This document provides an overview of SAP Controlling (CO) functionality and implementation. It discusses the main components of CO including cost center accounting, profit center accounting, internal orders, and product costing. It also covers integration with other SAP modules, the three phase implementation approach, and organizational structure setup. Profitability analysis is differentiated from profit center accounting. Cost planning, allocation, and budgeting are described for cost centers. Internal orders are explained for managing projects. Product costing integration with procurement and production is outlined.

1. SAP CONTROLLING
FUNCTIONALITY AND
IMPLEMENTATION
Muhammad Hani

2. Agenda
 The role of SAP-CO in the business environment.
 Main components of SAP-CO.
 Controlling integration with other SAP modules.
 Implementing SAP-CO.
 Overview of the organizational structure.
 Cost center and profit center accounting.
 Internal Orders.
 Product Costing
 Profitability analysis.
 Conclusion, Questions, and discussion.

3. The rule of SAP-CO in the business
environment
 Controlling (CO) is the term by which SAP refers to
“Managerial Accounting”.
 Managerial accounting is concerned with the provisions and
use of accounting information to managers within
organizations, to provide them with the basis to make
informed business decisions that will allow them to be better
equipped in their management and control functions.

4. Managerial VS Financial
accounting

5. Components of SAP-CO
 Cost Center Accounting
 Profit Center Accounting
 Internal Orders
 Product Costing
 Profitability Analysis

6. Implementation Consideration
 Controlling implementation depends on how
well is the implementation of the other
components:
 FI-MM-SD-PP-HR
 SAP recommends Controlling implementation
to be carried out in 3 phases:
 Foundation.
 Stabilization.
 Enhancement and Optimization.

7. Controlling Integration
 Financial module plays the role of a “Feeder
system”.
 All Financial transactions relevant to profit and loss
accounts are updated in the controlling in “real
time”.
 This happens in real time through the component
“Cost Element Accounting”.
 Any transaction in non-financial modules like MM-
SD that have a financial impact on profit and loss
are updated in controlling instantly.

8. Integration in event- based posting

9. Organizational Structure

10. Cost Center Accounting
 Used for internal controlling purposes and
make the costs more transparent in an
organization.
 If you have overhead costs, they need to be
allocated to the actual department that owns
that cost.
 Focus is on managing cost per plan.
 Performance is managed by comparing
planned and actual costs.

11. Cost Center Accounting-Cont’d
 The structure of cost centers is heavily
dependent on each organization.
 Before creating a cost center, you should
outline the standard hierarchy of the cost
centers.
 Standard hierarchy allows you to visualize the
organization from the controlling perspective.

12. Activity types and planning
 Used to measure the output or the contribution of
cost centers to the organization.
 Ex: Quality control cost center ,the output which
is “Inspection Hours” is an activity type.
 Activity inputs -which are primary cost elements-
and activity output quantities and prices are
planned and compared to actual values so that
any variance can be measured and analyzed.

13. Activity flow and allocation

14. Cost center: Budget Planning
 Cost center accounting also allows you to set
up a monthly budget by cost center.
 You can compare the actual values against the
budgeted values and establish timely
availability checks in case the budget is
exceeded.

15. Profit Center Accounting
 Primarily used for management-related
reporting for internal purposes.
 Defining an organizational element as a profit
center entails that the unit is being managed
independently by a person who is responsible
for the profit(revenues and costs).
 Difference between profit center accounting
and profitability analysis.

16. Internal Orders
 Used for managing small projects that need to be
budgeted and managed independently .
 Ex: setting up a marketing kiosk in a cultural
event.
 Internal orders accounting allows you to plan,
budget, collect ,and settle the costs of a mini
project in a process oriented fashion.
 Real and statistical orders.
 Settlement process and receivers (Fixed Assets-
Cost Centers-Profitability Segment-WBS).

17. Internal orders

18. Product Costing
 The basic question that CO-PC aims to
answer is this: what is the material cost of a
product?
 Measuring the value added by each process
and organizational unit.
 Supports make or buy decisions.
 Determine true inventory and COGS values.
 Come up with price floor for unit cost.

19. Product costing integration
 CO-PC is heavily integrated with PP and is
effective only in conjunction with PP and MM.
 All of the master data of CO-PC depends on
PP for BOM, routing, work centers, and relies
on cost center accounting for activity types
prices.
 Product cost planning and standard cost
estimate.
 Planning with or without Quantity structure.

20. Costing Variant

21. Profitability Analysis (CO-PA)
 The key difference between CO-PA and profit
center accounting (EC-PCA) is that PA is the
external view of the organization while PCA is
the internal view of the organization for
management reporting.
 CO-PA is a market oriented perspective, you
can report profitability by customer, customer
group, division, product, product
group, distribution channel, and so on.

22. Reporting features, an example

23. CO-PA Integration

24. Conclusion
 Controlling can help your organization:
 Improve productivity and insight.
 Reduce costs through increased flexibility.
 Support changing industry requirements.
 Provide immediate access to enterprise
information.

25. Questions/Discussions

26. Thank You