Migrate Successfully to the New SAP GL

Paul Theobald

Contents

Preface ............................................................. 3 2.3 Possible Migration Scenarios ............................ 27

Changes in the New G/L ................................. 3 Migrating From Systems That Used
Migrating to the New G/L ............................... 3 Parallel Accounting ................................... 28
Future SAP Support of the Classic G/L and Summary of Possible Migration Scenarios 28
Advantages of the New G/L ............................ 4 2.4 Potential Benefits and Risks ............................. 29
Intended Audience and Skill Prerequisites ...... 4 Benefits of Migrating ................................ 29
How This Book is Organized ............................ 5 Risks of Migrating ..................................... 30
2.5 Summary ........................................................... 31
1 Upgrade to SAP ERP 2004/2005 .................... 7
1.1 SAP ERP Key Components .............................. 7 3 Migration Phases ............................................. 33
1.2 Benefits of Upgrading ...................................... 9 3.1 Phase 0: Planning ............................................. 33
Benefits of SAP NetWeaver ..................... 9 3.2 Phase 1: Migration and Testing ........................ 34
Functional Benefits .................................. 9 3.3 Phase 2: Go Live ............................................... 34
Benefits of Upgrading from Legacy 3.4 SAP Migration Service ...................................... 35
Systems .................................................... 10 3.5 Summary ........................................................... 36
Finance Benefits ....................................... 10
1.3 Upgrade Approaches ....................................... 12 4 Planning Phase ................................................ 37
Upgrade Reasons ..................................... 12 4.1 Scope of Project ............................................... 37
Technical Upgrade ................................... 12 4.2 Initial Situations in the Classic G/L ................... 38
Functional Upgrade ................................. 14 Use of Profit Center Accounting .............. 40
Strategic Business Improvement Upgrade 14 Use of Business Areas ............................... 40
1.4 Best Practices ................................................... 15 Use of Cost-of-Sales Accounting .............. 40
Planning ................................................... 15 Use of Special-Purpose Ledgers ............... 40
Building .................................................... 16 Use of Additional Currencies in
Running .................................................... 16 Special Ledgers ......................................... 41
1.5 Future Release Strategy ................................... 16 Use of Interfaces to External Systems ...... 41
1.6 Summary .......................................................... 16 How Consolidation Is Performed ............. 41
Status of Existing Transaction and
2 Why Migrate to the New G/L? ....................... 19 Master Data .............................................. 41
2.1 Upgrade and Migration as Separate Projects ... 20 Company Codes and Cross-Company
2.2 New Functionality ........................................... 21 Code Clearings ......................................... 42
Segment Reporting .................................. 21 Use of Parallel Valuation .......................... 42
Document Splitting .................................. 23
Parallel Ledgers ........................................ 25

www.sap-press.com 1
Contents

4.3 Target Migration Scenarios .............................. 43 6 Migration and Testing Phase .......................... 67
Migration without Document Splitting 6.1 Complete Customizing ..................................... 67
or Parallel Valuation ................................. 44 Ledgers Customizing ................................ 67
Migration with Document Splitting ......... 45 Segment Reporting ................................... 69
Migration with Parallel Valuation ............ 49 6.2 IMG Migration Activities .................................. 70
Migration with Document Splitting 6.3 Testing .............................................................. 78
and Parallel Valuation .............................. 53 Validation of Document Splitting
4.4 Timing .............................................................. 53 Customizing .............................................. 78
4.5 Staffing and Training ........................................ 54 Check Business Transaction Assignment
Staffing ..................................................... 54 for Migration Documents ......................... 80
Training .................................................... 54 Validation of Migration Activities ............. 81
4.6 IMG Migration Tasks ........................................ 55 6.4 Evaluation of Migration .................................... 81
4.7 Initial Customizing ........................................... 56 6.5 Summary ........................................................... 82
Document Splitting Customization ......... 57
Parallel Ledgers Customization ................ 60 7 Go-Live Phase .................................................. 83
7.1 Testing .............................................................. 83
5 SAP Migration Service .................................... 61 7.2 IMG Migration Activities .................................. 84
Scenarios Supported by the Analyze Migration Status .......................... 84
SAP Migration Service .............................. 63 Migration Successful ................................. 85
G/L Migration Cockpit ............................. 64 Migration Was Not Successful ................. 86
5.1 Summary .......................................................... 65 7.3 Training ............................................................. 87
7.4 Technical Facts about Migration ...................... 89
7.5 Summary ........................................................... 89

Index ................................................................. 91

2 © Galileo Press 2008. All rights reserved.

2 Why Migrate to the New G/L?

The classic G/L is currently being used by the majority of The new G/L was developed by SAP after gathering cus-
SAP customers worldwide and can continue to be used in tomer requirements over several years. Figure 2.1 illus-
SAP ERP, so why migrate to the new G/L? Let’s look at trates these requirements, which include:
some answers.
In recent years, accurate financial reporting has
Management
become more important than ever. Executives now have Reporting
to personally attest to the accuracy of financial state- Segment
Extensibility
ments and are personally liable for any misstatements. Reporting

Also, global organizations must report using many differ-

ent accounting principles, including US GAAP, IFRS, and Legal Entity Balanced Books
Reporting by Any Dimension
local GAAP. Customer
Requirements
The new G/L reduces complexity by integrating ledgers
Parallel
that were maintained separately in the classic G/L. Cost Compliance
Accounting
of Sales, Profit Center Accounting, and Consolidations,
for example, are now unified within the new G/L, allow- Transparency Fast Close
ing more transparency and saving time as individual ledg-
ers do not have to be reconciled. TCO Reduction
The answer to the question, should a company migrate
to the new G/L? will generally be yes, if the company Figure 2.1 Why Did SAP Invent the New G/L?
meets any of the following criteria:
왘 The company is an international organization operat- 왘 Management reporting — requirement for better rec-
ing in multiple countries and on multiple continents onciliation between the FI and CO modules
왘 The company is required to report multiple accounting 왘 Extensibility — requirement to add new functionality,
methods, such as US GAAP, IFRS, etc. such as in the new G/L, while minimizing impact to
왘 The company is required to report by different busi- existing system functions
ness areas (e.g., product lines) 왘 Balanced books by any dimension — the classic G/L
왘 The company is required to report financial statement could only complete partially balanced books by busi-
items by segment according to SEC guidelines ness areas and profit centers (see 2.2.2 on document
왘 The company is required to produce consolidated splitting)
financial statements across multiple legal entities 왘 Parallel accounting — increased requirement to pro-
왘 Current reconciliations between classic G/L and Con- duce parallel sets of financial statements in accordance
trolling are complex and time consuming with different accounting principles (see section 2.2.3
왘 The company would like to reduce the complexity of on parallel ledgers)
it’s financial structure 왘 Fast close — all organizations want to close the books
as soon as possible. In the classic GL, reconciliation

www.sap-press.com 19
2 Why Migrate to the New G/L?

between FI and CO modules was time consuming at 2.1 Upgrade and Migration as Separate
close. Projects
왘 TCO reduction
왘 Transparency — requirement for better drilldown from The new G/L represents a major change from the classic
reports to their originating transactions G/L. It has many new features and the migration project
왘 Compliance— requirement for the G/L to produce will be complex. Also, very often the data volume in the
reports in compliance with other reporting standards classic G/L to be converted adds to the complexity of the
such as IFRS, local GAAP. project.
왘 Legal entity reporting Migration to the new G/L is far more than a data con-
왘 Segment reporting — requirement to report key finan- version, especially in a migration scenario with document
cial statement items by segments, such as geographical splitting where existing data has to be enriched to work
region (see Section on segment reporting) with the new functionality.
The new G/L also has new tables that may require
Example of G/L-Related Customer Requirements existing interfaces and user modifications to be rewritten
Many companies have the requirement to report full and tested. There are also changes to transaction codes
financial statements by dimensions at a level lower which will require user security roles to be revised.
than the company code. In SAP Enterprise and previ- Therefore, it is very important for you to have separate
ous SAP releases this was only possible with the use of projects to first upgrade to SAP ERP and then migrate to
business areas and profit centers and this was not a the new G/L. The migration should be considered as a
complete solution for areas such as cash, accounts separate consulting project requiring a full project cycle.
receivable, and accounts payable. The new G/L meets Figure 2.2 illustrates the upgrade project being com-
this requirement by allowing customers to define their pleted and then the new G/L implementation project
own dimensions and, in conjunction with document with three phases:
splitting, the new G/L has the ability to generate a set 1. Blueprint new G/L — determining business require-
of balanced and reconcilable financial statements for ments, scheduling of milestones
any dimension of the business. 2. Customizing and implementing the new G/L — includ-
ing data mapping and custom code updates
3. Migration to the new G/L — including testing certifi-
This chapter will explain the key areas of new functional- cation of results, final signoff on project results
ity in the new G/L, provide an overview of the most com-
mon migration scenarios, and, finally, discuss the poten- Timing of the migration project will be covered in detail
tial benefits and risks of migrating to the new G/L. in the planning section, but the date of the migration
must always be the start of a new fiscal year. Most com-
Note panies have a fiscal year equal to the calendar year, so
Some industry-dependent solutions require the use of their date of migration would be January 1. Year-end
the classic G/L, which can still be used in SAP ERP. closing of the prior fiscal year must also have taken place
before the migration project can go live, so the date of

Upgrade New G/L Implementation Project

Project Customizing & Timeline

Blueprint Migration
SAP R/3 new G/L implementing to new G/L
mySAP ERP new G/L

Figure 2.2 Upgrade to SAP ERP Is a Prerequisite to Migration

20 © Galileo Press 2008. All rights reserved.

 2.2 New Functionality

activation will be later than the date of migration. Most This section will provide an overview of the three main
migration projects will take approximately six months areas of new functionality in the new G/L that will impact
and, based on a January 1 date of migration, will start the possible migration scenarios.
around October 1. This means that before this date there 1. Segment Reporting
must have been a successful upgrade to SAP ERP and — 2. Document Splitting
as mentioned earlier in Chapter 1 — SAP estimates that 3. Parallel Ledgers
the average time for the fastest upgrade approach, a tech-
nical upgrade, is three-and-a-half months. The aim of this section is to explain these three areas in
The time required for a migration project depends on enough detail, so that decisions can be made as to
several factors but one factor is how much of the new whether they will be included in the migration project. A
functionality in the new G/L is implemented. The next migration without document splitting, for example, is far
section explains the key areas of new functionality in the less complex than a migration with document splitting,
new G/L. and thus whether to include it is an important consider-
ation.

2.2 New Functionality Segment Reporting

Segment reporting is a legal requirement in many coun-
It is useful to consider the existing architecture in previ- tries. US GAAP and IFRS require a segment to be reported
ous releases of SAP to realize why SAP needed to intro- if the total external revenues of the segment exceed 10 %
duce the new functionality in the new G/L. Figure 2.3 of the total revenue. They also require certain other bal-
shows the existing FI CO architecture and demonstrates ance sheet and income statement information to be
how legal reporting in the FI module was completely sep- reported by segment, such as revenues by geographical
arate to management reporting in the CO module. region, etc.
The big change for segment reporting in SAP ERP is
FI CO that there is now a separate Segment field in the profit
General Ledger Cost Center Accounting
center master record as shown in Figure 2.4.
Asset Management Profit Center Accounting

Accounts Receivable Profitability Analysis

Accounts Payable Product Costing

Investment Management Activity Based Costing

Special Purpose Ledger Internal Orders

Figure 2.3 Existing FI CO Architecture

Figure 2.4 Separate Segment Field on Profit Center Master

The separation of the modules made cross-module
reporting, such as segment reporting and balance sheets
by profit centers more difficult and led to the develop- In previous versions of SAP, it was possible to report by
ment of the new, more flexible G/L. segment using nodes in the profit center hierarchy, but
this new field means that there can be relatively few seg-
Note ments to many profit centers. This is a great benefit for
As mentioned earlier, there is a separate book avail- companies with many profit centers because reporting
able for a more detailed explanation of the new func- will be far less complex and time consuming. Many of the
tionality in the new G/L, NewGeneral Ledger in SAP standard reports in SAP ERP contain the Segment field
ERP Financials by Eric Bauer and Jorg Siebert, pub- and therefore users can easily produce balance sheets by

lished by SAP PRESS. segment. An example of this is the standard report for
producing financial statements as shown in Figure 2.5.

www.sap-press.com 21
2 Why Migrate to the New G/L?

to derive the segment automatically. Also, the Segment

field can be populated manually at the time of posting.
Figure 2.6 provides an overview of the various ways that
segments can be derived.
The easiest and recommended approach for segment
reporting is to use the Segment field on the profit center
master record.

Setting Up Segment Reporting in SAP ERP

Figure 2.5 Segment Field on Standard Reports
The following steps are required for setting up segment
The big advantage of segment reporting in SAP ERP is that reporting in SAP ERP :
the segments are contained at the detailed document 1. Define segments. Commonly-used segments will be
level and, therefore, you do not need to wait until period- geographical for a multinational company, for exam-
end close to build the segment reports. This is less time ple, in Figure 2.7:
consuming and less prone to error.
Document splitting, which will be covered later, can
be activated by segment in SAP ERP, making it possible to
produce balanced financial statements by segment. In
previous versions of SAP, document splitting required a
special ledger and could only be activated on the profit
center and business area fields.
Population of the segment field can be manual or Figure 2.7 Define Segments
automatic. As shown in Figure 2.4, the Segment field is
included on the profit center master record so if a posting 2. Assign the segmentation scenario to the ledger. Figure
to a G/L account includes a profit center, the segment will 2.8 shows how to assign the segmentaion scenario to
be derived automatically. If profit center master data is the leading ledger. This step defines that segment
not used, custom derivation rules can be defined with the reporting will be used for this ledger.
customer enhancement BADI FAG/L_DERIVE_SEGMENT

Material Management and Production:

Controlling object or material master
G/L postings without profit center info:
a) Manual entry of segment or
b) BAdl (Coding or Substitution) or
Sales: c) Default Segment
Customer order position

Controlling: Profit Center

CO objects

Derivation of segment

Totals per: Ledger, Company code, Segment, etc.

Figure 2.6 Derivation of Segment G/L

22 © Galileo Press 2008. All rights reserved.

 2.2 New Functionality

In SAP ERP, on the other hand, line items can be split by

the following dimensions:
왘 Profit centers
왘 Segments
Figure 2.8 Assign Segmentation Scenario to Leading Ledger 왘 Functional areas
왘 Business areas
3. Assign segments to the profit center master records (as 왘 Commitment items
shown in Figure 2.4) or use the alternative customer 왘 Funds
enhancement to derive the segments automatically. 왘 Funded programs
Figure 2.9 shows where to find the customer enhance- 왘 Grants
ment in the IMG:
Example of Document Splitting by Segment
Document splitting by segment is widely used by compa-
nies required to produce full financial statements by seg-
ment. Figure 2.10 shows an example of a posted docu-
ment with segments. In this example, a customer invoice
has been posted with two revenue entries. One revenue
Figure 2.9 Derive Segments Automatically (BADI posting is to profit center P190004, which is linked in its
FAGL_DERIVE_SEGMENT) master record to segment NA (North America), and the
other revenue posting is to profit center P190005, which
Note is linked to segment EU (Europe).

The Business Area field can still be used for segment

reporting, but will only be retained in its present form
with no new development planned for it.

Document Splitting
Document splitting is a functionality that allows fully bal-
anced financial statements to be produced at levels lower
than company code. For example, there may be a
Figure 2.10 Document Posted in the New G/L with Document
requirement to produce financial statements by profit
Splitting
center, segment, or other dimensions.
In previous versions of SAP, producing full balance This document simulation shows the classic G/L view of a
sheets by profit center was extremely difficult. Balance document, but in the new G/L an expert view can be
sheet items such as accounts receivable and accounts selected that simulates the document splitting before
payable could be analyzed and posted by profit center at posting, as shown in Figure 2.11:
period-end close using standard SAP programs, but these As you can see in Figure 2.11, the effects of the docu-
were not real time and there was never a satisfactory ment splitting can be displayed before the document is
solution for allocating cash to profit centers. posted. In this example, the customer posting has been
Document splitting was available in SAP Enterprise, split in the same way as the revenue postings so that the
but only in the special ledger. In order to use document balance sheet accounts receivable total can also be
splitting, a special ledger was required and document reported by segment.
splitting could only be activated for business area and In SAP Enterprise, using a Special Ledger with docu-
profit center. ment splitting, it was not possible to preview/simulate

www.sap-press.com 23
2 Why Migrate to the New G/L?

the split of a document before posting. Therefore, this is option, as shown in Figure 2.13. Zero balancing ensures
a very useful feature in the new G/L. that each individual document posted is balanced by
the split characteristic, Segment in this case.

Recommendation
It is strongly recommended that you select Zero bal-
ance for document splitting, especially when balanced
financial statements are being produced by the split
field.

Figure 2.13 Document Splitting Characteristics

2. Classify G/L Accounts for Document Splitting

Figure 2.11 Example of Split Document by Segment in the New G/L Depending on your chart of accounts, you need to
classify accounts as balance sheet accounts, revenue
Document splitting also works for cash by taking the accounts, expense accounts, etc. SAP software does
breakdown from the original invoice. In the previous not require certain accounts to be classified, for exam-
example, if payment is received from the customer for ple, vendor or customer accounts, as it can recognize
$5,000, the cash posting will also be split between the these as reconciliation accounts for their respective
two segments in the same proportion. subledgers.
3. Classify Document Types for Document Splitting
Setting Up Document Splitting Standard SAP document types have already been clas-
The main configuration tasks for setting up document sified for document splitting. Customer-defined docu-
splitting are outlined in Figure 2.12. Let’s look at each in ment types that have been added, for example, Z
more detail. types, must be classified in this table T8G12 or will not
split correctly. For example, in Figure 2.14, SAP stan-
dard document type KR for a vendor invoice has been
classified as Transaction 0300, which is Vendor invoice.

Figure 2.12 Document Splitting Configuration

1. Define Split Characteristics

The first step in setting up document splitting is to
define the split characteristics. Split characteristics are
the fields that you wish your ledger to split on. In this
example, we are using the Segment field for document
splitting and have also selected the Zero balance Figure 2.14 Classify Document Types for Document Splitting

24 © Galileo Press 2008. All rights reserved.

 2.2 New Functionality

4. Define Zero-Balance Clearing Account different accounting principles and require their own
As stated earlier, zero balancing is recommended for predefined chart of accounts.
document splitting and in this section you specify the
G/L account for the balancing postings. Example
5. Activate Document Splitting A US company has a global chart of accounts but has
The final task is to activate document splitting, as subsidiaries in Europe — for example, France — that
shown in Figure 2.15. Note that it is possible to deac- require local accounts to be reported to the French
tivate document splitting by company code. Government using their own chart of accounts. Using
a special ledger, postings made to the classic G/L also
update a special ledger with the required local G/L
account number. Any postings unique to the French
local GAAP are made directly to the special ledger.
Figure 2.15 Activate Document Splitting

Parallel Ledgers
Local GAAP
With the globalization of many organizations, there is an Reporting
increased requirement to produce parallel sets of finan-
cial statements in accordance with different accounting IFRS Reporting US-GAAP Reporting
principles such as US GAAP, IFRS, etc. General
US-GAAP
IFRS Ledger
only
Accounts Common
Parallel Accounting in Previous Releases of SAP Accounts
Accounts
One of the challenges presented by previous releases of
SAP has been how to gather and store the different sets
of valuations needed to produce parallel accounting. In
Local GAAP
previous releases of SAP, companies used one of two Accounts
methods:
왘 Parallel accounts
G/L accounts are created and used only for postings Figure 2.16 Parallel Accounts Method
related to the particular accounting principle. Some
G/L accounts are shared where the accounting princi- The New Parallel Ledgers Functionality in SAP ERP
ples are the same and the different accounting princi- In SAP ERP, the parallel accounts solution can still be used
ples can be reported by grouping the G/L accounts. for parallel accounting and will be supported by SAP, but
Figure 2.16 shows how the general ledger common the new parallel ledgers functionality is a major improve-
accounts are shared by US GAAP, local GAAP, and ment over the special ledger solution.
IFRS reporting and how each accounting principle also Separate ledgers can be set up for each reporting
has its own separate G/L accounts. A common exam- requirement such as local GAAP. IFRS and, as shown in
ple is for assets that may have different useful lives Figures 2.17 and 2.18, postings to other modules, such as
depending on the accounting principle. Separate G/L FI-AR, FI-AP, SD, MM, and PP, update the ledgers simul-
accounts are maintained for the different depreciation taneously (in parallel) according to different accounting
postings. standards.
왘 Special ledger A leading ledger must be defined, which is always 0L in
A special ledger is maintained for reporting a different SAP ERP, and represents the accounting standard that is
accounting principle. Many companies use this most commonly used by the organization. Other ledgers
approach and it is very useful for countries that have are known as nonleading ledgers and represent other
accounting standards. Controlling functionality is always

www.sap-press.com 25
2 Why Migrate to the New G/L?

All ledgers updated simultaneously

Only specified ledgers are updated

New General Ledger

FI-AR • Postings via new transactions

FI-AP 0L Leading Ledger FB01L and FB50L
...
SD Non-Leading Ledger
• Foreign currency Valuation Program
MM Non-Leading Ledger FAGL_FC_VALUATION
PP
PM
...
• FI-AA depreciation areas
...
Other Non-Leading Ledgers

IFRS, US GAAP, Local GAAP

Reports are based on the corresponding ledger

Figure 2.17 Parallel Ledgers

integrated to the leading ledger, but dimensions such as

Multi-dimensional balancing
profit center accounting can be deactivated if they are not
Accnt / SEG Debit Credit
required for non-leading ledgers. For a US company, the
leading ledger 0L will be for US GAAP and for a European ----------- A 60
----------- B 40
company, the leading ledger 0L will usually be for IFRS. ----------- A 60
SAP ERP allows the creation of multiple non-leading ----------- B 40

ledgers, but, depending on an organization’s require-

ment, usually one non-leading ledger is sufficient to cover Multi-ledger Local GAAP

Multiple valuation
update
parallel accounting requirements for other countries. US GAAP
Multi-ledger
IFRS update
Having more than one non-leading ledger significantly
xxx xxx xxx xxx xxx xxx
increases data volume. ---- --- -----
---- --- -----
---- --- -----
---- --- -----
---- --- ----- ---- --- -----
---- --- ----- ---- --- -----
When the leading ledger is posted to, all non-leading ---- --- -----
---- --- -----
---- --- -----
---- --- -----
---- --- ----- ---- --- -----
---- --- --- ---- --- ---
ledgers are posted to simultaneously. However, with the Multi-dimensional
Multi-dimensional
new posting Transactions FB01L and FB50L, postings can
be made to specific non-leading ledgers only (see Figure Figure 2.18 Parallel Ledgers Are Updated Simultaneously
2.19).
For example, a French subsidiary of a US parent may
need to make a manual posting specific to French local
GAAP requirements. In SAP ERP, this can be made in the
G/L to the specific non-leading ledger, as shown in Figure
2.19. In previous releases, the entry would have been
made directly to the SPL using a different user interface,
which is often confusing to users who are used to posting
G/L entries with G/L transaction codes.
Closing activities have to be run separately by parallel
ledger and SAP ERP standard reports can be run by led-
ger.
Figure 2.19 G/L Posting to Specific Ledgers

26 © Galileo Press 2008. All rights reserved.

 2.3 Possible Migration Scenarios

Key Advantages of Parallel Ledgers Versus Parallel Accounts 2.3 Possible Migration Scenarios
Key advantages of the parallel ledgers solution compared
to the parallel accounts solution are: Having learned about the main areas of new G/L func-
왘 Different fiscal year variants can be used for parallel tionality, you should now be able to start planning possi-
ledgers. ble migration scenarios. A migration scenario describes
왘 Different posting control variants can be used for par- the existing setup in the classic G/L and the required
allel ledgers. This functionality can be helpful as the setup in the new G/L.
group ledger can be closed while the local GAAP led- There are many possible migration scenarios, depend-
ger remains open. ing on the existing setup in the classic G/L. The activities
that need to be performed for each scenario will be
Setting Up Parallel Ledgers explained in Chapter 4, but the three most common sce-
The steps required to configure parallel ledgers are as fol- narios are:
lows: 왘 Migration without document splitting
1. Define Ledgers This is the simplest form of migration. Document split-
In general, a separate non-leading ledger will be required ting is not required for companies that do not need to
for each reporting requirement that you have in your produce balanced sets of financial statements by any
organization. For example, a global US organization may dimension lower than company code. They may still
have to report US GAAP, local GAAP, and IFRS and so will use cost center and profit center accounting to analyze
have 0L as the leading ledger for US GAAP and two other their Income Statement but do not need to produce
leading ledgers for local GAAP and IFRS. full balance sheets by splitting their accounts receiv-
In this step, you define the nonleading ledgers. 0L is ables and payables by, for example, profit center.
specified by default as the leading ledger and any new In this migration scenario, data from the classic G/L is
ledgers such as A1 are non-leading ledgers (see Figure migrated to the new G/L without deriving any addi-
2.20). tional information for document splitting. Given the
relative ease with which it can be performed, it is often
referred to as the Quick Migration.
왘 Migration with document splitting
This is a far more complex migration as the existing
Figure 2.20 Define Parallel Ledgers
data has to be tested to ensure that documents being
2. Settings for Nonleading Ledgers migrated will split correctly.
In this step, you assign company codes to the nonleading There are additional account assignments that must be
ledgers. All company codes are automatically assigned to set up and far more testing is involved. Consider, for
the leading ledger. You can also define additional curren- example, a company that uses the classic G/L and
cies for the nonleading ledgers as in Figure 2.21, which wants to migrate to the new G/L and use segment
shows the currency fields available. reporting with document splitting to produce financial
statements by geographical region. These segments
are not in the existing data so additional account
assignments are required to generate the segments in
the existing line items.
Figure 2.21 Settings for Nonleading Ledgers 왘 Migration with parallel accounting
Migration in the standard SAP ERP system only sup-
Having explained the key new functionality in the new ports a migration from a scenario that uses parallel
G/L, the next section will discuss how this new function- accounts in the classic G/L. For companies that have
ality can be incorporated into possible migration scenar- used a special ledger approach for parallel accounting
ios. in the classic G/L, an alternative solution will have to

www.sap-press.com 27
2 Why Migrate to the New G/L?

be found for migrating from the special ledger to the Parallel Ledgers
parallel ledger functionality in the new G/L. Pros Cons

Fewer G/L accounts Data volume may increase sig-

Note nificantly as parallel ledgers are
updated simultaneously with all
Please note that use of parallel accounts is still sup- postings to the leading ledger
ported in the new G/L and for less complex require-
Separation of ledgers gives sep- Difficult to report on different
ments is a good solution. However, the parallel ledgers arate transparency (e.g., for fiscal years
functionality in the new G/L is far more powerful than auditors)
the classic G/L with a special ledger. Can maintain a separate ledger Postings may cross valuations
for each accounting principle — for example, users may mis-
takenly post local GAAP to US
GAAP G/L accounts. (Note: A
Migrating From Systems That Used Parallel Accounting
validation is often created to
Companies that have used parallel accounting in their ensure that cross-valuation
existing SAP system may migrate to the new G/L as postings do not occur)

shown in Table 2.1. Different fiscal year variants can

be used for ledgers

Existing G/L Solution New G/L Solution Different posting control vari-
ants can be used for ledgers
Parallel Accounts Parallel Accounts
Table 2.3 Pros and Cons of Parallel Ledgers
Special Ledger Parallel Ledgers

Table 2.1 Migration from Systems That Used Parallel Accounting Summary of Possible Migration Scenarios
At this point, you should be thinking about the function-
However, many companies that have previously used the ality that you require and the particular migration sce-
parallel accounts solution may now require a parallel led- nario that you will have. The following questions are rel-
gers solution due to expansion globally, for example, or to evant:
satisfy other, more complex requirements. The pros and 왘 Do you require document splitting? If yes:
cons of parallel accounts are shown in Table 2.2 and the 왘 For which company codes do you require splitting?
pros and cons of parallel ledgers are shown in Table 2.3. 왘 What will be the split characteristics?
왘 Do you need parallel accounting? If yes:
Parallel Accounts 왘 Will you use parallel accounts or parallel ledgers?
Pros Cons 왘 If parallel ledgers, how many ledgers will you need,
which currencies will they be maintained in?
Ease of use and relatively simple High increase in the number of
setup G/L accounts adding complex- The functionality currently being used in the classic
ity to the chart of accounts G/L will greatly influence the migration procedure.
Retained earnings account and Difficult to report on different You must consider the following factors in the exist-
balance carry forward — sepa- fiscal years ing system:
rate retained earnings account
for each accounting principle is 왘 Previous use of profit center accounting (PCA)
maintained 왘 Previous use of cost of sales accounting (COS)
Parallel postings in the specific Postings may cross valuations In the new G/L you can either migrate the COS data
account areas — for example, users may mis- into the leading ledger or into a nonleading ledger.
takenly post local GAAP to US
Document splitting is not required for this.
GAAP G/L accounts. (Note: A
validation is often created to 왘 Previous use of special purpose ledger (SPL)
ensure that cross-valuation The use of the SPL in the existing system will deter-
postings do not occur)
mine its impact on the migration scenario. Consider
Table 2.2 Pros and Cons of Parallel Accounts the following questions:

28 © Galileo Press 2008. All rights reserved.

 2.4 Potential Benefits and Risks

왘 Which ledgers do you use and for what purpose? This section has highlighted some of the areas that must
왘 Are the ledgers updated in real time or built by roll- be considered in the existing G/L that will determine the
ups? target migration scenario. The next section details some
왘 Is document splitting already used on a ledger and of the benefits and risks of migrating to the new G/L.
what is the splitting charateristic?
왘 Use of interfaces to external systems
Any interfaces used to post to the classic G/L will need 2.4 Potential Benefits and Risks
to be updated in order to post to the new G/L. It is
possible that some interfaces will no longer be There are many benefits to migrating to the new G/L,
required if the new functionality in the new G/L makes such as utilizing the new functionality available, but the
them obsolete. main risk is a lack of understanding of the new function-
왘 Managing G/L accounts on an open-item basis ality. The G/L contains very sensitive data and the data in
This only impacts the migration scenario if document the new G/L must be exactly the same as the data in the
splitting will be used. As part of the migration with classic G/L prior to the migration. With sufficient testing
document splitting, all open items must be converted and correct setup of the new functionality, any risks to
so as many as possible should be cleared before the data being migrated incorrectly can be minimized. This
migration starts. section will highlight the specific benefits and risks of
왘 Number of documents in the migration period migration as follows:
All documents posted between the migration date and
the activation date (i.e., phase 1) and all documents Benefits of Migrating
from phase 0 that are still open on the migration date Segment reporting, document splitting and parallel led-
must be included. gers are three of the main benefits of migrating to the
왘 Number of company codes and cross-company new G/L and have been explained earlier in this chapter.
clearings Other benefits include:
The number of company codes obviously impacts the 왘 Integration of financial and management accounting
migration scenario. It is possible to migrate company Many ledgers such as the cost of sales ledger and profit
codes separately provided there are no cross-company center accounting ledger have now been combined
transactions between them. into a single ledger. This leads to far less reconciliation
than in previous SAP releases. Figure 2.22 shows how
Recommendation several of the applications in SAP R/3 Enterprise have
You should migrate all company codes that share the now been unified in the new G/L.
same fiscal year variant together as this is the most effi-
General Ledger in General Ledger in
cient method. SAP R/3 Enterprise mySAP ERP

Multiple Applications mySAP ERP:

A Unified World
Classic G/L CoGS
Legal New General Ledgers
왘 Use of different fiscal year variants Requirements Ledger Management reporting
If company codes have different fiscal year variants it Legal Requirements
Profit Center Ledger Segment reporting
must be possible to derive the same fiscal year from Management and Extensibility
Segment reporting
Balanced book by add.
the migration date for all company codes within a dimensions
migration plan. Special Ledger Parallel sets of books
Multi-Dimensional, Fast Close
왘 Use of additional currencies in special ledgers Customer-Defined
TCO reduction
If special ledgers are used and will be replaced by the International Accounting
Industry-Specific Standards
Ledgers
new G/L, the currencies used in the ledgers must be in B/S by, Grant,
Compliance and
Transparency
Fund, Title...
the orginal posting document. If not, data cannot be
migrated and the SPL must be retained. Figure 2.22 Unification of Ledgers

www.sap-press.com 29
2 Why Migrate to the New G/L?

The new G/L is often referred to as one version of the

truth due to the fact that financial (legal) and manage-
ment reporting are unified.
왘 Easy extensibility
Ability to add new functionality, for example,
enhancement packs, with mimimal disruption to the
system.
왘 Faster period-end closing
Due to the unification of ledgers, many period-end
activities are no longer required. Figure 2.23 shows
that ledgers such as EC-PCA, consolidation prepara-
tion, CoGS ledger, FI-SL, and reconciliation ledger are
no longer needed. Other reasons for a faster period-
end close include:
왘 Document splitting is real time. Previously, period-
end programs were required to post accounts Figure 2.24 New Fields on Standard Reports
receivable and payable by profit center.
왘 Real-time posting from CO to FI, no longer at Also, SAP NetWeaver includes Business Intelligence (BI),
period end. formerly known as Business Warehouse (BW). This is a
왘 Legal and management data are unified in one major advantage over previous SAP releases as only one
ledger. system is required. Figure 2.25 shows the link between
the new G/L and the BI system and having only one sys-
Accounting Interface tem leads to large improvements in performance. BI pro-
Profit Center Currency Zero vides:
Derivation
Determination Translation Balance 왘 New Microsoft Excel integration features
왘 Better formatting for reports generated in Microsoft
Document Split
Excel and the Web
왘 Easy printing of reports in formats such as PDF
왘 Improved delivery of reports to users
왘 Improved transparency for users internal and external
EC-PCA FI-SL CO-OM
auditors
Reconc. 왘 Better corporate governance
Ledger Cons. CoGS
Prepa- CO-PA Reconc.
ration Ledger Ledger 왘 Reduced ongoing costs

Figure 2.23 Existing Ledgers Have Been Unified Risks of Migrating

Major risks such as loss of data are extremely unlikely due
왘 SAP ERP provides a closing cockpit, which displays to the requirement to have the SAP migration service that
all closing functions on a single screen. Its intuitive performs technical checks throughout the migration
graphical interface uses color coding to identify the project. This service will be explained in detail later in this
status of the closing activities. book, but the main risks for a migration project are
왘 New G/L reporting options related to a lack of understanding of the new G/L func-
Standard SAP reports include new fields such as Led- tionality. Members of the migration project team may
ger and Segment, as shown in Figure 2.24. For exam- continue to think in classic G/L terms which can lead to
ple, report RFBILA00 can produce balance sheets for new functionality such as document splitting for example
segments. either being excluded from the migration when it would

30 © Galileo Press 2008. All rights reserved.

 2.5 Summary

Company, Segment, PC, etc. Company, Segment, Profit Center, etc.

Functional Area, Transaction Type, etc.

FI Remote Extractor

CO
Periodic Extractor
... General
Ledger SAP NetWeaver BI

Figure 2.25 SAP ERP Includes BI Reporting

be beneficial, or the document splitting producing inac- Later in this guide, you will learn how to alleviate these
curate results. Also, without a full understanding of the risks by executing all activities for a migration project
new G/L functionality existing functionality such as spe- from planning to go live.
cial ledgers for example may be set up in the new G/L
when they are no longer needed. This can lead to issues
with data and decreased performance. Other potential 2.5 Summary
problems that can be caused by a lack of understanding
of the new G/L functionality include: The aim of this chapter has been to introduce you to the
왘 Unsure what to use for segments new G/L and the reasons why the majority of companies
왘 Confusion about parallel ledgers should migrate to it. The classic G/L will remain in SAP
왘 Creating too many nonleading ledgers ERP and will continue to be supported, but this chapter
왘 Not fully understanding document splitting has demonstrated the many benefits of upgrading to the
new G/L.
Another significant risk is the amount of data cleansing One of the main points is that upgrading to SAP ERP
that is required before the existing data can be migrated. and migrating to the new G/L are two separate projects.
For a migration with document splitting, open items on Migrating to the new G/L is complex and the data is
G/L accounts are time consuming to migrate and the highly sensitive, so a full project is necessary.
more that can be cleared before, the better. You also learned about the new G/L functionality and
possible migration scenarios so that you can begin to
Example think about the functionality you will need and, there-
Many companies have G/L open item managed fore, what migration scenario you will have. This is the
accounts with thousands of un-cleared open items, so first step in planning the migration project and the migra-
users with knowledge of this data can start the process tion scenario will have a significant impact on the timing,
of cleansing well before the migration project starts. staffing, and complexity of the project.
This cleansing activity may be performed as a separate Preparation for a future migration to the new G/L can
project to precede the migration project. start at any time, even before the upgrade to SAP ERP is
completed. As discussed in this chapter, data cleansing is
a significant part of any G/L migration or conversion.
Other risks include the time required to test and also the Deleting G/L accounts that are not required, consolidat-
time required to ensure that existing interfaces still work ing accounts, and clearing open items on open item man-
as expected. Many migration projects underestimate the aged accounts are all good examples of tasks that can be
time required for these, which can lead to problems in started well in advance of a future migration.
meeting project deadlines.

www.sap-press.com 31
2 Why Migrate to the New G/L?

Chapters 3–7 will cover the actual migration project.

Chapter 3 provides an introduction to the three project
phases and discusses why the project should be struc-
tured in this way. The remaining chapters describe each
phase in detail.

32 © Galileo Press 2008. All rights reserved.

Index

A Customizing Item Categories

AC210 ledgers 67 check G/L Accounts for 79
New (Flexible) General Ledger 54
AC212
Migration to New G/L Accounting 55 D L
Accounting Principles Define Segments 69 Leading Ledger
definition of 69 Depreciation Areas define currencies 68
Additional Currencies in Special Ledgers posting to G/L 60 Scenarios linked to 69
scope definition 41 Depreciation Values 53 leading ledger 25
APC Values 51 Document Splitting 23 Ledgers
activation of 59 assign Accounting Principles to 69
assignment of method 59 assign Customer field and Scenarios to
B classify document types for 57 69
Balance Carryforward 75 classify G/L accounts for 57 compare after activation 85
analysis of 85 customization of 57
creation of 47 deactivation of by Company Code 59
reset of 76 define characteristics 59 M
Business Areas define information for open items 73 Master Data
scope definition 40 information for documents posted in scope definition 41
Business Transaction Assignment 80 Phase 1 74 Migration
Business Transactions 80 process information for open items 73 benefits 29
Business Warehouse (BW) 30 Document Types 80 calendar fiscal year start date 53
cockpit 35
complete reset of data after failure 87
C E from parallel accounts to parallel ac-
Classic General Ledger Existing Transaction counts 49
deactivation of after migration 86 scope definition 41 from parallel accounts to parallel
Closing 88 ledgers 50
Company Codes IMG activities 37, 84
scope definition 42 F phases 33
Consolidation FB01L 26 restrictions with document splitting 48
scope definition 41 FB50L 26 risks 30
Controlling Field Status Groups 76 target scenarios 43
postings to 88 Financial Statements Report 83 with document splitting 27
Cost-of-Sales Accounting 88 Functional Resources 54 with Document-Splitting and Parallel
activation of for individual Company Valuation 53
Codes 69 with parallel accounting 27
scope definition 40 I without document splitting 27
Create Worklists 71 IMG migration activities 67 Migration Plan
Cross-Company Code Clearings Interfaces to External Systems activating manually 72
scope definition 42 scope definition 41 creation of in IMG 55

www.sap-press.com 91
Index

Migration Status integration with Treasury & Setting Validation Date for Document
analysis of 81 Risk Management 53 Splitting 56
Parallel Valuation Special ledger 25
scope decision 39 Special-Purpose Ledgers
N scope definition 42 scope definition 40
New G/L 19 Perform Assignment of Company Codes
activation after migration 85 56
Nonleading Ledgers 25 Posting Period Error 70 T
define and activate 68 Posting Period Table 70 Technical Resources 54
Profit Center Accounting Third- Party Consultants 54
in scope determination 40
O Project Manager 54
Open Items U
update in new G/L Accounting 74 User interface 87
R
Reconciliation Ledger 88
P Remote service sessions 35 W
Parallel accounting 19 Worklists 67
Parallel Accounts 25 creation of in document-splitting 47
pros and cons, scope definiton 42 S
Parallel Ledgers 25 SAP Migration Service 54
customization of 60 Scope of project 37 Z
defining in the new G/L 60 Segment Maintenance 76 Zero Balance Account 58
integration with Asset Accounting 51 Segment Reporting 20, 21, 69 Zero Balance Account Posting Keys 58

92 © Galileo Press 2008. All rights reserved.