Cost Center Planning - How To and What Forms 101

Cost Center Planning in SAP managed in SAP or BPC can be broadly divided into two forms.

To start some minor (more or less) definitions so you can follow along if you use different terminology.

Primary Posting - The Financial Posting to the General Ledger by Company Code

Secondary Posting - The resulting secondary controlling entry to any number of items including cost center, profit center etc. as a result of a primary posting or statistically by direct entry

Cross Company Code Controlling - Allowing secondary postings from primary objects that are not directly related to the secondary object - Requires a known but often overlooked setting in configuration where many would fear to tread!

Now for the two Broad Forms.

1.  No Cross Company Code Cost Center Postings - the Most Common Form

2.  Cross Company Code Cost Center Postings - Advanced only for the very knowledgeable few! but VERY GOOD for some.....not often used.

In the first form when entering a cost center posting in SAP the secondary posting will be to a cost center that belongs to the COMPANY CODE in the primary FI posting.   In other words you have company code 0001 and a cost center related to that company code CC01.  You will always post to that cost center with company code 0001 and never do distributions or assessments outside of the company code.  

This structure is typical and is a DECENTRALIZED management approach to cost center management and management reporting generally when taken at face value.

In form 2, you have company code 0001 and company code 0002 and a cost center related to company code 0001  (or any other company code for that matter) called CC01.   In financial postings you will use company code 0001 and 0002 to post to this SAME cost center that is associated with company code 0001. 

This is true cross company code controlling and an advanced method to create centralized and few cost centers for the whole world and to simplify!! yes simplify management reporting.  In that simplification there is some business alignment thinking that must take place.  Only a few FICO consultants would be able to know how this would happen but if you do not over think what a cost center or profit center or even a segment is in SAP then you can get to the solutions.

Now that the framework is a bit set in SAP In A NutShell, we will see two designs for Cost Center Planning in BPC In A Nutshell related to Form 1 and Form 2 that may exist in the back end.   Many other assumptions regarding Profit Center and Functional Area will not be discussed at this time as everyone should know that there is more flexibility in how profit centers and functional areas are determined at primary posting document entry.