SAP CO-PA and BPC at Woodward: Costing-Based vs. Account-Based

By Sydnie McConnell

Historical case study, originally published September 9, 2014. This account describes Woodward’s SAP ECC and SAP BPC 10.0 project at that time. The S/4HANA context section below provides a current terminology update.

At Woodward, our project to implement SAP Business Planning and Consolidation (BPC) 10.0 for SAP NetWeaver was part of a roadmap to unify financial reporting across the company while retaining multiple ERP systems.

The project began with two sites already using SAP ERP Financials and SAP Business Warehouse (BW). We had both forms of SAP Profitability Analysis (CO-PA) activated, but our detailed reporting relied on costing-based CO-PA. When we designed the BPC data load, we revisited account-based CO-PA.

Table of Contents

• Why We Used Costing-Based CO-PA
• Matching CO-PA Data to BPC Requirements
• Cost Elements and BW Reporting
• S/4HANA Context and Margin Analysis
• Conclusion
• Glossary

Why We Used Costing-Based CO-PA

Costing-based CO-PA gave us the detail we needed for manufacturing profitability reporting. We used it to analyze:

• Cost of goods sold by cost component.
• Production variances by cost component and variance category.
• Cost of sales for billable repairs and warranty repairs.
• Margins by product hierarchy, program, distribution channel, and customer.

Although account-based CO-PA had also been activated at go-live, we had not validated its data or used it for reporting. Our costing-based reports were already meeting the detailed analysis requirements of the ECC implementation.

Matching CO-PA Data to BPC Requirements

Our BPC forecast model needed values organized by account. Costing-based CO-PA stored the financial amounts in value fields, so we considered a custom BW cube to translate those fields into accounts. The additional mapping and maintenance led us to evaluate account-based CO-PA as a source.

Table 1 summarizes the roles of the two CO-PA approaches in our project.

We initially expected to miss the extra detail available in costing-based CO-PA. Reviewing the forecast requirements showed that BPC needed less detail than our operational reports. We could continue analyzing variances and cost of sales in ECC while supplying the account-oriented data needed for forecasting.

Cost Elements and BW Reporting

Several cost-of-goods-sold G/L accounts in our ECC system had no corresponding cost elements. Their postings were therefore missing from account-based CO-PA. We created the required cost elements and mapped the relevant postings to an unused value field in costing-based CO-PA as part of our reporting design.

That approach reflected our ECC configuration and the handling of different CO-PA record types. Teams evaluating a similar design should verify the resulting postings and report totals in their own systems.

We also adjusted BW to extract account-based CO-PA data. The BW cube used in our implementation required summarization hierarchies. At the time of the original article, repair-order reporting still needed further investigation.

S/4HANA Context and Margin Analysis

In SAP S/4HANA, account-based CO-PA has evolved into Margin Analysis, with account-based profitability data integrated into the Universal Journal. SAP identifies Margin Analysis as its preferred profitability analysis approach because it is reconciled with Financial Accounting. See SAP’s documentation on account-based CO-PA and Margin Analysis and costing-based profitability analysis.

When planning an S/4HANA design, evaluate the reporting detail available in your edition and release. For custom reporting characteristics, read SAP Margin Analysis Extensibility.

Conclusion

The Woodward project showed why the target planning model’s requirements matter when choosing a data source. Detailed operational analysis continued in ECC, while the team validated account-based CO-PA and BW extraction for the BPC forecast model.

Glossary

Account-Based CO-PA

Profitability analysis that organizes costs and revenues by account and analyzes them by market segment characteristics.

Business Planning and Consolidation

SAP BPC supports financial planning and consolidation. In this case study, the forecast model used account-oriented data.

Costing-Based CO-PA

Profitability analysis that organizes financial values in value fields, such as revenue, material cost, or production variance.

Margin Analysis

SAP S/4HANA’s account-based profitability analysis, integrated with Financial Accounting through the Universal Journal.

Value Field

A field for an amount or quantity in costing-based CO-PA. Reporting characteristics identify the market segment to which that value belongs.