Handling Organizational Changes with SLO and Company Code Merge

change slo datavard

In this fourth installment of my blog series about SLO (System Landscape Optimization), I will describe  how to handle organizational changes using the Company Code Merge approach.  So far, I’ve discussed the use and benefits of using SLO tools and methods for carve-outs and carve-ins when companies are involved in Divestitures or Mergers and Acquisitions (M&A) .

SLO is a tool-based approach to implement business transformation projects that offers many useful and valuable features, including flexible go-live dates, keeping the integrity of SAP data, and minimized impact of the transformation on ongoing business.

Organizational changes can happen at all levels of organizational units, ranging from fairly simple and straightforward changes to objects such as cost centers or profit centers all the way to merging or splitting company codes.

The figure below illustrates the SAP organizational structure with Operating Concerns, Controlling Areas, Company Codes, Plants, and Storage Locations. Other organizational units include Sales Organizations, Purchasing Organizations, Cost centers, and Profit Centers.

slo datavard


Renaming and merging of an organizational unit

A very simple and easy to perform business transformation is the rename of organizational units. This is not really a change in the organization from a structural point of view. The hierarchy of organizational units remains the same before and after the conversion, but the technical names of organizational units can be changed flexibly, e.g. to align the plant codes across multiple systems to avoid confusion by having globally unique codes. This is an interesting scenario for achieving “quick wins” when improving the collaboration between different pieces of the company.

Splitting organizational units

Splitting organizational units is much more difficult, and typically done for Controlling Areas and Company Codes only. I will cover this scenario in a later post.

Merging Company Codes

Merging company codes is more complex. SAP LT (Landscape Transformation) comes with an out of the box scenario for merging company codes in SAP ERP. However, even if the scenario is out-of-the-box, it requires dedicated skills, knowledge and experience. My recommendation is to involve experienced transformation consultants to implement such a scenario using SAP LT. This ensure you’ll receive proper guidance when encountering issues, or rolling out the conversion in a landscape that includes more than “only” ERP.

The scenario of merging company codes using SAP LT is often used in an M&A. However, sometimes it is also used to simplify business processes within companies.


An example for such a simplification is the merger of legal entities within a company in the automotive industry. This vendor is specialized on connection technology (i.e. screws). Within the company there were two company codes for the same country for historical reasons to distinguish between production and sales.

For the year end closing, each of these two entities first needed to close the year before an overall financial company consolidation could be created. With the passing of time and the business growing, this procedure and the overall business process grew more and more complex. Therefore, the idea was born to merge both company codes and thus simplify internal and external reporting (including related processes).


In the realization of projects based on SAP LT you start by entering the relevant company codes into SAP LT. The conversion technology in LT will convert all data in the ERP system including historical data such as postings of closed fiscal years. By converting them the data of several separate company codes will be merged into one legal entity. Before beginning with the realization, you should review the project approach with your auditor and determine the requirements for documenting the transformation.

The conversion covers the company codes themselves and dependent data:
• FI-document numbers (e.g. table BKPF)
• Company code dependent data of customers and vendors (B-segments, e.g. tables KNB1 and LFB1)
• Accounts (e.g. table SKB1)
• Activity types in CO
• Asset numbers (e.g. table ANLA)

Preconditions for Company Code Merges

Some conditions must be fulfilled so that company codes can be merged. Before a conversion project you should check SAP Note 1589619. This note is used by SAP development to provide further information about restrictions. Experienced consultants can provide solutions or workarounds for most of the restrictions. For example, customer specific conversion code may be used to define a specific conversion logic.

Restrictions for Company Code Merges

The restrictions for company code merges are:
• The company codes to be merged need to being to the same controlling area and thus (indirectly) to the same operating concern
• Settings for currencies as well as the fiscal year variant of the company codes need to be identical
• Help from SAP is required for some modules. The dependencies and prerequisites depend on the SAP LT release. For SAP LT V2 with SP03 (or older), for example, an additional analysis of the treasury module is required. Also with SP04 some checks by experts from SAP development are required to review data of the market risk analysis in treasury to confirm the feasibility of the merge.
• There are some restrictions for cash book incidents until SAP LT V2 SP01.
• Totals records in FI-CA face some restrictions. This only affects customers using contract accounting, i.e. mainly utilities customers. These restrictions affect SAP LT releases before V2 SP04. For such releases, a ABAP check program determines inconsistencies within totals records in table DFKKSUMC before converting it. If this program reports problems, then you should upgrade your SAP LT installation to SP04. SAP note 1651372 provides further information. SAP note 1527123 helps with installing new SAP LT support packages.

Some changes to other business objects are required when merging company codes. For example, if the number ranges of documents are overlapping for the different company codes, then these FI documents will need to be adapted to harmonize the conflicting document numbers. Usually this is done by applying a prefix rule. Such a rule can, for example, put a character on the first place of the document number. For most company code merges such a harmonization of document numbers is required. This can turn out to be a critical point for the required alignments with auditors.

A similar approach is taken towards asset numbers if they are conflicting between company codes which are to be merged. If the same asset number is in use for two company codes, these numbers need to be changed to avoid duplicate numbers. Manual changes need to be done when the company code dependent data of master data is in conflict, e.g. for the company code dependent data of customers (table KNB1).

Account numbers of the chart of account are usually merged during company codes. Of course, no documents are lost by this conversion: all data remains completely in the system as it was posted. After the conversion, the documents are available and posted within the target company code. This includes all documents, including open items and documents in closed fiscal periods. The conversion includes totals records which are summed up where required. Lists with data before and after the conversion should be created for testing such company code merges. The comparison of such lists are an important part of the validation and the documentation for auditing purposes.

Company code merges can be combined with other data transformations when using SAP LT. Thus, several conversions can be included in one technical execution, eliminating the need to run several transformations sequentially. This includes conversions of customer numbers, vendor numbers, the merge of controlling areas and the conversion of cost centers or profit centers.


Join our live webinars on SLO:


2 comments on “Handling Organizational Changes with SLO and Company Code Merge

  1. Sreeni on

    At a Car manufacturing plant working on assessment for moving from ECC to S/4. There are 12 clients , 6 for ECC – non HR and 6 for HR and we have additional requirement to merger 5 company code . They do not want to use SAP SLO tool. Below are my queries and will appreciate if you can reply ASAP. Its quite urgent,
    1. Are you aware of any manual way for consolidation.
    2. Do we need to perform any assessment to provide any suggestion for consolidation , attach excel file has high level details , So any high level efforts required for performing assessment.
    3. Base on the above will we in position to provide approach and high level estimate for consolidation.

  2. Goetz Lessmann on

    Hi Sreeni,

    thanks for your questions!

    There is no real “manual” way for a company code merge or consolidation … unless you count greenfield, where you basically do an open item migration. However, with the big impact on business processes and reporting, plus being restricted to a key date like the beginning of a new fiscal year, I would not recommend such an approach at all.

    Typically there is an assessment phase before a company code merge, to ensure that customizing and data actually fit together, and identify where they don’t so that appropriate steps can be taken. This assessment typically determines high level estimates. However, some of the effort drivers can be evaluated in a telco by our experts, so maybe that would be a good first step?

    Best regards,


Leave a Reply

Your email address will not be published. Required fields are marked *