CO-PA and SAP BW � A Winning Team

The powerful integration ofCO-PA and SAP BW addsvalue to your business bycombining:

■ CO-PA�s provenbusiness model andconsistent profitabilitydata basis with

■ SAP BW�s replicationmodel and state-of-the-art cross applicationreporting.

To guarantee that controlling in your enterprise is geared towardssuccess, it is essential to be able to assess the profit margin of youreconomic activities at any given time. The best way to achieve this is toensure that your integrated value flows allocate revenues and costs tothe business units and market dimensions which are relevant for decision-making. Typical questions that have to be answered are �Which productsand markets generate the highest contribution margin?�, �How doindividual customers or customer groups affect my results?�, and �Towhat extent have my sales employees attained the set goals?�

Just as your Profitability data must be complete, up-to-date and mustmeet your specific controlling requirements, it is equally important to beable to analyze this data smoothly and efficiently. The joint implementa-tion of SAP R/3�s Profitability Analysis (CO-PA) and the SAP BusinessInformation Warehouse (SAP BW) provides you with two complementarysystems, each with its own emphasis:

■ CO-PA provides a reliable data basis for determining the profit marginfor your sales activities (using the definable business model forcontribution margin accounting) and for assigning the profit margin tothe responsible market segments (such as regions, customer groups andproduct divisions).

In Focus

■ SAP BW affords a cross-application informationinfrastructure with company-wide uniformity.This infrastructure provides up-to-date profit information fromCO-PA and allows you to analyzethis information with a modernand sophisticated reporting tool.

Due to the technical compatibilityof these two products, their corecompetencies supplement eachother perfectly, forming anunbeatable combination.

What Profitability Analysis DoesBestThe core competency of CO-PAresides in consistently combiningthe revenues earned with the costsincurred and in determining theresult at the market segment level.Accordingly, the integratedbusiness model of CO-PA offersdifferent value flows, whichallocate revenues and costs to themarket segments where theyoccured. This includes on the onehand the data transfer andvaluation of sales documents forrelevant market dimensions. Onthe other hand, a full range ofallocation transactions enable youto apply overhead costs to theproducts, customers and divisionsthat incurred them. This integratedbusiness model meets therequirements of differentindustries ranging from retailcompanies and service companiesto make-to-order producers.

For this purpose the data of allsales processes, such as sales fromstock, third party business andintercompany sales are transferredto CO-PA and demonstrate howCO-PA integrates all relevantprofitability aspects into acomplete picture. In all these cases,the quantities sold together withcorresponding revenues and costof goods sold are recorded real-time in CO-PA. Thus CO-PA allowsyou to perform consistentprofitability reporting at anygiven time.

As an instrument for internalprofitability accounting, CO-PAenhances profitability informationfurther with valuation. Valuationuses accrual methods forcalculating accrued costs such asfreight costs, commission, or cashdiscounts, and can retrievedetailed product cost information,if desired.

Depending on your reportingrequirements, you can use CO-PAto determine either a sales resultby using the full costs or acontribution margin by separatingfixed and variable costs - the lattersupporting a break-even analysis.Furthermore, CO-PA�s interactionwith R/3�s Material Ledger allowsyou to attain a result at the end ofthe period using actual costs.

You can supplement thecontribution margin informationwith the remaining costs of theperiod: Administrative and salescosts are allocated to the marketsegments where they occurred. Thecosts of goods manufactured areupdated with the productionvariances and the variances ofproduction cost centers. Finally,the information can be renderedcomplete by incorporating actualpostings, such as actual cashdiscounts and actual freight. Thus

CO-PA provides a powerful toolfor customer and productcontribution margin accounting,which you can use to analyzeaccurate profitability informationof individual market segments.

Profitability Reporting withSAP BWThe SAP BW is a ready-to-use datawarehouse solution with whichyou can collect all data in yourenterprise that is relevant toreporting. You do this by means ofgeneric data structures (InfoCubes)and you can then combine thisdata for analysis using thereporting frontend (BusinessExplorer).

In SAP BW, you will in many casesreport period end results that youhave taken from CO-PA (by takingthe closed income statement, forexample). In other cases (such asfor short-term profitabilityanalysis purposes or for use as anearly warning system), it makessense to use a more recentreplication interval (usually adaily interval), which is alsooptimally supported by CO-PA andSAP BW. With this replicationmodel you separate transaction-based applications from resourcecomsuming reporting activities.

ScenariosAside from the existingpossibilities in Drill-down-Reporting within CO-PA and theexisting ALE-scenarios in the R/3System, you can add value to yourprofitability reporting with thehelp of SAP BW in the followingscenarios and situations:

High-Volume andCross-Application ReportingIn a typical scenario of how SAPBW is used in profitabilityreporting, you move reportingtasks from the R/3 System into anindependent system. For such ascenario, the R/3 System operatesas an OLTP (Online TransactionProcessing) system, which runs theoperational business, while theSAP BW system serves as an OLAP(Online Analytical Processing)system.

By diverting the performance-intensive reporting tasks to aseparate system, the followingstrategic advantages can begained:

■ Reporting does not affect theresponse times of operationalbusiness transactions in the OLTPsystem

■ Each system can be optimized toperform its specific tasks: Youcan tune the R/3 System toefficiently perform OLTP-typicalparallel updates and single-record accesses, whereas the SAPBW system can be adjusted tohandle complex search requeststhat involve summarizing largesets of hits. Competing updatesare bundled via cyclicreplication, thus eliminating anyinterference with the queries.

■ OLTP transactions do notinfluence the response times ofreporting.

■ Besides the technical advantages,the efficiency of reporting isfurther increased by uniformlyreporting across all functionalareas and R/3 applications.

Collecting Profitability Data fromSeveral R/3 SystemsFor environments involvingseveral R/3 Systems that represent,for example, slightly differentmethods of profitability analysisfor various countries or businessunits, it is essential to gain across-system view. In this scenario,the results from differentorganizational subunits arecombined into a single InfoCube inSAP BW that contains the samereporting levels and calculationsof contribution margins.

CO-PA provides the necessaryfunctions for preparing your databasis for group profitability:

■ You can classify your businessprocesses according to salesbetween affiliated companies andcustomers. This classification of

internal and external customersenables you to report yourgroup profit by analyzing profitsfrom external customers as wellas profits from affiliatedcompanies.

■ Furthermore, we recommendvaluating quantities sold withthe group cost estimate inparallel value fields in CO-PA toeliminate intercompany profits.

The data thus prepared in CO-PAcan easily be extracted into SAPBW.

The powerful integration of CO-PAand BW also allows you toharmonize heterogeneousoperating concerns:

■ If a business unit (affiliate,division, country) stores salesdata in CO-PA at a more detailedlevel than other units,appropriate presummarizationcan be carried out when the datais transferred.

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■ If there is no need to integrateyour data into R/3 Accounting,SAP BW can provide anexcellent cross-system viewwhen data is loaded directly intoSAP BW. The powerful stagingmechanisms within SAP BWprovide extensive support forimporting external data, dataquality management and subse-quent bulk updates of theimported data.

ConclusionCO-PA is the R/3 businessapplication, which provides aconsistent data basis for analyzingthe profitability of your company�sactivities.

Given one of the scenariosdescribed above, SAP BWcomplements the businessapplication CO-PA by providing asophisticated replication modeland a modern reporting tool.

■ If a division system stores adetailed cost component split forthe COGS while group-levelreporting is carried out in lessdetail, cost of sales can beaggregated from the split duringdata transfer.

Collecting Profitability Data fromLegacy SystemsA third typical scenario for theimplementation of CO-PA with anSAP BW installation is whenaffiliated companies or parts ofyour company operate systemsother than R/3 and their data hasto be consolidated in yourreporting of group profitability.

■ External data transfer into theR/3 system is recommendedwhen Financial Accounting andManagement Accounting areupdated simultaneously. In thiscase the integrated businessmodel of CO-PA will assure theconsistency of your profitabilitydata.