SAP CO-PA stands for Controlling - Profitability Analysis and represents an accounting component for mapping profit and market segment accounting. Company departments such as sales, marketing or product management use the CO-PA module for internal accounting and strategic decisions. Profitability analysis can be mapped in two different ways:
as costing-based or value field-based profitability analysis, in which costs and revenues are calculated using self-defined field values and costing-based valuations;
as accounting-based or account-based profitability analysis, in which costs and revenues are stored in accounts for calculation.
Accounting CO-PA becomes Margin Analysis
Both types of profitability analysis - cost-based (value field-based) and accounting-based (account-based) - have always been mapped in SAP in the CO-PA module. However, most companies used cost-based CO-PA because accounting-based CO-PA was very inflexible and not very meaningful. In addition, imputed CO-PA made it relatively easy to comply with International Financial Reporting Standards (IFRS) and implement customer-specific requirements.
In S/4HANA, SAP renamed the accounting CO-PA to Margin Analysis and significantly enhanced the functionality in various releases. In the context of S/4HANA implementation projects, many companies are therefore faced with the question of whether Margin Analysis can replace cost-based CO-PA from ECC or whether cost-based CO-PA must continue to be used in order to meet the requirements for profitability analysis.
What solutions are available in S/4HANA
Basically, a distinction must be made between S/4HANA on-premise and the cloud when making a decision. In an S/4HANA on-premise solution, both margin analysis and imputed CO-PA can be used: Both variants can be activated simultaneously. Since Margin Analysis is evaluated and further developed by SAP as a strategic product, the use of Margin Analysis in the cloud is mandatory, in contrast to an on-premise system. It should also be taken into account that cost-based CO-PA is not being further developed by SAP.
What new features does Margin Analysis offer?
Although Margin Analysis maps most of the functions of imputed CO-PA, it differs in scope and focus. In addition, Margin Analysis includes several new features. For example, the following functions are new:
- Drill-down reporting by P&L characteristics: analysis down to document level by market segment is possible.
- Parallel currency: In Margin Analysis, all FI currencies are available in ACDOCA (up to ten currencies).
- Account-based analyses: Account-based reporting also provides the ability to structure profitability analysis by type of expense.
New functions in the master data are:
- Evaluation of balance sheet items by profitability characteristics: market segments for unbilled revenues or WIP can be evaluated.
- Characteristic derivation without profitability segment: Real-time derivation of profitability characteristics for postings to cost centers, orders, projects, etc.
What is missing in Margin Analysis?
However, there are some functions in cost-accounting CO-PA that are not available in Margin Analysis. For example, the following functions are omitted from actual postings and valuation:
- Statistical SD conditions at order entry: consideration of statistical SD condition types such as salesperson commission at order entry.
- Manual posting directly in CO-PA: Line item entry in Profitability Analysis to adjust results.
- Parallel valuation with different cost estimates: Calculation of COGS based on multiple approaches such as standard costing, group costing, or transfer price costing.
- Valuation of sales and administration overhead: Calculation of administration and sales overhead based on characteristics of the operating concern.
- CO-PA valuation: Calculation of imputed costs in CO-PA.
Both types of profitability analysis - cost-based and accounting-based - are available in S/4HANA On-Premise. The accounting-based profitability analysis has been enhanced with various functions and is called Margin Analysis in S/4HANA.
Summary
Customers who already have a very customer-specific imputed CO-PA in the ECC system with programmed exits including complex derivation logics and many customer-specific value fields / characteristics must analyze very precisely in advance whether the margin analysis covers their requirements. Also, especially for topics such as Goods in Transit, compliance with IFRS rules in reporting must be analyzed.
Customers who have not previously used CO-PA or who only use the standard functions of Profitability Analysis can save effort in their projects with Margin Analysis. In addition, there is no alternative in the cloud solution so far.
