Introduction to SAP S/4HANA Finance
In 2014, SAP introduced the SAP S/4HANA Finance and from that time the product has been a matter of a lot of discussion and people often fail to understand what this product is about. SAP S4/HANA Finance is portion of the S/4HANA suite and works on similar terms but in an advanced manner. This application includes many features that were not present in the previous versions that includes universal journals, real-time analytics and better streamlined designs. This application is available in both on-premise and cloud versions and there are constant quarterly updates to remove the bugs. The SAP simple Finance has now become obsolete and only SAP S/4HANA Finance, which is also known as the version 2. Is in function. The overall bugs that were present in the prior versions have been simplified in this one and a more advanced version is given out for people to use. The previous version has now become obsolete and people are only using the advanced version that can help them in doing a lot more activities in a faster manner.
SAP is an enterprise resource package that aims to cover the day to day activities of any organization and help them in presenting their financials in a more accurate manner. It helps in integrating the other lines of business along with the core functions and helps in various finance based operation that ranges from risk analysis to core functional based areas like financial reporting. SAP business suite will run only on the SAP HANA database and hence it is all considered as one product. It is said that implementing a SAP in the organization can help in saving around 37 percent of the total cost that an organization would incur based on its internal and external performance and that would include everything from labor cost to other ancillary cost for the business (Abdullah & Said, 2017). Overall it is one good investment that organization can do. Based on all this it can be said that it is imperative for the organization to use this software widely and that is the reason of its popularity. There have been many versions that has come in the market through technological upgradation and marketing and technological insights and that has led to many new and effective changes. SAP S/4HANA Finance is one of those newer versions that has been released by the company and includes many new features that are discussed below.
Features of SAP S/4HANA Finance
SAP S/4HANA Finance is a detailed set of financial management and solutions that covers many areas relating to accounting that includes financial planning, analysis, accounting, financial risk management, compliance engagement among others. It provides an out an out accounting based solution to people. It is entirely meant for business purposes and hence can suffice the needs of both the long term and short-term business goals of any company .It has been in business from a long time and hence after the older version people wanted certain changes which the new version satisfies. It can be customized as per the needs of the business and organization needs to purchase their own exclusive licenses to use these software for their operations.
SAP S/4HANA consists of four components:
The functional core component this is one of the best thing about the new version. There needs to be at least SAP Net Weaver 7.4, SAP ERP Central Component (ECC) 6.0 Enhancement Package 7, and SAP HANA version 1.0, if the organization wants to switch to the new upgraded versions. This functional upgrade would include the inclusion of transactional tables for the organization.
The user experience component that helps in making the core component of the software user-friendly. It has Fiori screens that are user friendly and hence it makes it easier to use this software. It would require SAP Net Weaver 7.4 and SAP Gateway version 2.0. It is a more optional component and people can opt for it if they want more comfort while using the software for their business. People can keep using the prior versions for user component (Boghossian, 2017).
The analytic and reporting component that includes real time reporting and analytics and that can be done using HANA Live views. The companies who wants to use this feature needs to have SAP HANA Live 1.0 for SAP ERP and SAP HANA pre-installed. This is also an additional component and can be used if the company wants.
Application Component – There are various application based features that have been included in this new version that can help the users in financial analysis and decision making in a better manner and there is no reason why they will opt in for this as it will increase the quality of the work done and improve the overall services that the software is rendering to the company. It is an optional component too.
SAP Hana is the backbone that runs the SAP business. The main feature of this application includes the central column-based Relational Database Management System (RDBMS), which it can use to store, retrieve and process data within the organization. All the applications that runs on SAP needs to have this database installed. So, this is a common angle in all the versions of SAP that are introduced in the market. It is very important that organization needs to keep up with the digital world when it comes to embracing new technologies and installing and upgrading them into their system of operation. SAP S/4HANA is a more advanced version of the SAP ERP FICO and the difference between the two is stated below:
Components of SAP S/4HANA
The difference between SAP S/4HANA Finance and current SAP ERP FICO
SAP Finance helps in dealing with the financial management in an organization and it comes with a package through which people can deal with their financial reporting and risk analysis and thus that would help them in generating best results. It helps in reviewing the real time financial status of a company in the market and helps them in reducing the overall complexity and deal better with their overall financial needs. It is a more detailed software and based on more traditional lines that deals with four main areas in an organization that includes accounts payable, accounts receivables, general ledger, assets recognition etc. Hence it deals in with the basic aspects of financial structure of an organization in the company and helps them in generating the best results for the company (Bouret, 2017). It was the basic version that was introduced by SAP and that companies that do not involve very complex transactions goes for these kind of software as it is using to use and can be customized as per the needs of the organization. SAP ERP FICO is the best software for both internal and external data processing and FI stands for financial reporting and CO stands for controlling. It is one of the most important core module in which the real time financial transactions are combined with the SAP modules (Svahn, et al., 2017). It is best suited for excellence in finance and other fields of accounting for the business. It is a highly sophisticated way of handing the finances and helps in generating the best possible results for the organization. It is highly utilized in banks, taxation sectors, stock holders and others. It helps in combining all the diverse modules in an organization that would include finance, HR, etc. and making them one integrated module that business can effectively use. So, in a nutshell it can be said that it helps in drawing the data for the external analysis while the control process helps in managing the internal data of the organization that is useful for the internal users. So, we see that these are the versions of the SAP software that runs of the SAP HANA database. On comparing SAP FICO with SAP S/4 HANA we see that both are based on similar lines but provides different functions.
SAP S/4 HANA is the fourth version of the SAP ERP suite and can run only on SAP HANA. It is more user friendly then all other previous versions of SAP and is intended to be used to solve more complex problems and handle large amount of data. In comparison to the SAP FICO it is more agile and easier to understand and use and thus can be effectively used for complex transactions too. Thus, business are having the advantage of reinventing their business models and connecting them with their peers and streamlining large amount of data through easy networks that removes the complexity of multiple system and only one integrated data network is enough that helps in processing. SAP S/4 HANA does not require batch processing and that is the best part of this software, which makes it simple to use the business processes and also drive them towards the real-time scenario where people can see the real time for the overall planning, execution and stimulation for the company (Chron, 2017). This is very helpful in a way that management can streamline important data that affects the financial position of the organization and based on that they can make their financial planning and execution. SAP helps in data storage, processing, generation and analysis. Hence in a way it does all the functions that might affect any company and thus people uses this for their financial management .There are many versions of the same in the market and hence people can make their choices based on their needs. SAP simple finance is the basic SAP based application that can be found in the market. SAP Simple finance is one of the best important feature of the SAP S/4 HANA as it helps in integrating financial management with real time data monitoring that helps in aligning the financial and non-financial data into in terms of SAP single source of truth and many businesses are starting with SAP Simple finance before moving onto more complex versions like SAP S/4 HANA. Overall based on the entire analysis it can be said that companies can use both versions but each have their own qualities that make them better in different areas. SAP FICO is more integrated and is more logical and consists of some great features that can be used effectively in large organization in which internal control is as important as external data processing and when it comes to SAP S/4 HANA it is more user friendly and helps in streamlining things that makes it imperative for the organizations to use them for their better results when managing large amount of data at the same time. It can be said that both the versions are good and it entirely depends upon the needs of the organization which they want to use and what are the changes that they want to bring in the current financial sector. It is a user based software and thus users can relate to their needs better and accordingly choose (Coate & Mitschow, 2017).
Role of SAP HANA in SAP Business Suite
There are various advantages that can be associated with SAP S/4 HANA which includes the fact that it is the modern cloud-based finance ERP that is suitable for the new modern digital age. There are many new updates that have been made in this new version which makes it effective enough to be used for large amount of data processing and is very user friendly also. The key benefits of the same are stated below –
Access the Single source of truth – It helps in streamlining all the internal and the external processes to the single integrated form that helps in development of a single source of truth that is useful for the organization for better data analysis. It helps in removing data duplications, redundancies and reconciliations. Hence reduces the overall effort of the management of the company and helps them in better data processing and treatment. This single source of truth reduces a lot of effort that the management puts in segregating the data (Delone & Mclean, 2004)
Engages flexible business processes – This is one of the most important benefit of this version as it helps in increasing the flexibility of the business processes keeping the core values intact. It focuses on critical tasks and exceptions for the business and helps in easily changing the processes as the business models evolves. Thus, it is suitable to the changing technological times where technically it changes every year as technological growth is happening rapidly.
Helps in making comparison between the peers – It helps in making cross company analysis which helps in making self-learning data available for analysis of the people and companies can gain knowledge from that. It helps in making various role have access to embedded statistics, reporting and benchmarking for the organizations (Delone & Mclean, 2004).
User friendly – One more advantage of this kind of software is that it is very user friendly and hence companies find it easy to use as they can effectively apply it when they need to manage more complex data and features that are related to any external and internal processes and hence leads to better risk management also. Even though it is imperative that training has to be provided to people when they are dealing with this complex software’s but having a simple moving database makes the work easier and more refined.
Switching from one version to another version is not an easy task given that the overall changes in the SAP S/4 HANA feature is very high. The most common challenges that companies and their IT staff faces are listed below:
- The overall processes are mostly rigid hence changes are not adapted on a quick basis by the companies.
- Advanced IT related support is required so that business can adapt to such complex software.
- There is complexity in reporting involved(Norberg, 2018).
- There is lack in integration and transparency of data that makes it difficult to deal with such kind of data
- There is a large amount of demand from the users for user friendly software and more better customer service experience that they demand.
- Most of the front end and user interfaces becomes outdated(Kusolpalalert, 2018).
- Optimization and getting proper licensing is also one of the requirement.
- There needs to be consistency in the demand and the processes applied by the companies
- The users take time to get ready for the overall future application of data and analysis.
- The cost involved in shifting from one version to another is sometimes very high because people need to be train on how to do their data management(Vieira, et al., 2017).
Comparison between SAP S/4HANA Finance and SAP ERP FICO
Thus, we see that when companies migrate from one version to another there are a lot of challenges that are faced. There are various restrictions that are put in by the users and the overall technical capability of the company also comes into picture and that effects the effective migration of the company, there are various web solution companies like Amazon, Wipro that aims to provide these companies with the best solutions for migrations. But it entirely depends on the management on how they weigh the overall pros and cons and then see which company will be effective enough to provide them with the desired solutions. First, they need to figure out whether they really want to make the switch or not, because the kind of effort and money it involves is very huge. Hence as companies and from their approach it is proactive to think that better judgement needs to be where it is needed in terms of making the switching (Salter, 2018). The above-mentioned IT issues are just part of the entire picture that involves lot many technical and strategical changes that comes in along with migrating from a more simplified version to a complex data mining version and how effective it would be to manage that data is what the point of debate should be. In the past there have been many such cases where companies have tried migrating and have messed up their ongoing operations, in the initial phase it requires a dead lock when the operations are shifted from one version to another and during that phase companies need to opt for expert help as they would help them in dealing with more complexed issues which cannot be easily dealt with .The real-time data monitoring function that is there in SAP S/4 HANA requires a very strong technical data base to be in operation and in that case if the companies fails to provide them the required platform it would lead to data leakage and redundancy of information might take place. Based on this there have been solutions that are provided by other web based solution companies that makes it easier for implementation of these software based applications (Norberg, 2018).
The below chart shows the implementation of the SAP S/4 HANA since its perception in 2014 and how we can see is that as time progressed more companies started opting for the S/4 HANA suite instead of the normal HANA finance and thus that makes it clear enough that even though the issues involved are very high, the benefits surpasses that and hence companies are ready to migrate for better results in the future (Plattner & Leukert, 2016).
Conclusion
Based on the overall analysis it can be said that companies should opt for such software that helps in improving their work flow and management. This SAP software involves a lot of cost and training needs to be provided so that people can use them effectively. Thus, before implementing these software companies needs to proper research and analyse whether it would be effective enough in all ways and monetary feasibility is there or not. Based on their requirements they should opt for such data management tools. It can be said based on the entire analysis that companies all around the world are using SAP because of its unique features that includes real time data monitoring and reducing data mining efforts through single source of truth feature. Thus, given that it is beneficial enough to use them but the fact cannot be ignored that companies do face a lot of issues when they move from the traditional system to more technological advanced versions and that does affect their overall flow of data in the system. Financial competencies are one of the best feature that companies cannot ignore and it is important that finances of the company must be properly maintained because based on that the management of the company takes important decisions about business operations and functioning. The users of the financial statement depend on them to take important decisions regarding the company and hence it is important that it should be free from all kind of errors. In companies that involves operations all over the world and has huge scale of business it becomes very difficult to mine data and then put them to use. Hence at that point these ERP based software comes into functions that works effectively to give the optimum results in the minimum scale of time possible. The only point is that research should be undertaken before investing in such software and long-term feasibility of usage and its compatibility with the overall operations of the company should be taken into consideration, that will help in reducing the overall wastage and generating the best results for the company.
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