Universal Cost Allocation is the new simplified functionality in SAP S/4HANA to allocate and distribute cost periodically from one controlling object to one or more others. For example, the costs incurred at a cost center that provided services for other cost centers can be transferred to these cost centers with defined rules.
With this functionality, just a few Fiori Apps are used to perform the allocations of cost centers, profit centers, and margin analysis considering both actual and plan records. Indeed, financial and Controlling allocations are built in one architecture using the core tables for Universal Journal actual line items (ACDOCA) and plan items (ACDOCP).
With the traditional cost allocation processes, organizations face some challenges. Mainly they are related to difficulties to understand their allocation cycles and the resultant cost flows, struggling to explain them to the relevant stakeholders. Also, there is a lack of traceability to analyze the cost allocated compared to the actual cost invoiced; without having granular visibility at the reporting level.
In addition, the organizations are managing uncertainty in current times having dynamic and complex processes. That may lead to difficulties to define the desired scenarios in allocation cycles and without having tools to simulate possible financial effects of changed allocation rules on their financial data. Also, the execution of the allocation processes and reporting may take long runtime.
Please refer to the image below for further challenges:
The new Universal Cost Allocation functionality in SAP S/4HANA reduces the number of transactions to run the cost allocations compared to previous versions. It is needed to run just a few Fiori Apps, that are user friendly and having guided procedures and validations to make the user more confident with the tool.
In addition, it provides a simplified data model by removing a handful of core tables which in return reduces the database size significantly. Besides, significant benefits are listed in the image below:
Universal Cost Allocation offers several features and capabilities to make easier the cost allocation processes, and the related reporting and analysis performed to make business decisions. Customers can quickly identify the possible financial effects of changed allocation rules on their financial data.
The solution can perform allocations for actual data and plan data, providing simulation capabilities with the definition of predictive ledgers. It also offers user-friendly reporting built-in Fiori with the capability to analyze the records in multiple currencies.
Refer to the image below for further features:
However, the new solution does not cover the following allocation processes that require to keep using the original transactions in SAP GUI system:
Universal Cost Allocation allows you the creation and execution of the following type of allocation cycles using the same Fiori Apps for all of them.
The Fiori Apps to perform the allocation processes are listed in the picture below:
The next post in this 2 part blog series will be an overview of Cost Allocations. It will dive into a deeper look at one of the key functions and processes within Universal Cost Allocation in S/4HANA.
This is the third and final blog in a series of three about Universal Cost Allocation. If you have not already done so, please read Part 1 and Part 2 of this series, linked below. Part ...
This is the second blog in a series of three about Universal Cost Allocation in SAP S/4HANA. This blog details the Cost Allocations process as part of the Universal ...
This is the final part of a three-series blog discussing Group Reporting in S/4HANA. If you have not yet read the first two blogs, we highly encourage doing so first. What is Group Reporting ...