speci#ied in a posting" the system uses the de#ault pro#it center #or the account or account interval
a
06 read7ustment$ -he balance read7ustment program read all 1:" 1P and -1 postings
*posted !ithout or !ith pro#it center DUMMY, It a llocates the correct pro#it center to 1:+1P and -1 and creates postings in 2I and In the period end;closing schedule !e also run the PC1 1:+1P update !here all open items *1:+1P, are updated in total in PC1 per pro#it center -he o##set postings are updated real time-his means !e have double counting in PC1 in the 1:+1P area -o solve this the read7ustment accounts are removed #rom @KE' >
Derivation :ules #or 2inding the Pro#it Center$ @KEI$ @KE' con#iguration is used #or determining de#ault pro#it centres #or all 0alance 6heet accounts" other than reconciliation accounts" !here the C80 cannot be determined -hese accounts are there#ore" assigned to Corporate or 2inancing Certain 0alance 6heet accounts are de#aulted to DUMMY because the C80 cannot be determined at time o# posting" and should not be reported against any particular C80 #rom a day to day perspective -hey are" ho!ever" dealt !ith during the period end and eventually are allocated to the C80s guidelines
>>
1dding #ields to PC1 distribution +assessments$ -ransaction 5C1$ 4ie!+-able$ 4N->>I
>?
1ssignment o# Pro#it Centres to Co codes$ In this activity the pro#it centres are assigned to company codes -his can be done !hile changing the Pro#it center or can be done collectively -ransaction KEB?" KEB
>@
Per#orm 1ccount Control #or 4aluation Di##erences$ hen payables and receivables are trans#erred to Pro#it Center 1ccounting" the system ad7usts valuation di##erences arising #rom #oreign currency revaluation In this activity" you decide !hich account these ad7ustments through #oreign currency revaluation are to be posted to -here are t!o possibilities here$
Posting to the 5eneral =edger account #or payables+receivables Posting to the balance sheet ad7ustment account o# the general ledger account #or payables+receivables
-here is not much con#iguration in C8 * Except Product Costing and C8P1, but most conceptual %no!ledge you should have in C8"
> Create Controlling area 8KKP ; 1ctivate CC1 and PC1 ? 1ssign company codes to controlling area 8KKP @ 1ctivate reconciliation ledger A Maintain 4ersion B Maintain Document /umber #or Controlling 1rea Create 1utomatic + manual cost elements
L Create Cost Center 5roups Create Cost Centers *should have standard hierarchy, H 0e#ore cost center create ma%e sure you have cost center categories in place *standard, other!ise create your o!n > Ma%e PC1 controlling area settings ; KEB *ma%e sure you have dummy pro#it center and standard hierarchy, >> Main @KE' settings >? Ma%e sure you have created 8K0H account determination *!herever necessary, >@ Maintain PC1 number ranges in 50?
Use K60> #or cost center line items Use KEBJ #or pro#it center line items
You have #ollo!ing master data
5= 1ccount 4endor Customer 'ouse 0an% 0an% 1sset Cost Element Cost Center 1ctivity -ype 6tatistical Key 2igure Internal 8rder Pro#it Center
SD )illin' Do%$ment -he graphic belo! illustrates ho! the system determines the pro#it center #or an 6D billing document In Pro#it center 1ccounting" the data in the MM document is posted to the pro#it center determined by the system
2or an 6D billing document" the pro#it center is ; !ith one exception ; al!ays determined indirectly via the preceding document
/ote Cross4Company S%enario ith cross;company transactions" the sales order item al!ays contains the sender pro#it center -his pro#it center is used both #or the internal settlement and the goods issue *see normal case in the graphic, -he pro#it center ma%ing the sale must be determined using a substitution when the %$stomer billin' !o%$ment is %reate! *see cross;company transaction in the graphic,
5ole o" Pro"it Center A%%o$ntin' in the SAP System Role in Enterprise Controlling (EC) -he Enterprise Controlling component *EC, is a po!er#ul" integrated system !hich provides e##icient" up;to;date in#ormation #or controlling your group or company EC consists o# the applications E#e%$ti.e In"ormation System *EC;EI6," Consoli!ation *EC;C6, and Pro"it Center A%%o$ntin' *EC;PC1,
Executive In#ormation 6ystem *EC;EI6, -he Executive In#ormation 6ystem presents up;to;date aggregated data and provides user;#riendly tools #or analy.ing the critical success #actors #or your company or entire group -he data basis can be supplied either internally *61P system or other applications, or #rom external sources EC;EI6 is integrated !ith other in#ormation systems in 61P through the architecture o# the 61P 8pen In#ormation arehouse
Consolidation *EC;C6, Consolidation *currently in development, gives you a reconciled vie! o# your group> Pro#it Centers+1ccount 5roup, into J
layout
Drill do!n into Pro#it Center 1ccounting ; =ayouts #or PC1 ; De#ault Parameters Choose Integrated Excel Double;clic%" and enter de#ault parameters" then clic% on 8vervie! *mountain icon, Clic% 6ave 2ile Description icon 6ave Excel =ayout Clic% on 5eneric 2ile" enter in all C1P6 a txt name #or the #iles that !ill be uploaded" !ith an asteris% *example P=1//I/5O--, Choose 2ile ; 6ave as to save the Excel template to be used later to upload spreadsheet plan data 6et up Plan 4ersion ; menu path 6P:8 ; Pro#it Center 1ccounting ; Planning ; 0asic 6ettings #or Planning ; Plan 4ersions ; Maintain Plan 4ersions
Usin' Plannin' -ransaction LKE> allo!s #or manual cost+revenue planning
Choose Planning ; 6et Planner Pro#ile" choosing the planning pro#ile de#ined in Customi.ing Clic% the dis%ette icon User Master :ecord i# this is the main type o# planning to be done by the user Enter in desired pro#it center and account parameters" then execute Enter values" then clic% dis%ette icon in 61P menu bar to save I# the user does not already have a template #or spreadsheet upload" choose 2ile ;; 6ave as #rom the Excel menu -ransaction LKE allo!s #or spreadsheet upload o# plans
2irst update the spreadsheet :emove the totals line at the bottom o# the sheet You may have to unprotect the sheet to !or% !ith it -hen" enter your amounts 6ave the sheet as a text" tab delimited #ile You can import either a single #ile" or multiple #iles in a #older I# you choose the #older option" 61P !ill pull in all #iles !ith the naming convention in the #older 2or example" i# the planning is con#igured as above" P=1//I/5>--" P=1//I/5?--" and P=1//I/5@-- !ould all be imported change the decimal notation #ield to >"?@A"BLH Execute 61P !ill indicate the status o# the upload
-he #ollo!ing example is given #or cost center planning 'o!ever" you can go to Pro#it Center GGF Planning :emaining are same except LKE> I# you con#igure in this !ay" you can upload the plan data through excel #or pro#it center
-his is controlled by planning are in your planning pro#ile You need to use Cost ctrs$ Cost element+activity inputs planning area #or this purpose
'ope you are conversant !ith Integrated excel upload
-o do integrated excel upload o# cost center plan data
IM5 GGF Controlling GGF Cost Center 1ccounting GGF Planning GGF Manual Planning User De#ined =ayouts ; Create your o!n layout or copy #rom standard layout and change it
IM5 GGF Controlling GGF Cost Center 1ccounting GGF Planning GGF De#ine User De#ined Planner Pro#iles
Copy the 61P1== to J61P1== You cannot change 61P1== as it is standard
In J61P1== planner pro#ile" select proper planning area and enter your layout
-ic% Integrate Excel
8nce the popup #or KP comes" you need enter the data and save it It !ould generate the #ile name
ith the same #ile name you need upload the plan data by using KP
In KP
Extras GGF Excel Planning GGF Upload
6elect the #ile as prepared in accordance !ith #ormat at the time o# generating the #ile name
'ope this solves your problem
/inkin' the )$siness /o%ation to a Pro"it Center
Use Pro#it Center 1ccounting *EC;PC1, is a part o# the Enterprise Controlling *EC, module EC;PC1 allo!s you to$ •
Determine pro#its and losses by pro#it center using either period accounting or the cost;o#; sales approach
•
1naly.e #ixed capital and statistical %ey #igures *number o# employees" s(uare meters" and so on, by pro#it center
Conse(uently" you can calculate all the %ey #igures commonly used in cost accounting *return on investment" cash #lo!" sales per employee" and so on, 1 pro#it center is a management;oriented organi.ational unit used #or internal controlling purposes 0y assigning business locations to pro#it centers" you can analy.e areas o# responsibility and delegate responsibility to decentrali.ed units" thus treating them as companies !ithin the company -he pro#it center di##ers #rom a cost center in that cost centers merely represent the units in !hich capacity costs arise" !hereas the person in charge o# the pro#it center is responsible #or its balance o# costs and revenues 0y assigning balance sheet items *asset port#olio" payables and receivables" material stoc%s" !or% in process, to pro#it centers" you can analy.e your companys business locations by pro#it center" thus using them as investment centers -his also ma%es it possible #or you to analy.e a number o# %ey #igures by pro#it center" including return on investment" !or%ing capital and cash #lo!
Pro%e!$re -o assign a pro#it center to a business location master record$ >
8n the Change 0usiness =ocation$ Initial 6creen" enter the location ID o# the business location that you !ant to change
You can also assign a pro#it center to a business location !hen you create a business location ?
Choose 5oto
Q 1ssignment Q 8b7ect lin%s -he Change 0usiness =ocation$ 8b7ect =in% Details screen appears Depending on the con#iguration o# your system" the Pro#it center assignment box may appear on the optional second ob7ect lin% assignment screen -o display this screen" choose 5oto
Q 1ssignment Q 8b7ect lin%s ?
Enter the number and controlling area o# the pro#it center that you !ish to use to depict the
business location in your system Use the matchcode search i# necessary to determine the correct pro#it center record A
Choose Enter
to validate the pro#it center details that you have entered 1 green tic% or chec% icon con#irms a valid pro#it center I# a red cross or icon appears" there is a problem !ith the pro#it center" #or example it may be #lagged #or deletion or bloc%ed #or use You can use the pro#it center maintenance transaction to establish the cause o# the problem B
6ave the data You return to the initial screen #or changing the business location master record -he message 0usiness location Rlocation ID F has been changed appears
I# you !ish to code additional chec%s #or the pro#it center to !hich you are assigning the business location" you need to activate enhancement 8I21?? -his enhancement calls user processing during the initial load o# the pro#it center data and during P1I *process a#ter input, on the pro#it center assignment input #ields
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