Cost Center Hierarchy
I know about the Cost ctr std. hierarechy. However, I am not sure about alternate hierarchy. Has anyone used in your organization both of them and what is the exact business scenario that would prompt business to use both of them, Please share your thoughts. There were some discussions on this topic in SDN but I did not get what I wanted to know. We are planning to use in our company if we see alternate hierarchy purpose and your help will be greatly appreciated.
Gulshan Batra replied
Standard hierarchy in SAP (the one you view using txn OKENN) is basically a Cost Center Group. It is identified as a Standard Hierarchy, so that it can be used as default hierarchy for all std. reports, etc.
Alternate hierarchy is just another group of Cost Centers, which a company might want to use - usually to meet some local / statutory / reporting requirements. E.g, a global co based out of US, will have a std hierarchy based on reporting requirements for US. However, they might also have internal reporting that they might do for, say, transfer pricing requirements, or any other reporting requirement that is internal to their business. All such hierarchies are labeled as Alternate Hierarchy in the system. That's why there's no such thing as Alternate Hierarchy in SAP. Instead, to makeit, you simply go to txn KSH1 (create Cost Center Group).
Then, in whatever reports you create for internal consumption, you simply direct your report to use the alternate hierarchy, which is nothing but your custom-made cost center group. Note here that the cost center group, by definition, also works equally well with any and all std reports which use cost center group as an input. That, then, is the use of alternate hierarchy.
Trust this clarifies your doubts.