How to Define Business Area in SAP with Example

In this SAP Tutorial, you will learn what is business area and how to create business areas in SAP ECC system & S4 Hana system using the IMG menu path or transaction code OX03.

Let’s learn what is business area and why we need to implement in SAP:

What is Business Area in SAP

A business area is a separate area of operations or responsibilities of organizational units of financial accounting that is used for internal and external reporting. Different divisions of each business within a legal entity are created as Business areas for reporting of each operational area.

As per the business requirements, the financial statements can be created for each business area and these financial statements can be used for internal reporting purposes.

Important Points about Business Area in SAP:

1. This is an optional organizational unit, so it is not mandatory to define the business area in SAP systems
2.  Business areas are not assigned to any company codes, they are maintained at the client level. So any company code can use the business areas that are defined in the SAP.
3. Using business area organizational units, the statements of Profit and Loss, Balance sheets
4. You can define the business area with 4 characters and the same company code be used for the business area key.

Scenario: If you have a requirement like the business area must be used to only a particular company code, then this requirement can be fulfilled via validations.

How to Create Business Areas in SAP:

As we discussed above, business areas are to be maintained to generate the financial statements separately for each area of operations.

Refer to a step-by-step guide on:

• How to define business area in the SAP ECC system
• How to define business in SAP S4HANA system

Based on the system version that you are using, you can refer to one of the following configuration steps.

Define business area in the SAP ECC System

Step 1:- Enter transaction code SPRO in the commend field

Step 2:- Select SAP Reference IMG ( Shortcut key F5 )

Step 3:- After selecting SAP Reference IMG, follow the below structure to configure the Business areas

Step 4:- After Selecting Define Business Area, Select new entries to configure new Business areas

Step 5:- Enter the 4-digit code in the business area field enter the name of business areas in the description field and save the settings.

For example: Based on the locations, you can create the business areas.

Thus Business Areas ADKA, ADHY, and ADMU are configured in SAP FICO.

Define Business Area in SAP S4 Hana system

Now similliary, let’s learn how to create the business areas in the S4HANA system.

The configuration steps between the ECC & S4HANA systems are the same.

Step 1: Log in to your S4 Hana system using login credentials.

Step 2: Execute the transaction code ‘OX03‘.

Step 3: Click on the ‘New Entries‘ button to define the new business areas.

Step 4: On new entries of the business area configuration screen, update the following details

• Business area
• Business Area description

Step 5: Click on the save button, select the customizing request, and save the details.

Successfully, we have defined business areas in SAP S4 Hana system.

Business Area – Tables

The details of business area stores in the following tables:

Let’s check our business areas through the table:

To view the data through a table, execute the transaction code SE16 or SE16N and give a table name.

Practice Guide:

Now you have learned how to create business areas in the ECC & S4 Hana system and learned how to view the business area data through a table.

Let’s create business areas on your own. You can also refer below example details for your reference.