Allocations - Assessments and Distributions Foundations

Business Planning and Consolidation and Profitability and Cost Management boast various allocation engines.  Allocations is the word we use when we discuss what is best done in SAP ECC as either an assessment of costs or a distribution of costs from one cost object to another.

So for the Newbies and there are MANY in the BPC space let me describe and define:

Assessment - when in SAP a cost object like a cost center has taken on either planned costs or actual costs and at period end you want to ASSESS those costs to other cost centers.  In an assessment the costs are moved via know processes and the track back to the originating cost element is HARD TO FIND (it is there).

Distribution - when in SAP a cost object like a cost center has taken on either planned costs or actual costs and at period end you want to ASSESS those costs to other cost centers you can use DISTRIBUTION which allows for full traceability of the original cost element by maintaining that element and track back to originating cost object is simpler. 

It was once believed that Distributions was more difficult to do and assessment was preferred because of the time to run.  Remember when that original document was written however we had just hit mid cycle for the x86 chipset!   Distribution in this Senior Consultant's view is superior in every way in that it provides better visibility to data and eliminates the creation of cost elements that really are not required.

The above definitions are simplified to a great degree to give you a sense of why some people select PCM as a tool.  PCM also offers some modest and some might say meaningful scenario simulation advantages.  Still in either case both BPC and PCM what drives people to think about one or the other stems from a lack of understanding of SAP ECC Core backend processes in

1.  CO-PA and the Valuation Engine of CO-PA
2.  Sales and Operations Planning and Distribution of Product Hierarchy Planning to Materials
3.  Assessments and Distribution Cycles
4.  Bills of Material Structures and Planning Materials

If you understand these and know how to integrate to them you become less particular about either BPC or PCM because you know that there are ways in both to do many things.

So to be sure what are we going to do here?  We are going to build an application similar in its form to a RATE application where we are going to set statistical key figures for a variety of our structures and set some other variables that give us the DIM WHAT WHERE variables we need.   From this data we are simply going to fully automate a dynamic single engine allocation process in BPC using nothing but script logic. 

Are you ready for the journey?