Setting Up Operating Concerns in SAP FICO

Operating concerns in SAP FICO are a key component of the Profitability Analysis (CO-PA) module, used to segment and analyze profitability data. The operating concern defines the scope of profitability analysis and allows you to structure your organization’s profitability reporting. This article outlines the step-by-step process of setting up operating concerns in SAP FICO with examples for better understanding.

Step 1: Understand the Role of Operating Concerns

An operating concern in SAP is the highest level in the Profitability Analysis (CO-PA) hierarchy. It helps in determining how profitability is analyzed and reported. Key elements of an operating concern include:

• Characteristics: Dimensions used for profitability analysis, such as customer, material, or region.
• Value Fields: Quantities or monetary values (e.g., sales revenue, costs) that are analyzed in the Profitability Analysis report.
• Segment Reporting: Enables reporting at different levels of profitability, allowing you to analyze performance across various segments of the business.

Step 2: Define Operating Concerns

The first step in setting up operating concerns is defining them in the SAP system. This involves creating an operating concern, which will act as a container for profitability analysis data. To do this:

• Go to transaction KE51 to define an operating concern.
• Enter the operating concern code (e.g., "OC01").
• Provide a description of the operating concern, such as "North America Profitability Analysis."
• Choose the relevant controlling area to which the operating concern will be assigned.
• Click Save to create the operating concern.

Example: You are setting up an operating concern for the North America region with the code "NA_OC." This will include all profitability data related to the North American market, including sales, costs, and other revenue factors.

Step 3: Assign Operating Concern to Controlling Area

Once the operating concern is defined, you must assign it to the controlling area. This establishes a link between the operating concern and the controlling area, allowing the system to integrate profitability analysis with internal cost reporting. To assign an operating concern to a controlling area:

• Go to transaction OKKP to assign the operating concern.
• Enter the controlling area (e.g., "1000") and the operating concern code (e.g., "NA_OC").
• Click Save to confirm the assignment.

Example: In this example, the operating concern "NA_OC" is assigned to controlling area "1000" for North America to ensure that the profitability data for this region is properly captured in cost reports.

Step 4: Configure Characteristics for the Operating Concern

Characteristics are the key elements by which profitability is segmented and reported in SAP CO-PA. Common characteristics include customer, material, and region. You need to define and assign characteristics to the operating concern to ensure that data is analyzed based on these factors.

• Go to transaction KE52 to configure characteristics for the operating concern.
• Enter the operating concern code (e.g., "NA_OC").
• Click Characteristics and select the characteristics you want to use, such as Customer, Material, Sales Organization, and Region.
• Click Save to confirm the settings.

Example: For the North America operating concern, you might choose characteristics like Customer and Region to segment profitability analysis. This will allow you to analyze sales and costs for different regions and customers.

Step 5: Define Value Fields for the Operating Concern

Value fields define the financial data or metrics that are used for profitability analysis. These can include sales revenue, cost of goods sold (COGS), profit margin, and other financial indicators. Defining value fields is a key part of setting up operating concerns in SAP FICO.

• Go to transaction KE54 to define value fields.
• Enter the operating concern code (e.g., "NA_OC").
• Click Value Fields and create new value fields as needed (e.g., "Revenue," "Cost of Goods Sold," "Gross Profit").
• Click Save to confirm the settings.

Example: For the North America operating concern, you may create value fields like "Revenue," "Cost of Goods Sold (COGS)," and "Gross Profit" to capture and analyze the financial data.

Step 6: Assign Value Fields to Profitability Segments

After defining value fields, you need to assign them to profitability segments to ensure that the data is properly segmented for analysis. Profitability segments represent the business units or categories that you wish to analyze, such as different customer groups or regions.

• Go to transaction KE56 to assign value fields to profitability segments.
• Enter the operating concern code (e.g., "NA_OC").
• Choose the appropriate profitability segments (e.g., by customer or region).
• Assign the defined value fields (e.g., "Revenue," "COGS") to the relevant profitability segments.
• Click Save to finalize the assignments.

Example: In the North America operating concern, you can assign the "Revenue" value field to the "Customer" and "Region" profitability segments, allowing you to analyze profitability based on these criteria.

Step 7: Activate Profitability Analysis (CO-PA)

Once the operating concern and its components are set up, you need to activate profitability analysis to begin using it for reporting and analysis. This activation process ensures that the system will capture and process profitability data based on the settings you have configured.

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

Example: After completing the setup for the "NA_OC" operating concern, you activate CO-PA to begin analyzing profitability for North America based on the defined characteristics and value fields.

Step 8: Monitor and Analyze Profitability Data

Once the operating concern is set up and activated, you can begin to monitor and analyze profitability data. SAP provides various reports for analyzing profitability, such as the KE30 report for profitability analysis by segment and the KE24 report for detailed cost and revenue data.

• Go to transaction KE30 to generate profitability reports for the operating concern.
• Enter the operating concern code (e.g., "NA_OC") and select the characteristics and value fields you wish to analyze (e.g., by region and customer).
• Click Execute to view the profitability analysis report.

Example: Running a report for the "NA_OC" operating concern with "Revenue" and "COGS" value fields will show you the profitability performance for different customer groups and regions in North America.

Conclusion

Setting up operating concerns in SAP FICO is a critical step for organizing and analyzing profitability data in the Profitability Analysis module. By following the steps outlined in this article—defining operating concerns, assigning characteristics and value fields, and activating CO-PA—you can structure your profitability analysis to provide valuable insights into your business performance. Regular analysis of profitability data will help in making informed business decisions and optimizing business operations.