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 for IT with additional month-end/year-end activities performed by business users which may have lead to inefficient use of resources operationally.

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 and allows the teams involved in the period-end process to focus on core entities and value-creating activities throughout and especially towards the end of each financial period. For entities out-of-scope from S/4 HANA, direct uploads of the required Financial data into the consolidation systems will be the direction with a streamlined, intuitive and optimized process to realize further time-savings at period-end.

Company codes and companies will be set up such that there is sufficient room to grow for Syensqo as a dynamic organization operating in a rapidly changing business environment. Companies can be converted easily from non-operational entities into operational entities in the future without a need for re-numberings while still retaining its identification as former out-of-scope entity which may be required for historic reporting. At the same time, the immediate 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 eliminations. 

A company code is an organizational 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

Evaluation

	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

See also

Change log

Workflow history