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Prepare now for profit center reorganization: Q&A with Mikhail Ostrov on tools and options for SAP General Ledger

January 23, 2014

Financials 2014 speaker Mikhail Ostrov recently took readers’ questions on profit center reorganization for SAP and the tool, released with SAP ERP 6.0, to streamline profit center restructuring for SAP General Ledger. View the chat replay or read our edited transcript of the Q&A below.

Mikhail Ostrov is a Senior Manager with Enabling Technologies practice of Ernst & Young LLP. He has over 20 years of practical experience in SAP implementations, roll-out, and process improvement projects in the US, Europe, and Asia. Mikhail’s SAP functional areas of focus are in the areas of SAP FICO, Supply Chain, and Sales and Distribution. His background combines hands-on SAP configuration, technical, and project management experience.






Allison Martin, Moderator: Thanks to everyone for joining us! I’m very pleased to welcome E&Y’s Mikhail Ostrov to today’s Q&A. Mikhail will be presenting a session on the profit center reorganization tool at our conference in Orlando, and we’re very happy he’s joining us to take some questions now too. Great to have you here, Mikhail!

Mikhail Ostrov: Hi Allison. Thank you for inviting me to this discussion. I am excited to be here!



Comment From Martin Wilkinson: I have read that to use this functionality you need to be running SAP NetWeaver Business Client even though the programs and tables reside in ECC. Is there any way to use this functionality through the standard SAP GUI?

Mikhail Ostrov: Hi Martin. You must have either NetWeaver Business Client or SAP Portals to use the functionality. Unfortunately, there is no way to access Reorg transactions through ECC SAP GUI.



Comment From Vilim Harangozo: Although it is included with EHP5, do you have to pay to activate the tool and to perform the reogranization?

Mikhail Ostrov: Hi Vilim. We didn’t have to pay extra for activating and using the functionality. It’s my understanding that you pay extra only if you decide to involve SAP SLO services to conduct the Reorg.



Comment From Ravinder Gupta Accenture: You mentioned that we don’t need to pay for this tool. However, for my current client, SAP asked us to pay the licensing fees for using this tool. We have Ehp6 in our system.

Mikhail Ostrov: Interesting. All I can say is that my client didn’t have to pay. Perhaps SAP has changed its policy.

Allison Martin: My best suggestion would be to check with your SAP account rep for pricing details.



Comment From Vilim Harangozo: For G/L accounts with Open Item Management, do we have to repost open items with the assignment to the new profit center?

Mikhail Ostrov: Hi Vilim. GL accounts with OI management (non-sub-ledger) are not handled by the current reorg functionality. We had to develop our custom solution to handle this scenario.



Comment From Mahesh Valleru: We are using ECC 6.0.

1. Can we change the segments in the profit centers that are currently being used?

2. Can we split an existing profit center?

3. Is it possible to merge existing profit centers?

Mikhail Ostrov: Hi Manesh. Here you are:

1. Segment reorganization for existing profit centers is a different functionality. I do not have practical experience with it.

2. Yes.

3. Yes.



Comment From Lindie Visagie: Will you also be discussing reorganization in terms of segments?

Mikhail Ostrov: Hi Lindie. Sorry, I don’t have practical experience with segment reorganization.



Comment From Clinton Jones: Should a profit center reorg be considered a business or an IT project?

Mikhail Ostrov: Hi Clinton. It’s both. Configuration and execution is usually an SAP Support (i.e., IT) function. Reconciliation of the results requires a great deal of business involvement.



Comment From Nipa: What is the name of the tool?

Mikhail Ostrov: The tool is called SAP Profit Center Reorganization Tool.



Comment From Jeff W.: Is this tool compatible with the classic general ledger or only the new general ledger?

Comment From Martin Wilkinson: Does the tool support the classic GL and EC-PCA, or is it only applicable for the new GL?

Mikhail Ostrov: Unfortunately, the tool works only with the new GL. There is an OSS note that refers to the classic GL/PCA solution, but the solution is not part of the standard SAP offering. Contact SAP for more details.



Comment From Clinton Jones: When reorganizing the profit centers, what are your choices for staging your reorg changes?

Mikhail Ostrov: The tool provides you with a very rich functionality to stage your changes and run the changes through approvals. It leaves a perfect audit rail.



Comment From Clinton Jones: What tools are available for changing the profit center configuration?

Mikhail Ostrov: The tool handles master and transactional profit center changes. There is no additional support for configuration (i.e., substitutions).



Comment From Vilim Harangozo: What transactional data is updated with the new profit centers?

Mikhail Ostrov: Here are just a few examples: Sales Orders, Purchase Orders/Scheduling Agreements, Production Orders, Open AP/AR items, etc.



Comment From Vilim Harangozo: How do we handle the profit center change in the material master, if we have to post in the previous period with the old profit center and in the current period with the new one? If we post to the current period with the old profit center, does reorganization include the change of the material accounting documents with the new assignment?

Mikhail Ostrov: You have to complete all transactions in the old period before executing the actual change of profit centers in material master. During this time, you can stage your changes without actually updating material master. Once material master is updated with the new profit center, you can no longer hit the old profit center with material movements.



Comment From Fizah: You mentioned that profit center reorg may result in new functional issues. Can you share what these issues are?

Mikhail Ostrov: SAP constantly publishes OSS notes to fix some bugs. One quick example: After Reorg, Open AR by Profit Center based on FAGL_SPLINFO table was not equal to New GL balance in FAGL_FLEXT. You need to reconcile every step.



Comment From Guest: Can we close the reorg plan without completing? I faced a situation where some of the assets had errors. I could not rectify the assets or close the plan without rectifying the assets.

Comment From Satya: Can we close the reorg plan without completing for all the objects generated in the list? In my case, there were some errors in the assets and I could not rectify the errors. But I need to close the plan because the open plan is giving errors for processing new purchase orders that are linked to the profit centers in the reorg plan.

Mikhail Ostrov: Yes, I had this situation in our test environment. Please write to SAP OSS. They will send you special instructions on how to close the unfinished plan. Although keep in mind this certainly would not do in Production. :-)



Comment From Guest: When we are performing the profit center reorg, I know the objects will be locked. Do we need a downtime for the system to perform the reorganization?

Mikhail Ostrov: Very important point. You absolutely need downtime when the tool updates master and transactional data. For the large scale reorg last time, it took us almost 24 hrs. It certainly depends on the scope and data volumes.



Comment From Guest: In regards to changing cost center master data to a new profit center, does the tool allow these changes to be made at any time, or is it still restricted to being allowed at the new FY only?

Mikhail Ostrov: The tool requires that the changes are made as of the 1st of the new fiscal period (not new year). It also checks period open/close during the execution of various steps.



Comment From Guest: What actual system data does this reorg? ECC? BI? Does this reorg all historical data?

Mikhail Ostrov: Actually, the tool does not change historical data. It moves balances and impacts future transactions. Let me give you an example: An open AR item with the old profit center. The item will not be changed, but the balance in the new GL will be moved. And the cash application (clearing) will be posted to the new profit center.



Comment From Ravinder Gupta Accenture: How is historical data managed ? If there are no changes to the line items posted earlier, will historical reporting still be on the old profit center design? Also, how do we handle comparative reports with last year if historical data doesn’t get changed?

Mikhail Ostrov: Very good question. The tool does not change historical data. You have to go with custom solutions to provide comparative reporting.



Comment From Nikhil Singhal: If segments are used along with profit centers, do we need to carry out segment reorganization along with profit center reorganization separately, or will the profit center reorg take care of both?

Mikhail Ostrov: The tool will take care of both. If the old profit center has a segment and the new profit center is assigned to the same or different segment, the updates will take segments into consideration. You don’t need segment reorg if all your segment logic is driven by profit center assignments to segments.



Comment From Satya: What is the cutover strategy to complete the reorg plan? We cannot perform any testing for the reorg plan.

Mikhail Ostrov: You must have a copy of Production to conduct the testing. For the large scale reorg last time, it took us four testing cycles to get it to work. Each testing cycle required a fresh copy of Prod to the test environment.



Comment From Ulla Valkonen: Is it possible to merge profit centers only inside one legal entity or also between two legal entities (company codes)?

Mikhail Ostrov: No restrictions here. You can merge profit centers between two company codes. Only one thing — your new profit center must be activated in both company codes.



Comment From Menginder: Is the costing based on the number of users, or some other basis? Also, do we need some training or external expertise to operate the tool? If so, from experience, how much training is required?

Mikhail Ostrov: It’s a very tricky question. :-) You can certainly master the tool yourself. It really depends on the timing. If you are under time pressure to execute, I would suggest getting someone who has done it before, or better yet, get SAP SLO.



Comment From Debasish: Is there any step-by-step guide about how we go ahead with PC reorganization?

Mikhail Ostrov: Unfortunately, no. The only documentation available is standard SAP help and EhP5 release notes. You have to learn many things through testing. :-)



Comment From Irrinki: What are the alternative methods to update material master with profit centers after a PC reorg has happened?

Mikhail Ostrov: You can still update material master with MM02 going forward, as long as there is no active Reorganization Plan in the system that locks this material. However, by doing a simple MM02, you have a risk of not propagating your changes to dependent data (sales orders, purchase orders, etc.).



Comment From Vilim Harangozo: Does it include G/L balances by profit center without cost object? What if the old profit center exists in the item?

Mikhail Ostrov: The tool provides the functionality to update the profit center in line item. Take one example: an open AR item. There is no cost object here. The tool updates relevant SAP tables where profit center info is stored for this line item.



Comment From Satya: For large data, what is the estimated time for each testing cycle? We have to perform the reorg plan before starting transactions posting in the new period, so testing has to be completed by the last working day in the period.

Mikhail Ostrov: You are talking about Production. In a testing environment, you have control over opening/closing periods. The List Generation/Object Maintenance must be done with the old period opened/new one closed. The reassignment step is the other way around (old period closed/new opened). You can control when you open/close periods physically.



Comment From Menginder: Are only the PCs that are being affected by the changes locked or is the whole PC hierarchy locked during the implementation stage?

Mikhail Ostrov: To the best of my knowledge, the PC hierarchy is not locked during the execution. PC Master (and standard hierarchy) is maintained ahead of time and not during the execution of the reorg.



Comment From Andy Mackintosh: Are you able to change the profit center hierarchies (KCH2) as well using this tool?

Mikhail Ostrov: If your reorg involves setting new profit centers, you would do KCH2 ahead of time. The meat of the reorg is changing the dependent data (materials, orders, etc.) and moving the balances.



Comment From Bjoern: If I change a profit center in the material master, will this transfer be reflected in the balance sheet accounts or is a manual rebooking still required?

Mikhail Ostrov: That is a beauty of the reorg. The posting is done by the tool. Additionally, you will get a very nice report reconciling the posting by material/plant.



Comment From Andy Mackintosh: Can you confirm that materials profit center assignments are also changed with this tool?

Mikhail Ostrov: Absolutely. That is in the center of the tool’s functionality.



Comment From Satya: After completing the reorg plan in the current month, if we reverse any transactions in the previous month, which profit center will get updated?

Mikhail Ostrov: Very good question. If you are doing a simple FB08 reversal, you will hit the new profit center. However, we had problems with billing cancelations and had to develop user exits to handle it correctly.



Comment From Guest: Does the tool update only FAGL* tables, or does it also update BS* tables (BSEG, BSIS, BSAS)?

Mikhail Ostrov: Excellent question! I have documentation, by object, on what tables the tool updates for each object. One quick example: Open AR. BSEG and FAGLFLEXA are not updated. The system updates FAGL_SPLINFO, which holds the profit center split for open items. Sorry, not enough time to answer for each object here.



Comment From Irrinki: You said the old profit center on an open AR line item doesn’t get updated with the new profit center. Will only the associations change and the cash be applied to the new profit center?

Mikhail Ostrov: Exactly. The system will move the balance from the old to the new profit center (FAGLFEXT) for AR Recon account. It will also update FAGL_SPLINFO to be able to process the clearing transaction to the new profit center. Historical data will remain untouched. If you are looking at the line item via FB03, you will not be able to say if it was reorganized.



Comment From Tim Roose: Is this typically carried out with a functional consultant or is it something we can take care of internally?

Mikhail Ostrov: I would sincerely recommend either a functional consultant or SAP SLO.



Comment From Satya: Will the WIP balances also be replaced with the new profit center?

Mikhail Ostrov: This is a great question! I wish I could answer it. The truth is that we were unable to use the tool for production orders. The logic of the tool was not compatible with our business requirements. We had to exclude production orders from the scope of the reorg and did a custom solution outside of the tool.



Allison Martin: Thanks again, everyone, for a great discussion and all those questions! For more on this topic, join us in Orlando at Financials 2014, where Mikhail will have a session focused on profit center organization projects and tools. And finally, thank you, again, Mikhail Ostrov, for taking these questions today. We appreciate you taking the time to join us, and look forward to seeing you in Orlando!

Mikhail Ostrov: It was a real pleasure to be part of this session! Thank you to everyone for very good questions.

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