History of SAP S/4HANA Finance
SAP S/4HANA is a computer software used by business organisation to run there day to day operations. SAP S/4HANA has helped in faster analysis and generation of financial reports. This report on SAP S/4HANA outlines the importance and challenges of the software on business, user experience in using SAP software, whether it is user-friendly or not is described in the report. The companies using SAP software have considerable experience in providing real-time reports and global regulatory and compliance abilities across all languages. SAP S/4HANA software has helped the firms in closing monthly reports (Arik 2002, p14), it has brought a lot of changes in the business environments, and provide an added advantage on business firms over their competitors. This report on SAP S/4HANA contains a brief history of the software, that is, when and where it was launched and whether it is a multinational corporation. The significance of SAP S/4HANA in the business for examples, it promotes real-time reporting and secure data management (Maheshwari 2017, p36). Also the challenges of implementing this application are outlined in the report.
SAP S/4HANA Finance was earlier known as SAP simple finance, is a business suite application software that was developed to integrate most of the business transactions into one process. This software application can work for both small business organisations and multinational companies. The finance departments in this companies adopted the use of this software in profit and cost accounting and any other financial operations. This platform has eliminated the traditional barriers in the organisation, whereby most of the transactions were processed individually. SAP S/4HANA has four modules that allow integration of business process and real time generation of reports. The functional module is the first component that promotes a variety of finance capabilities. This is the core component of the business suite because it gives life to the other modules.
The presentation component is another module that promotes user experience in SAP S/4HANA Finance. The use of SAP fiori has made the software to be user friendly and allow easy interaction between the client and the software. The reporting module is a component in SAP S/4HANA Finance that predicts future trends of the organisation. This module is used to tell the future financial position of the organisation. The top management are able to make strategic decisions concerning the future of the organisation. The integration of all this components has brought success to the organisations that have adopted the use of SAP S/4HANA Finance.
Difference between SAP S/4HANA Finance and current SAP ERP FICO
SAP S/4HANA Finance is application software that was launched in February 2015 by SAP SE Multinational Corporation in Germany as an upgrade of SAP HANA that was launched in 2013. This software is the fourth generation of SAP business enterprise resource planning, for many years SAP has been working to solve complex business process. The launching of SAP S/4HANA finance has ensured the success of the business suite. This software application has promoted the processing of vast volumes of business information in real time. SAP database concept has allowed writing off millions of codes. The ERP system has been made simple and easy to use in data entry, storage, and processing of large volumes of transactional data (Anon 2018). SAP has presented an opportunity for companies to reinvent their business models by utilizing the internet of things. SAP S/4HANA uses real-time processing of information; it doesn’t require batch processing of data. The clients can receive their data in real time for simulation and execution of their data. SAP S/4HANA and SAP Fiori have interlinked together to provide user-friendly display functions that allow easy use of SAP in a variety of devices (Anon 2017).
SAP S/4HANA was initially referred to as SAP RF and was growing at a very high rate. In the year 1992 SAP R2 was introduced and launched. By the year 1992 SAP R3 was started as an update of the previous application. In the year 2004 SAP ERP was launched which had more features and components that the business world required. The central enterprise component was also another name given to SAP ERP which was well received in the business world with many customers using it. SAP ERP gained popularity very fast which prompted the company to develop new modules as the technology was changing quickly. The system offered a variety of services. Due to the advancement in technology, the SAP Company produced another module in 2015. The SAP S/4HANA was launched as the most updated Enterprise Resource Planning of all time. This SAP S/4HANA has many up to date modules which helps in the running of the business. The primary objective of SAP S/4HANA is to run an enterprise resource planning which uses the memory available to be effective and easy to use (Bhaskar and Williams, 2013).
In 2016, 5,400 clients had already implemented the use of SAP S/4HANA finance. Due to the competition available in the market, SAP S/4HANA had to be reinvented to offer an added advantage over other competitors like Microsoft or Oracle. The simplifications of business processes have paved the way for live data to be accessed. Live data has enabled a secure method of producing real-time reports. There were many transactions and news involved with the previous versions of SAP ERP, but the new SAP S/4HANA reduced the number of reports and sales required. It integrated most of the processes into one making them compound to reduce the number of reports generated. The database storage is only exclusive to SAP software only, unlike the previous versions which supported databases form other companies. The use of only SAP database saves the cost of purchasing databases from other companies (Gunawardana 2015, p13).
SAP S/4HANA is divided into several logistics and modules which simplifies the different departments of business environments. The first module is the inventory management, this module of enterprise management give a simplified information model which helps in tracking inventory in the business firm. Inventory management outline what, when and how the stock is taken in the company. It simplifies the manual checking of stock. Procurement is another module of enterprise management in SAP, and it has increased the efficiency of the procurement officer in procuring and payment of the suppliers (Breen and Calvert 2003, p87). There is efficient management of what was purchased and the amount of the products. Reports from the procurement officer can easily be generated with the help of SAP. Material requirements planning and order management are modules of enterprise management in SAP S/4HANA (Belloc 2010, p.63).
SAP FICO enables business firms to manage and organize all financial data and information by generating financial statements for reporting and analysis by the business management. It is divvied ton two units, SAP FI for Finance and SAP CO, which stands for SAP controlling. SAP S/4HANA is only one unit which supports only the finance option. SAP Finance (FI) helps in business financial reporting, that is generating of all the financial statements required by the company. It is also involved in the accounting department of the business firm. On the other hand, SAP Controlling (CO) is involved in the planning and monitoring of the company income and expenses. SAP FI and SAP CO were launched as different modules while SAP S/4HANA was launched as one module containing different units in it for processing and analyzing information. SAP FICO worked as different units combined, but SAP S/4HANA works as one unit (Ismail and Ali, 2013, p.123).
The SAP FI modules include: account receivables unit, general ledger, accounts payable, asset accounting and fund management amongst other groups. The asset accounting module manages all the operations that are related to the organizational assets, that is, acquisition or disposal of an asset. The SAP CO units include the following: cost elements, profit analysis, and product costing. This unit is mostly used by the top management of the company in the analysis of profits and other related expenditure. The above arguments show that SAP FICO worked separately in producing several reports but in SAP S/4HANA all the units are integrated to allow real-time analysis provision of reports. The reports will be easily generated because all the data required by the software for analysis is readily available in the same place (Jackling and Spraakman 2008, p.69).
The profit accounting sector and the cost accounting sector in SAP S/4HANA finance has brought new face in the finance departments. Profits in most of the business organisation that have adopted the use of SAP are well accounted. The companies are able to predict future profits and allow maximum profit generations. Business firms are able to cut the cost of operations because the SAP S/4HANA helps in tracing unproductive business transactions. Therefore, a firm will be able to focus on those business transactions that will ensure maximum generations of profits. However, in SAP FICO, the profit and cost accounting wasn’t that effective because it could not separate unproductive business operations. SAP FICO only focused on the top management and the administration departments of the business organisation. The controlling department benefited a lot by using the SAP FICO software.
One of the significant elements of SAP S/4HANA is the SAP Fiori function which promotes user-friendliness of the software. This has enabled access to the software form desktop computers, mobiles devices or even laptops. SAP FICO does not have such feature in it. Even though it produces the same result, SAP S/4HANA is more user-friendly than SAP FICO (Leon 2014, p.12). In November 2015, SAP S/4HANA introduced another business module called Materials Management and Operations, and this unit helps in the management of inventories and procurement of company’s stock. In January 2018, human capital management was integrated by SAP S/4HANA as one of the new modules to manage the human resource, on the other hand, SAP, FICO has no recent update. 4HANA software has integrated its module into one whole software application which helps in faster analysis of data.
SAP S/4HANA have brought a lot of profits into the business world, and the enterprise resource planning has changed how business data is being processed. Both financial and managerial accounting has been combined for secure and faster processing of information. Real-time processing of data has led to the availability of crucial information for decision making (Little and Best, 2003). The SAP S/4HANA has sped up the process of decision making by the top management for proper running of the business organization. Because of SAP S/4HANA, there is a universal journal entry which has led to the easy reconciliation of financial transactions. For example, Boar’s Head Provision Company in New York has adopted the use of SAP S/4HANA to generate real-time reports used in decision making. In 2016, during a board meeting, some financial statements were lost, and the board had demanded them. Due to the availability of this software, the finance officer was able to process the same information within a quick time and submitted the same to the board. Therefore SAP S/4HANA has helped companies in processing data in real time and accurately (Pattanayak 2017, p56).
Audi Automobile Manufacturer in Germany is one of the successful company that have implemented the use of SAP/S4HANA Finance. The company deals in manufacturing and distributing of cars worldwide and it has nine facilities that are integrated into one module. All these facilities are interconnected by SAP S/4HANA Finance which has automated all the transaction in the company and has allowed easy transactions with the suppliers. After the implementation of the SAP business suite, the company realised an increase in their profits with efficient utilisation of the resources. The business transaction between the suppliers and the customers of the company have been all integrated to allow easy processing of accurate reports. The company had issues in generating customer and supplier reports, but once the SAP S/4HANA finance was adopted, real-time reports are generated quickly without any delays.
Business organisations are able to predict future markets and make strategic decision on how to satisfy customer demands. Companies are able to use predictive analytics to show how their profit margins will be flowing in future, and position themselves in a way that they don’t become obsolete. A lot of companies have failed to survive the in competitive markets due to obsolete business applications that doesn’t match with the technological trends. However, SAP S/4HANA finance has ensured competitive advantage to their users because it redesign all the business transactions to allow faster transactions.
SAP has been working for years to solve Complex Information Technology and business problems in the business platform. The launch of SAP S/4HANA has brought a significant change in the operational and transactional processes of the business. The business environment is evolving rapidly with technological trends in cyber security and cloud computing which has prompted the differences in ways of conducting business transactions (Kurbel 2016, p.25). Business firms innovate how they do their operations to cope with the changing business environments. SAP recognized the gap in the global business and developed a digital framework which helps their clients do business in a more safe and secure environment. SAP has promoted their clients to do transactions in a digital way whereby there are easy storage and analysis of business data (Murray 2010, p.69).
Efficient reporting is another benefit of using SAP S/4HANA. The accuracy of the financial report is one of the most critical parts of the business. The database table has all the data that allows the software to compute and provide accurate reports in real-time. There is no data replication because it is being processed in real-time and therefore there is no requirement for batch processing. Due to the accuracy and availability of financial reports, the business can enjoy faster financial closing (Parkes 2011, p85). The closing of financial; periods, e.g., Annually, semi-annually, quarterly or even monthly, it has been made easy, and the finance officer can close the period with ease. Statement of comprehensive income and that of the financial position that is required in decision making is readily available (Menashe and Julian, 2006 pg:89).
Asset accounting has been improved, and there is no recording of depreciation value because SAP S/4HANA has brought in a new module of asset valuation (Machera 2017, p375). The use of asset accounting module efficiently manages Acquisition, depreciation, and disposal of assets without the confusion of the company day to day business. Liquidity management component has replaced the cash management. A business firm can manage short-term cash positions and ensures that there is no or little theft of company’s cash. In the recent year, most companies lost a lot of cash due to theft by the employees, but with SAP S/4HANA all the liquid can be traced to the person who withdrew the money (O’Donnell 2004, p.75). This software promotes faster tracking of the money; hence there is no loss for the business. Ego pharmaceutical company in Australia lost millions of dollars before integrating SAP S/4HANA. The employees were able to sell the drugs for their benefit without the company’s knowledge. They used the back door in selling the stock because the company was not in a position to trace their share. When SAP S/4HANA was applied in the management of the financial sector in the company, there were no losses experienced since then. Inventory management has helped the company trace their stock without losses (Moscarola and Chabouni 2010, p143).
The flexibility of SAP S/4HANA in the business world is a significant improvement in the company’s system. Finance officer can get the financial reports faster without the lengthy, time-consuming reconciliations. The software generates both financial and managerial statements in a way that it saves time. During an emergency meeting, the reports can easily be generated from the system without any constraints. The use of Fiori has improved the user interface and promoted user productivity. The software is flexible in that there is a simple, easy way to use an analytical function to produce financial statements. User productivity and the flexibility of SAP S/4HANA has led to increasing profits in the organization (Schfer and Melich 2016, p72).
Cost saving is one of the most critical parts of any business firm, most of the businesses are focused on reducing the cost of production and the expenses of the company. The companies nowadays spent a lot of money on software productions IT strategy. With the implementation of SAP S/4HANA, a company can save cost because it optimizes data volumes and removes the overlapping of data. Operating and infrastructure costs can be cut down by the use of SAP S/4HANA because its operation is in a way that it saves cost (Marriott 2015, p480).
An adoption plan for implementing SAP S/4HANA can be quite tricky despite the flexibility part of SAP. The process of choosing SAP product, to begin with, is very complicated. The reason for the company’s challenging move to switch SAP S/4HANA is a massive investment in enterprise resource planning implementation. The existing database management system, e.g., a structured query language server and therefore they have to switch to 4HANA (Wagner and Monk 2008, p26). The decision of which process should be run on the SAP S/4HANA and which transaction should be run differently is a challenge for the top management. One of the significant challenges of migrating to SAP S/4HANA is the cost involved, and it is quite expensive to install and maintain the software. The functionalities of the system is also a significant concern because a lot of clients are not conversant with the use of SAP S/4HANA enterprise resource planning. Companies are also concerned with the number of resources they will need to run the software, and this is regarding human resource and the availability of the required hardware. Despite the benefits involved with SAP S/4HANA, there are challenges involved in the installation and use of SAP S/4HANA (Yaftian and Mihret 2017, p326).
Coca-Cola Company is one of the multinational corporations that have adopted the use of S/4HANA software. Despite the several success of the SAP software in the company, there were several challenges during the adoption of the application. The restructuring and redesigning of business processes were one of the main challenges Coca-Cola faced during the adoption of SAP. It requires a lot of time and works to install and configure the SAP software. The amount of work and time required to configure the software is quite cumbersome. Data migration from the previous database should be done by expertise to avoid data inconsistency (Withers 2010, p18).
Braskem petrochemical company migrated to SAP S/4HANA ERP in the year 2017. This company based in Latin America has become one of the biggest petroleum company in the world. The company integrated SAP S/4HANA, but it encountered difficulties during the implementation of the software. The company experienced challenges with the suppliers because they needed extra workers to work on spreadsheets. This led to data inconsistency during the computation of final reports for payment. This brought a lot of data redundancy; hence it displayed the wrong information. Conversion means that the company had to redesign the business process involved with their clients because of the changes in the interface. The company had large volumes of data which it was hard to transfer the data to the new 4HANA. The original clients and vendors were replicated into the master data before the installation of SAP S/4HANA enterprise resource planning (Pavel and Evelyn 2017, p5).
Financial data migration should be done carefully because any alteration of the data can lead to the loss of valuable information by the company. Data migration should be consistent during the transfer of data from the master database (Tonder 2006, pg36). Data inconsistency is one of the major challenges involved in the migration of SAP S/4HANA. For example, Braskem Petrochemical Company based in South America have been operational for decades. They implemented the use of SAP S/4HANA recently, but despite the success of the software the company had gone through difficulty during the installation of the SAP S/4HANA software. Data inconsistency nearly caused them to lose data during data transfer. Braskem petrochemical company had made an inconsistent update which costed the company. The company had made direct updates to the database which is very uncommon, and the updates are usually made consistently via the database interface. Despite the data inconsistency of the insurance company, it was able to recover all the data it needed (Sachan and Jain 2018, p58).
The functionality changes is another challenge that is involved in the installation of SAP S/4HANA software. The SAP ERP used classic cash in the analysis of cash inflow and cash outflow, but in SAP S/4HANA ERP cash management module is in operational in place of classic payment. This brings a lot of changes in the process of analyzing the income and expenses of the company. The company has to transfer the old credit management master data to the new cash management module. For example, Chiron Corporation was able to adopt the new changes in financial reporting. Their cash inflow and outflow were integrated into the new SAP S/4HANA software whereby the board implemented it without any difficulty. The biotechnology company experienced a lot of challenges during the implementation of the SAP ERP software, especially the changes in the processes (Sugut 2012, p25).
The architecture of SAP S/4HANA is quite complicated and require a lot of modules to be installed and activated for the software to work well. Fiori, gateway and HANA studio is one of the few components that need to be installed for the proper functioning of the SAP S/4HANA. Chiron Corporation implemented the use of SAP S/4HANA software to improve business processes in their organization. The application Programming interface is one of the updates made by the corporation to customize their products for their clients. During the architecture programming, the company nearly lost their data because the ERP they were using was entirely obsolete the architecture definitions is usually done before the installation of the SAP S/4HANA application (Sori 2009, p44).
Conclusion
In conclusion, computerized accounting is fundamental in global business transactions. The companies that have adopted the use of SAP S/4HANA in doing their business transaction have an added advantage over their competitors. Faster forecasting and planning, quick report analysis, real-time analysis are amongst the benefits of SAP S/4HANA software. However, data inconsistency and data migration are amongst the challenges associated with the implementation of SAP S/4HANA. The problems can be avoided by carefully transfer of data and preventing significant updates of the software. The integrity of the data can be checked by keeping the master database without any alteration of data. For a company to become a successful digital business, a proper data management strategy needs to be installed to provide a competitive advantage over their competitors. The architecture of SAP S/4HANA has many modules and components that allow real-time generation of financial reports.
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