Status
Owner	The person responsible for driving this decision and documenting it. Type @ to mention people by name
Stakeholders	The business stakeholders involved in making, reviewing, and endorsing this decision. Type @ to mention people by name

Issue

In Syensqo's current ECC systems, many companies are created as company codes in the system irrespective of whether the company code is operational or not. This added to the complexity of configuring and maintaining the system with additional month-end/year-end activities for the business to perform.

Recommendation

Based on the analysis performed, it is recommended to go with 'Option B: Create Company for all the entities and company code only for the operational entities'. This will keep the core SAP system cleaner with an opportunity to configure more company codes and/or convert non-operational entities into operational entities in the future. At the same time, the setup of each entity as a Company in S/4 HANA paves the way for future consolidated group reporting out of the new consolidation system introduced as part of the transformation program.

Background & Context

A company is a structure within S/4 HANA used to facilitate legal and management consolidation within the consolidations system. In SAP source systems, it is also used to differentiate intercompany transactions from external transactions with the aim of facilitating typical month-end consolidation activities such as I/C elimintations.

A company code is an organisational unit used in Financial Accounting representing a reporting entity at which fully compliant and complete Financial Statements can be generated out of the system. In Syensqo's current systems, all companies are set up as company codes in the ECC system, regardless of whether they are operational or not. This approach has led to increased complexity in system configuration and has made month-end and year-end closures more challenging. The presence of non-operational company codes adds unnecessary layers to financial processes, complicating the overall system management and potentially leading to inefficiencies during critical financial reporting periods.

Assumptions

None at this point

Constraints

None at this point

Impacts

Following are the impacts

Data Conversion and migration: Data from the As-Is systems need to be mapped based on the proposed Company code Structure

Downstream System: There will be an impact on all the downstream systems that use Company code and there should be a one-time remediation or mapping exercise that should be undertaken

Business Rules

Please refer to the Business Rules in the below section.

Options considered

Following are the options proposed for the issue

Option A: Follow the As-Is Structure i.e. Create company and company code for all the entities

As a part of this option the company and company code is created for all the entities that are in scope of consolidation

Option B: Create Company for all the entities and company code only for the operational entities

As part of this option, company code is created only for the operational entities

Type of company arrangement	In legacy ECC	Ownership	Syensqo as Operator	Consolidation	Company	Company Code	Business Rule
100% Owned by Syensqo and consolidated	Yes	Yes	Yes	Yes	Yes	Yes	Every legal entity on its own and 100%-owned by Syensqo should be a company code set up in S/4.
JV Entity	Yes	No	Yes	Yes	Yes	Yes	Every company code that is a JV entity in nature where Syensqo acts as the operator, must be created in S/4 HANA as a company code.
JV Entity	Yes	No	No	Yes	Yes	No	Every company code that is a JV entity in nature where Syensqo acts as the non-operator, must not be created in S/4 HANA as a company code.
Entities non-consolidated	Yes	No	No	No	Yes	Yes	Entities that are not consolidated, must not be created as a company code in S/4 HANA unless it's a JV operator entity or an active entity in legacy SAP or if it's been set up as a company code in ECC.
Entities non-consolidated	No	No	No	No	No	No	Entities that are not consolidated, must not be created as a company code
All other consolidated entities	Any	Any	Any	Yes	Yes	No	Every entity will be created as a company in the Consolidation system due to group reporting requirements.

Evaluation

Outline why you selected a position. The best format could be a pro/con table (sample below), but is up to you as the author. You must consider complexity, feasibility, cost/effort to implement, but also ongoing operational impact and cost. You must consider the program principles and explain any deviations in detail. This is probably as important as the decision itself.

	Option A: Follow the As-Is Structure i.e. Create company and company code for all the entities	Option B: Create Company for all the entities and company code only for the operational entities
System Complexity	Con: System configuration is complex. Any new entity even non-operational will have to configured as a company code.	Pro: Cleaner system as only the operational entities are in the system
Period end closure	Con: Multiple entities are considered in the PEC activities though not required	Pro: Only the required entities are considered for PEC
Future compatibility	Con: Once the company code is created and needs to be converted into an operational entity, the company code attributes ex: currency etc.. cannot be changed once any transaction is posted	Pro: The company code will be created as an operational entity only when required and therefore the attributes also can be configured at that point in time