Brief Historical Introduction of SAP S/4HANA Finance
Enterprise Resource Planning (ERP) is utilised for accounting, inventory control and human resource of an organisation. This is used to improve the business of an organisation by sharing information, business planning and decision-making (Bahssas, AlBar & Hoque 2015). This essay would provide a brief overview of SAP S/4HANA Finance and its importance in financial management. The section part would elaborate the difference between SAP S/4HANA Finance and current SAP ERP FICO. The next section would emphasise on the benefits of SAP S/4HANA Finance for business organisations. Finally, the essay would shed light on the issues encountered by the real life organisations at the time of shifting to SAP S/4 HANA Finance.
SAP S/4HANA Finance could be defined as a financial application in the SAP S/4HANA ERP platform. It comprises of a group of interrelated functions of financial management providing real-time data from the ERP applications. SAP S/4HANA Finance is a portion of S/4HANA and it is developed on the SAP HANA in-memory database platform (Bressler 2014). S/4HANA is involved in integrating cross-organisational functions into a system, which combines transactional analytics and processes for real-time applications. In case of the front end, SAP S/4HANA Finance utilises SAP Fiori for personalised and consumer-like experience.
SAP first launched SAP HANA in 2011 in the form of next generation in-memory platform developed as the great simplifier for the customers for inventing and reinventing business through real-time insight. SAP Business Suite has been introduced in January 2013 so that the organisations could drive real-time business along with simplifying the running procedure of SAP Business Suite by combining analytics and transactions into in-memory platform. It has drawn tremendous market reaction, as 2,000 customers registered to use the software in just two years (Faerber et al. 2015). In June 2014, focus has been shifted to particular business areas, which have helped the customers in driving real-time insight throughout finance along with simplifying the techniques of running their finance systems. Following on such success, SAP S4/HANA has been introduced in February 2015, which is the largest innovation of SAP until date.
S/4HANA is built on advanced in-memory platform along with providing a personalised Fiori-based user experience for accessing role-based solution. There are a number of customers found to be shifting from SAP Business Suite to S/4HANA and for 75% of the total customers; it takes six-month average for project migration (Chen 2015). SAP is engaged in providing a rapid deployment project for performing quick migration to the HANA platform and SAP Simple Finance solution. The different partners of SAP offer fixed price integration for some clients.
Differences between SAP S/4HANA Finance and SAP ERP FICO
The customers could be able to use the customisation even after the system is migrated effectively. The migration of SAP Business Suite to S/4HANA is conducted through the implementation package as SAP Simple Finance, Simple Logistics and others (Drum, Pernsteiner & Revak 2017). By using SAP S/4HANA, SAP is able to offer new products and upcoming generation of business applications, which constitute of simple enterprise software in relation to big data and it is built to assist in running simple in the digital economy.
Figure 1: Overview of SAP S/4HANA Finance
(Source: Drum, Pernsteiner & Revak 2016)
Owing to the advanced characteristics of SAP HANA, SAP S/4HANA is built for real-time business functions, business intelligence analyses and planning. The below figure depicts the Fiori-based user interface of SAP related to S/4HANA solution providing role-based experience to the users.
Figure 2: Fiori-based user interface of SAP S/4HANA Solution
(Source: Drum, Pernsteiner & Revak 2016)
It is possible to describe preferences of the users such as theme, language, default values and personalised searches. After making the selection, the save button needs to be clicked so that the user preferences could be saved.
Figure 3: User preferences in SAP S4/HANA Finance
(Source: Drum, Pernsteiner & Revak 2016)
Finally, it is possible to customise the home page screen of SAP S/4 user experience through clicking the Edit sign at the screen bottom. In addition, various home screen themes could be shown in the following figure.
Figure 4: Home screen themes in SAP S4/HANA Finance
(Source: Drum, Pernsteiner & Revak 2016)
Difference between SAP S/4HANA Finance and current SAP ERP FICO:
SAP FICO is a significant operational aspect falling within the main components of the SAP ERP, which allows the business organisations in managing their overall financial information. SAP ERP FICO intends to help the organisations in developing and managing financial information for relay and evaluation. Moreover, the organisations could use effective designs systems with the help of this system based on which correct decisions could be undertaken (Faulkner & Newman 2014). This system consists of two modules, which include SAP Finance (FI) and SAP Controlling (CO), which are utilised for specific finance functions. SAP FI manages the general financial reporting and accounting, while SAP CO manages planning and monitoring of costs.
Even though SAP CO and SAP FI have been started as two different nodules, they have been integrated later on for making majority of the users think that they are only one module (Gordon & Dyer 2014). The module of SAP FI comprises of different sub-modules, which handles particular accounting operations and this allows the business organisations in developing statements for assessment. However, although different sub-modules are included in the SAP CO, they are significant to advance the productivity of the organisations. SAP CO is engaged in promoting operations like monitoring, designing and reporting costs from significant activities.
Benefits of SAP S/4HANA Finance for Businesses
On the other hand, SAP S/4HANA Finance applications are placed on its ERP framework. This includes a group of roles related to financial planning and coordination, which are interrelated and they provide updated information from the usage of ERP. SAP S/4 HANA Finance is a portion of S4/HAN and it is built on the SAP HANA inside the memory storage site. The cross-organisational roles are linked into operations via S4/HANA and they are placed together with the transactional processes (Heinzelmann 2017). The main reason of introducing this system is to eradicate the conventional challenges in planning, analytics as well as transactional operations in providing overview using the different degrees related to financial information.
The financial professionals and experts working in different industries apply SAP S/4HANA Finance. In addition, this system is possible to be adopted in the cloud or even on-premise. As a result, it helps in providing a number of alternatives for the system users (Kalaimani 2016). Besides, the usability of SAP S/4HANA Finance could be adopted in the form of a self-contained product or integrated depending on the tendency of the customers or the needs of the organisations.
SAP S/4HANA Finance has a number of benefits, which are associated with its use within a business organisation. It has been observed that there are a number of organisations adopting this system, which has helped them in undertaking accurate decisions (Kale 2014). The primary benefit of this system is that it assists a firm in migrating from the last lengthy batch-dependent operations to real-time operations. Hence, it allows the organisations in running their financial systems effectively and timely. This minimises the time spent by the organisations at the time of undertaking decision, as there is availability of data and the managers need to apply it in undertaking significant decisions within their organisations. Along with this, there has been global recognition of SAP S/4HANA Finance in order to coordinate financial operations, which represents that the financial applications have retrieved identical information that would be updated in the long-run (Keuper & Lueg 2015). This would allow all the individuals within the organisations to access the necessary information that would aid in easy monitoring of finances.
Moreover, this system aids in eradication of data lay-offs and this reduces the chance of replication of information. As a result, the management finds it easy in terms of identification and follow-up with the movements of cash from the contributors; thereby, providing better overview owing to the applications at the level of line items. The organisations have the opportunity of shifting from static annual planning to an existing dynamic planning. SAP S/4HANA Finance provides insights such as predictive, historical and actual data (Kosalge & Ritz 2015). This makes it easier for the users to understand the data patterns and accordingly, they could undertake more informed decisions with relation to the existing data. The organisations utilising this system could tally their invoices and payments with the help of the machine learning process for providing predictive and automated insights. Besides this, when the organisations plan to shift, it needs to ensure seamless shifts. The non-disruptive substitution for the users has their custom operations moving, which allows normal continuance of usual operations (Lee, Wong & Hoo 2017).
Case Studies of Companies Migrating to SAP S/4HANA Finance
Along with this, SAP S4/HANA Finance includes a centralised finance, which implies that the management manages the monetary aspects. As a result, the users could apply this system in a distributed service framework, which leads to immediate duplication of data. The organisations could select from various options depending on the usage of SAP S4/HANA Finance. The system provides the alternative of utilising cloud, hybrid or on-premise in relation to their requirements. However, there would not be any addition to the knowledge base of the users irrespective of the deployment technique that the organisation has chosen and hence, they could not enjoy the consistency deemed to be essential (M. Beheshti et al. 2014). The system contains international coverage owing to its duration in the industrial sector.
SAP S4/HANA Finance has assured that it is updated with control and statutory compliance that covers the organisations for different financial cases or situations. In fact, this system possesses the capability of motivating the users. The reason is the presence of user-based Fiori screen, which assists in associating with the aspects by the usage of SAP Fiori-based GUI. Hence, it is crucial that there is no need for the staffs to be concerned about the relationship, which results in enhanced accomplishments of business staffs owing to better performance (Maheshwari 2017).
There are a number of organisations that have encountered issues in migrating to SAP S4/HANA Finance, some of which are described briefly as follows:
The Airways aimed to enhance its procurement and financial operations within its systems. Hence, it obtained professional services in order to seek assistance in the process of transition from its existing system to SAP S/4HANA Finance. As a result, it has selected Capgemini to be the most feasible outsourcing organisation. This has dedicated the outsourced organisation in the roles of procurement and improvement. The airline operates in a number of routes nearly around 190 global nations. However, the rise in the prices of fuel and the current risks imply that the airline has to make adequate amount of profit for the invested capital (May, Bo?hm & Lehner 2017). By taking this aspect into consideration, the airline has aimed to replace its existing legacy system by improvised technologies. For its purchase and finance roles, the airline has introduced a system (Horizon 8), which needs to have four systems integrated within the modules of SAP. These include flight-to-settle, budget-to-monitor, source-to-pay and finance-to-manage.
With the help of budget-to-monitor, a system-based budgeting and organising could be used depending on the usage of indirect operating expenses. The improvised solutions intended to help the airline to push for transparent data, progressing transactional operations along with offering existing information for undertaking decisions (Missbach et al. 2016). The framework that Capgemini has used has been a collective one, in which it was tasked with the technology staffs of Cathay Pacific Airways. In addition, Capgemini managed the operations from the past selection of SAP ECC6; however, later on, it has been changed (Crozier & Crozier 2019). The importance of the task has to been to allow the airline in obtaining a better insight of the direct and indirect expenses coupled with assistance in minimising general costs. Moreover, the variation needs to be managed by the airline in purchase throughout operating expenses and different aspects of indirect expenses.
The airline rushed to adopt the SAP S/4HANA Finance for obtaining significant benefits. In the initial stage, Cathay Pacific Airways intended in enhancing its purchase and finance operations enabling budgeting and driver-based planning, adopting indirect operating expenses in enabling route productivity reporting, timely gathering of cost related to direct operating expenses and management of procuring complexities. It is noteworthy to mention that the faults that the airline has encountered have been mainly in relation to finances and time. This is due to the fact that the airline learns the issues that include the process of transition and services of an outsourcing organisation.
Deloitte is considered to be one of the oldest organisations, which has implemented SAP in its system. It has started with the usage of SAP R/3 although the organisation has not developed the same for professional applications. However, the organisation has dedicated in acquiring the maximum benefits out of the system, which results in system customisation. It compelled the organisation in carrying out additional SAP customisation in the last few years. As Deloitte has made many customisations, it denotes that there have been many faulty decisions undertaken at the time of selecting the SAP S/4HANA Finance, which matched its business design and requirements (Carey 2017). On the other hand, it is to be noted that when Deloitte has been implementing the SAP application, advanced version has not been present. It is necessary that numerous customisations resulting in numerous faults leaving the organisation behind.
The issue encountered by the organisation at the time of using R/3 has been maintenance issue. It has been a challenge at the time it entered into maintenance because of the increased customisations (Murray & Akhtar 2016). As a result, it leads to rise in cost associated with maintenance. In addition, there has been absence of flexibility provided for the customisations inherent in the systems. The organisation aimed to enhance for eradicating the issues it has been encountering with the usage of R/3. The organisation has the goal of having SAP S/4HANA Finance, which would assist with significant financial operations. There would be enhancement in significant material operations; thus, offering the organisation with existing perceptions and information on the financial accomplishments.
The organisation has been enjoying additional benefits after the implementation of SAP S4/HANA Finance. It is making international advancements, which implies that the complexity of the financial functions of the company are progressing the reasons as well that drove the organisation to look for new solutions to the issues. Moreover, the organisation chose SAP S4/HANA Finance, as it got rid of the aspects and resulting in real-time closure. In the past, the organisation has been drive to run soft closes, which implies that it has been getting the operations down in the organisation. At present, the organisation could utilise the soft closes in every few hours that provides the CEO as well as the role owners with an enhanced perception depending on finance issues.
Deloitte has incurred its resources and time in enhancing efficiency and accomplishment. The implementation of the concerned system has assisted the company in minimising the general labour intensive operations. The result obtained is stability in operating costs owing to the simplicity in infrastructure. There has been rise in profit margin, as there is improved visibility of different revenue streams of the organisation. The entire performance is able to undertake informed decisions depending on the funds of the organisation. The implementation of the system has enhanced business operations and system sales in Deloitte.
This is a global agency managing the analysis in case of the creditworthiness of issuers on various fixed sectors in public sector as well as private sector. The capital of the agency is based on New York operating in the banking sector. For ensuring effectiveness in accuracy and flexibility in evaluation of provision, the agency has decided to get rid of MS Excel by using SAP S4/HANA Finance developed on the cloud (Suse.com 2019). The company staffs could provide allocation comfortably in the recent times in contrast to the long duration taken in the past.
However, some faults have been identified that Fitch Ratings encountered before the implementation of the concerned system. There would be application of the allotment framework once in quarter, instead of monthly, when required (Nica et al. 2017). In addition, the conventional framework is more prone to faults and it would require more time, as the conduction is made manually on the software. The time to transform the framework each time there has been challenging modification of the business driver. Along with this, there has been audit information and insecurity in the files (Singh 2017). Due to this, the New York offices are unable to share information with offices in other countries like London in UK.
The benefits related to the adoption of SAP S4/HANA Finance have been like a productive time undertaken in marketing, as the solution has been formed in weeks compared to months like in the last settings. There has been motivation among the staffs, which lead them to modify, develop and deliver instant allocations (Sun, Ni & Lam 2015). The adoption depending on the cloud system has eased the entire process, which has minimised the waste of time in procurements along with providing the steps as well as up-front spending to be used in the process.
Conclusion:
After considering all aspects, SAP S4/HANA Finance performs a significant role in the performance of a business organisation. It has the role of enhancing financial operations in terms of productivity and efficiency. It has been analysed that a number of organisations have adopted the SAP in their systems. On the other hand, it has been found that a significant factor is that SAP S/4HANA Finance could be used in coordination with other modules for bettering the efficiency and productivity of business organisations. It has been inherent that SAP S/4HANA Finance has portrayed its abilities that validate its innate value in contrast to SAP ERP FICO. The variations obtained from the two systems depicts the technological change in transforming the way through which financial accounting is conducted. By combining all the factors, SAP S/4HANA Finance has been a crucial aspect for majority of the business organisations.
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