Benefits of Activity Based Consolidation over Rule Based in Group Reporting

[harish_subramanian]

Hi SAP experts,

We are implementing Group Reporting in S/4HANA Cloud 2208. We are in the process of evaluating whether Activity Based or Rule Based Consolidation will be suitable for us.

Could please advise what are the differences between Activity Based or Rule Based Consolidation and if our customers can benefit using the latest approach Activity-Based compared to Rule-Based.

We have implemented Rule based consolidation for similar companies before and we are aware of the advantages of Rule based approach for example:

1. Rule based is tried and tested and module is relatively stable for any cloud upgrades.
2. There are configuration options available and custom rule changes can done in rule based. Hence it has the ability to adapt to customer design.
3. Log is very descriptive and provides great detail of the error. The log is also provided elimination level wise – Share capital, investment, reserves etc.,. Hence in rule-based you can find out the source of the error.

Will activity based consolidation also provide similar functions. Suppose the customer decides to go for rule based now, can we change to Activity based for example, a year after go live.

If Activity based has some key advantages or suitable for a certain industry/scenario, kindly let us know so that it will help us in our evaluation.

Thanks and Regards

Harish

[OwenLiu]

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[Edna_Garcia1 · Accepted solution]

Hi Harish:

These are the activities supported for each type of Consolidation of Investment

Consolidation of Investments (Activity-Based)

The following activities are supported by the consolidation of investments:

• First consolidation

• Subsequent consolidation

• Step acquisition

• Capital increase and decrease

• Partial and total divestiture

• Partial and total transfer

• Horizontal and vertical merger

Consolidation of Investments (Rule-Based):

The consolidation of investments supports the following activities for consolidation units using the purchase method or at equity method:

• First consolidation

• Subsequent consolidation

• Acquisition of further interest or partial disposal without change in method

• Increase in capital

• Total divestiture

Here are the links with the full explanation of the two types of Consolidations of investment and one more with the FAQ Group Reporting in SAP S/4HANA Cloud:

• Consolidation of Investments (Rule-Based): https://help.sap.com/docs/SAP_S4HANA_CLOUD/90c07e91c7a64f328be3fd6b48955b13/5ce06895106a463ca073fdda...
• Consolidation of Investments (Activity-Based): https://help.sap.com/docs/SAP_S4HANA_CLOUD/90c07e91c7a64f328be3fd6b48955b13/2f07a213a53f425eada2e096...
• 2659656 - FAQ About SAP S/4HANA Cloud for Group Reporting: https://launchpad.support.sap.com/#/notes/2659656

The customizing for Group reporting is available in the scope item 1SG (attached in this email) https://rapid.sap.com/bp/scopeitems/1SG

I would recommend also reviewing the “Task Tutorials” part of the 1SG Best Practice in case you want to see the steps/screens of the processes included in the Tutorials

Every release brings new functionality and you can find the details in the corresponding blogs, for example:

• Finance for SAP S/4HANA Cloud 2208 https://blogs.sap.com/2022/08/02/finance-for-sap-s-4hana-cloud-2208/
• How to integrate SAP Analytics Cloud for planning with SAP S/4HANA for group reporting https://blogs.sap.com/2022/08/02/how-to-integrate-sap-analytics-cloud-for-planning-with-sap-s-4hana-...
• SAP S/4HANA Cloud for group reporting 2202 https://blogs.sap.com/2022/01/31/sap-s-4hana-cloud-for-group-reporting-2202-is-live/comment-page-1/#...

KR

Edna Garcia

[Li_Sen]

Dear,

as illustrated in documentation, Consolidation of Investments (Rule-Based) vs Consolidation of Investments (Activity-Based)

Activity based support more scenarios, but these scenarios may be very uncommon, for example horizontal and vertical merger.  with rule based, if these uncommon scenarios occur, the customer may be okay to do manual group journal entries.

for more common scenarios, for example, capital increase or decrease, with rule based, postings in S/4 can flow to GR with financial transaction types and trading partner, but with activity based you'd have to reverse that posting , and repost it with activity, investee and holding percentage in GR.

activity based may require less efforts during GR implementation , because it's built-in logic,  not much configuration required, so less testing and documentation compared with rule based 

as for the method switch , according 2813262 - FAQ Activity-based consolidation... “a switch between both options is not supported automatically”. but in theory, a switch should be possible during year end, but more testing and validation is needed.

Regards,

Sen

[profile011]

Dear Harish,

Please read about Activty-Based Consolidation of Investments in Product Assistant documentation for release 2208.

Based on your/ your customers needs you can decide to use Rule-Based or Activity-Based consolidation.

Best Regards,

Tamas

SAP Product Support