Integration of Operating Concern and Controlling Area in SAP FICO

The integration of operating concern and controlling area in SAP FICO is fundamental for the effective functioning of the Profitability Analysis (CO-PA) module. The operating concern defines the structure for profitability analysis, while the controlling area organizes financial data within the company. This integration ensures seamless data flow between internal cost accounting and profitability analysis. In this article, we will go through the step-by-step process of setting up and understanding the integration of operating concern and controlling area in SAP FICO with examples.

Step 1: Understand the Relationship Between Operating Concern and Controlling Area

Before proceeding with configuration, it’s essential to understand the relationship between operating concerns and controlling areas:

• Operating Concern: It is used for profitability analysis (CO-PA) and allows you to analyze profitability across various dimensions such as customers, regions, or products. It is the highest level of data segmentation for profitability.
• Controlling Area: A controlling area is an organizational unit within SAP that groups together cost centers, internal orders, and other cost-related activities. The controlling area is crucial for managing internal accounting and cost tracking.
• Integration: The operating concern is assigned to a controlling area, ensuring that the profitability analysis is based on the data from the controlling area, including costs and revenues. The integration allows the system to reconcile cost accounting with profitability data.

Step 2: Define and Assign Operating Concern

The first step in integration is to define the operating concern and assign it to the relevant controlling area. This step ensures that data related to profitability is captured in line with cost tracking in the controlling area.

• Go to transaction KE51 to define the operating concern.
• Enter the operating concern code (e.g., "OC01") and provide a description (e.g., "Global Profitability Analysis").
• Click Save to create the operating concern.
• To assign the operating concern to the controlling area, go to transaction OKKP.
• Enter the controlling area (e.g., "1000") and the operating concern code (e.g., "OC01").
• Click Save to complete the assignment.

Example: You have created an operating concern "OC01" for global profitability analysis and assigned it to controlling area "1000," which is used for internal cost tracking in your company.

Step 3: Ensure Consistency Between Operating Concern and Controlling Area

It is important to ensure that the structure of the operating concern is consistent with the structure of the controlling area. The characteristics and value fields used in the operating concern should align with the data maintained in the controlling area, such as cost centers and internal orders.

• Go to transaction KE52 to define characteristics for the operating concern.
• Enter the operating concern code (e.g., "OC01").
• Choose relevant characteristics such as "Customer," "Material," and "Region" to segment profitability analysis data.
• Ensure that the data flow from the controlling area, such as costs and revenues from cost centers, is mapped correctly to the characteristics in the operating concern.
• Click Save to confirm the settings.

Example: For the operating concern "OC01," you can use characteristics like "Region" and "Customer" to segment profitability data. Ensure that the cost centers in the controlling area are mapped correctly to these characteristics for consistent reporting.

Step 4: Assign Value Fields to the Operating Concern

Value fields are the financial metrics that will be analyzed in the Profitability Analysis (CO-PA). These value fields can represent revenue, costs, or any other financial measure. When integrating the operating concern with the controlling area, the value fields must be properly configured to ensure that data flows seamlessly between the two.

• Go to transaction KE54 to define value fields.
• Enter the operating concern code (e.g., "OC01").
• Define relevant value fields such as "Revenue," "COGS," "Profit," and other important financial metrics.
• Click Save to finalize the value field configuration.

Example: In the operating concern "OC01," you might define value fields like "Revenue," "Cost of Goods Sold (COGS)," and "Gross Profit." These value fields will be used to capture financial data from the controlling area to reflect profitability in CO-PA reports.

Step 5: Activate Profitability Analysis (CO-PA)

After the operating concern and controlling area are integrated, it’s important to activate Profitability Analysis (CO-PA) for the operating concern. This activation allows the system to start collecting and analyzing profitability data based on the configured operating concern and controlling area settings.

• Go to transaction KEA0 to activate CO-PA for the operating concern.
• Enter the operating concern code (e.g., "OC01").
• Click Activate to enable profitability analysis for the operating concern.

Example: After activating CO-PA for the operating concern "OC01," the system will begin capturing and analyzing profitability data for all related cost centers and revenue streams defined in the controlling area "1000."

Step 6: Review Data Flow Between Operating Concern and Controlling Area

Once the operating concern and controlling area are integrated, it’s essential to monitor the data flow between them. Profitability analysis data should reflect the financial transactions occurring within the controlling area, such as cost allocations and revenue postings. You can use various reports to review this data.

• Go to transaction KE30 to generate profitability reports for the operating concern.
• Enter the operating concern code (e.g., "OC01").
• Choose the characteristics (e.g., "Customer") and value fields (e.g., "Revenue") to analyze.
• Click Execute to generate the report and review the profitability data.

Example: Running the report for "OC01" with "Customer" as the characteristic and "Revenue" as the value field will show you the profitability by customer, reflecting data from the controlling area like costs and revenues posted to cost centers.

Step 7: Adjust and Fine-Tune Settings

Based on the reports and data reviewed, you may need to adjust or fine-tune the configuration of the operating concern or controlling area to ensure accurate profitability reporting. This may involve modifying the characteristics, value fields, or assignments between cost objects in the controlling area and the operating concern.

• Go to transaction KE52 to modify characteristics or value fields as necessary.
• Make changes based on feedback from reports and operational requirements.
• Click Save to update the settings.

Example: If you notice that profitability by "Region" is not being captured accurately, you may adjust the characteristic assignments in the operating concern and modify the cost center assignments in the controlling area.

Conclusion

The integration of operating concern and controlling area in SAP FICO is crucial for effective profitability analysis. By following the steps outlined in this article—defining and assigning operating concerns, ensuring consistency between the two, configuring value fields, and activating CO-PA—you can enable accurate and detailed profitability analysis. This integration ensures that your financial and operational data is aligned, providing valuable insights into business performance and supporting better decision-making.