The cost of financial operations may not seem very big when compared with other categories of expense, but it is almost always higher than it needs to be. Who likes to waste money? Our clients certainly don’t. Yet, it’s quite common for otherwise well-managed businesses to endure (or ignore) inefficient transaction processing and financial reporting workflows. SAP recognized this problem and factored its solution into the design of its S/4HANA Finance software.
SAP S/4HANA Finance, an Introduction
SAP S/4HANA Finance was previously called SAP Simple Finance. That product no longer exists. Simply, SAP S/4HANA is a simpler SAP finance suite that has been built specifically to run atop the SAP HANA in-memory database. It takes advantage of that platform’s data processing speed and streamlined analytics capabilities. It also leverages SAP FIORI to make the user experience more intuitive than was possible with earlier products like the Financial Accounting and Controlling (FI/CO) sub-module of the traditional SAP ERP suite.
To get specific, SAP S/4HANA Finance is part of the SAP ERP 6.0 suite that runs on SAP HANA. It offers recoded elements of the old FI/CO suite, benefiting from SAP HANA’s enhanced capabilities. For example, the Asset Accounting (FI-AA) module has been redesigned for S/4HANA suite to make the process of accounting for an asset more efficient during the asset’s lifecycle. Similar improvements also emerge with transaction processing workflows.
SAP S/4HANA Finance includes reporting and analytics features based on pre-packaged HANA Live views as well as an App component. This is a collection of analytical applications useful for senior financial managers in any organization. S/4HANA Finance can be deployed in either on-premises or cloud-based versions.
SAP Central Finance
SAP Central Finance is a variant of S/4HANA Finance that consolidates data sources from multiple back ends. It’s an enhanced deployment of S/4HANA Finance. Central Finance helps solve a common problem, which is the difficulty in performing a quick replacement of the old FICO systems. That is unlikely to happen as it can be a time-consuming process. In response, Central Finance offers an intermediate step between FICO and S/4HANA Finance. It serves to reduce disruption by keeping extant FICO applications in place. At the same time, Central Finance incorporates the transactions from those old applications into S/4HANA Finance by means of SLT data replication.
Drivers of S/4HANA Finance Adoption
The S/4HANA Finance solution offers users a number of benefits related to financial management and financial operations. The use of the SAP HANA database, along with a newly unified data set, gives users the long sought-after “single version of the truth” in finance. It provides a common, consistent view of financial data on a company-wide basis. Earlier version of SAP finance were prone to duplication of data and potential confusion over reporting results. This new common, consistent view saves time and makes financial operations more cost effective through less rework and reconciliation.
Users are also praising the solution for simplifying processes. Business processes become more flexible and more able to handle exceptions—another source of high financial operations costs. S/4HANA Finance is also easy to modify, so the previously laborious process of changing and optimizing financial workflows is now relatively simple and fast. There is also the ability to share best practices for financial management across the organization, including embedded statistics and bench marking. All of these factors contribute to improved efficiency and costs in financial operations.
S/4HANA Finance Tables and Data Management
Further to streamlining financial operations, S/4HANA Finance has simplified its modules and tables as well as its processes. A universal journal (table ACDOCA) reduces the number of transaction postings required for financial management. Instead of having to post transactions to different ledgers like the Asset Accounting ledger and Material ledger, users now post to the Unified Journal. This approach cuts down on multiple, redundant financial data instances.
The data flow has also been simplified. There were arguably too many data tables in SAP Finance that required updating as a given financial transaction was posted. Secondary indexes, for example, might have to update themselves after an FI posting. S/4HANA Finance eliminates these tables, reducing the complexity of the data model at the same time.
Implementing SAP S/4HANA Finance
The implementation of S/4HANA Finance can be a complex process. Indeed, there are a number of entire books available on the topic. The same could be said for any enterprise financial suite, however if anything, this solution makes things simpler. There are still many details to get right when putting it into place which is why the SAP Central Finance solution is an attractive option for organizations that want to make the transition more slowly.
One basic decision in the implementation process has to do with how to migrate from traditional SAP ECC to SAP HANA. If you have already done this, then you won’t have to worry about it. OR, if you’re already using S/4HANA overall, you’re in great shape. However, if you’re still running ECC on a non-HANA database like IBM DB2 or Microsoft SQL Server, you will have to plan your data migration and migration to S/4HANA before embarking on the move to S/4HANA Finance. In terms of requirements, to run S/4HANA Finance, you will have to be on SAP Net Weaver 7.4, SAP ERP Central Component (ECC) 6.0 Enhancement Package 7, and SAP HANA version 1.0 or higher.
S/4HANA Finance Training and Pilot
We can help you make the shift to S/4HANA Finance. Having worked with many SAP clients on this kind of transition, we recommend setting up a pilot environment as a first step. From there, we can conduct training with your key stakeholders. This process is a great way to identify any migration and implementation issues that might arise in your unique business setting. As we’ve found, virtually every financial setup in an SAP landscape is different. Your processes and transaction patterns are distinctive. It is essential to reflect such details in the pilot and training process which occurs prior to the actual implementation of S/4HANA Finance.