COPA vs. PaPM

[jerry_liu2]

Dear Colleagues,

Recently we got a query from our customer about the difference of COPA and PaPM.

The reason why they have such question is because they plan to activate COPA in S/4HANA migration, which they didn’t use in ECC before, and they have also bought PaPM so they would like to decide which way to go is more reasonable.

We would like to check with you guys if there is any official explanation about this 2 solutions in terms of:

1. the difference and position in COPA and PaPM from SAP product strategy.

2. whether PaPM can completely replace COPA, and why.

2. the roadmap of COPA and PaPM.

3. if there is any reference customers who have done the migration from COPA to PaPM, any benefits or drivers.

Thanks a lot.

[thomasboerner]

Hi Jerry,

As you probably know we have 2 ways for using CO-PA in ECC, cost-based and account-based. Cost-based uses key-figures and account-based uses debit/credit postings in which the GL account express the meaning of an amount. In S/4HANA the account-based approach has been transformed to Margin Analysis. Margin Analysis operates on the Universal Journal which guarantees by design reconciliation of financial and managerial accounting. The cost-based approach of CO-PA is still available in S/4HANA, but innovations will focus on Margin Analysis.

PaPM can now use the Universal Journal but also further data sources as input for all sorts of calculations and allocations. It also enables users to define where results would be stored, in the Universal Journal or elsewhere, for instance a data warehouse. The latter might make sense when the profitability model includes many dimensions not relevant for the Universal Journal such as attributes of the business partner or the product/service. However, PaPM also enables aggregating such values and posting them on this aggregated level to the Universal Journal ensuring full reconciliation.

Our recommendation is to use in S/4HANA Margin Analysis instead of CO-PA and to use PaPM together with Margin Analysis or instead of it, when granularity of profitability analysis is much more detailed than the Universal Journal or necessary calculations are very specific or complex.

Regarding experiences of customers you might contact product managers of PaPM and/or Margin Analysis. For PaPM I would be the right contact.

Best regards, Thomas.

[jerry_liu2]

Hi Thomas,

Appreciate your prompt reply.

Your answer is quite helpful for me to understand the COPA and PaPM.

Based on your recommendation, may I ask if customer realize ABC costing, PaPM is still the better option which means we don't need to use COPA?

Thanks.

[thomasboerner]

Right Jerry, I would consider activity-based costing typically as "complex", meaning PaPM might better fit than CO-PA and Margin Analysis. Even when a rather simple model could be realized in CO-PA or Margin Analysis, we should guide our customers towards high-end models including for instance scenarios simulations enabling them to stay ahead of competition regarding efficiency and profitability.