SAP COPA document

1. CO-PA and SAP BW – A Winning Team
The powerful integration of
CO-PA and SAP BW adds
value to your business by
combining:
s CO-PA’s proven
business model and
consistent profitability
data basis with
s SAP BW’s replication
model and state-of-
the-art cross application
reporting.
To guarantee that controlling in your enterprise is geared towards
success, it is essential to be able to assess the profit margin of your
economic activities at any given time. The best way to achieve this is to
ensure that your integrated value flows allocate revenues and costs to
the business units and market dimensions which are relevant for decision-
making. Typical questions that have to be answered are „Which products
and markets generate the highest contribution margin?“, „How do
individual customers or customer groups affect my results?“, and „To
what extent have my sales employees attained the set goals?“
Just as your Profitability data must be complete, up-to-date and must
meet your specific controlling requirements, it is equally important to be
able to analyze this data smoothly and efficiently. The joint implementa-
tion of SAP R/3’s Profitability Analysis (CO-PA) and the SAP Business
Information Warehouse (SAP BW) provides you with two complementary
systems, each with its own emphasis:
s CO-PA provides a reliable data basis for determining the profit margin
for your sales activities (using the definable business model for
contribution margin accounting) and for assigning the profit margin to
the responsible market segments (such as regions, customer groups and
product divisions).
In Focus

2. s SAP BW affords a cross-
application information
infrastructure with company-
wide uniformity.
This infrastructure provides up-
to-date profit information from
CO-PA and allows you to analyze
this information with a modern
and sophisticated reporting tool.
Due to the technical compatibility
of these two products, their core
competencies supplement each
other perfectly, forming an
unbeatable combination.
What Profitability Analysis Does
Best
The core competency of CO-PA
resides in consistently combining
the revenues earned with the costs
incurred and in determining the
result at the market segment level.
Accordingly, the integrated
business model of CO-PA offers
different value flows, which
allocate revenues and costs to the
market segments where they
occured. This includes on the one
hand the data transfer and
valuation of sales documents for
relevant market dimensions. On
the other hand, a full range of
allocation transactions enable you
to apply overhead costs to the
products, customers and divisions
that incurred them. This integrated
business model meets the
requirements of different
industries ranging from retail
companies and service companies
to make-to-order producers.
For this purpose the data of all
sales processes, such as sales from
stock, third party business and
intercompany sales are transferred
to CO-PA and demonstrate how
CO-PA integrates all relevant
profitability aspects into a
complete picture. In all these cases,
the quantities sold together with
corresponding revenues and cost
of goods sold are recorded real-
time in CO-PA. Thus CO-PA allows
you to perform consistent
profitability reporting at any
given time.
As an instrument for internal
profitability accounting, CO-PA
enhances profitability information
further with valuation. Valuation
uses accrual methods for
calculating accrued costs such as
freight costs, commission, or cash
discounts, and can retrieve
detailed product cost information,
if desired.
Depending on your reporting
requirements, you can use CO-PA
to determine either a sales result
by using the full costs or a
contribution margin by separating
fixed and variable costs - the latter
supporting a break-even analysis.
Furthermore, CO-PA’s interaction
with R/3’s Material Ledger allows
you to attain a result at the end of
the period using actual costs.
You can supplement the
contribution margin information
with the remaining costs of the
period: Administrative and sales
costs are allocated to the market
segments where they occurred. The
costs of goods manufactured are
updated with the production
variances and the variances of
production cost centers. Finally,
the information can be rendered
complete by incorporating actual
postings, such as actual cash
discounts and actual freight. Thus
CO-PA provides a powerful tool
for customer and product
contribution margin accounting,
which you can use to analyze
accurate profitability information
of individual market segments.
Profitability Reporting with
SAP BW
The SAP BW is a ready-to-use data
warehouse solution with which
you can collect all data in your
enterprise that is relevant to
reporting. You do this by means of
generic data structures (InfoCubes)
and you can then combine this
data for analysis using the
reporting frontend (Business
Explorer).
In SAP BW, you will in many cases
report period end results that you
have taken from CO-PA (by taking
the closed income statement, for
example). In other cases (such as
for short-term profitability
analysis purposes or for use as an
early warning system), it makes
sense to use a more recent
replication interval (usually a
daily interval), which is also
optimally supported by CO-PA and
SAP BW. With this replication
model you separate transaction-
based applications from resource
comsuming reporting activities.

3. Scenarios
Aside from the existing
possibilities in Drill-down-
Reporting within CO-PA and the
existing ALE-scenarios in the R/3
System, you can add value to your
profitability reporting with the
help of SAP BW in the following
scenarios and situations:
High-Volume and
Cross-Application Reporting
In a typical scenario of how SAP
BW is used in profitability
reporting, you move reporting
tasks from the R/3 System into an
independent system. For such a
scenario, the R/3 System operates
as an OLTP (Online Transaction
Processing) system, which runs the
operational business, while the
SAP BW system serves as an OLAP
(Online Analytical Processing)
system.
By diverting the performance-
intensive reporting tasks to a
separate system, the following
strategic advantages can be
gained:
s Reporting does not affect the
response times of operational
business transactions in the OLTP
system
s Each system can be optimized to
perform its specific tasks: You
can tune the R/3 System to
efficiently perform OLTP-typical
parallel updates and single-
record accesses, whereas the SAP
BW system can be adjusted to
handle complex search requests
that involve summarizing large
sets of hits. Competing updates
are bundled via cyclic
replication, thus eliminating any
interference with the queries.
s OLTP transactions do not
influence the response times of
reporting.
s Besides the technical advantages,
the efficiency of reporting is
further increased by uniformly
reporting across all functional
areas and R/3 applications.
Collecting Profitability Data from
Several R/3 Systems
For environments involving
several R/3 Systems that represent,
for example, slightly different
methods of profitability analysis
for various countries or business
units, it is essential to gain a
cross-system view. In this scenario,
the results from different
organizational subunits are
combined into a single InfoCube in
SAP BW that contains the same
reporting levels and calculations
of contribution margins.
CO-PA provides the necessary
functions for preparing your data
basis for group profitability:
s You can classify your business
processes according to sales
between affiliated companies and
customers. This classification of
internal and external customers
enables you to report your
group profit by analyzing profits
from external customers as well
as profits from affiliated
companies.
s Furthermore, we recommend
valuating quantities sold with
the group cost estimate in
parallel value fields in CO-PA to
eliminate intercompany profits.
The data thus prepared in CO-PA
can easily be extracted into SAP
BW.
The powerful integration of CO-PA
and BW also allows you to
harmonize heterogeneous
operating concerns:
s If a business unit (affiliate,
division, country) stores sales
data in CO-PA at a more detailed
level than other units,
appropriate presummarization
can be carried out when the data
is transferred.

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s If there is no need to integrate
your data into R/3 Accounting,
SAP BW can provide an
excellent cross-system view
when data is loaded directly into
SAP BW. The powerful staging
mechanisms within SAP BW
provide extensive support for
importing external data, data
quality management and subse-
quent bulk updates of the
imported data.
Conclusion
CO-PA is the R/3 business
application, which provides a
consistent data basis for analyzing
the profitability of your company’s
activities.
Given one of the scenarios
described above, SAP BW
complements the business
application CO-PA by providing a
sophisticated replication model
and a modern reporting tool.
s If a division system stores a
detailed cost component split for
the COGS while group-level
reporting is carried out in less
detail, cost of sales can be
aggregated from the split during
data transfer.
Collecting Profitability Data from
Legacy Systems
A third typical scenario for the
implementation of CO-PA with an
SAP BW installation is when
affiliated companies or parts of
your company operate systems
other than R/3 and their data has
to be consolidated in your
reporting of group profitability.
s External data transfer into the
R/3 system is recommended
when Financial Accounting and
Management Accounting are
updated simultaneously. In this
case the integrated business
model of CO-PA will assure the
consistency of your profitability
data.