Controlling is an ongoing activity within an enterprise to analyze the ongoing business processes and provide management with important information (profit/loss/profitability/etc.) required to run the business. Reporting is today typically characterized by the selection of summation records and use of line items once areas of concern have been identified. The programs are executed as batch jobs and it takes a while until the data is available for decision support. Due to the amount of data, in some cases drill downs to line item level are not possible at all.
SAP ERP profitability analysis (CO-PA) is used to collect data on revenues and related costs at different levels of granularity, e.g. on organizational, customer, product level. The combinations of relevant characteristics are called profitability segments. E.g. a profitability segment might consist of business performed by sales organizations in Southern Europe and products of the category Ice Cream. The profitability segment Southern Europe, Vanilla Ice Cream, customers being small super-markets, would be a subset of the first profitability segment. Depending on the nature of the cost, some parts of the contribution margin can be determined on a very detailed level (product & customer), while others, e.g. marketing cost, may only be attributed to higher organizational levels.
CO-PA is highly integrated into the operational processes of the SAP ERP system. Revenue or discount information is taken from the sales order or billing document, cost of goods manufactured can be retrieved from product cost calculation, and overhead cost will be allocated from cost centers or internal orders to profitability segments.