Benefits Of SAP S/4HANA Finance: A Case Study Analysis

Overview of SAP S/4HANA finance

In today’s world, organization are facing huge competition in the market. Due to the increasing competition, it has become exceedingly important for the organizations to come up with more faster and flexible business strategies through which the leader will be able to take more efficient decisions in the within the organizations. Different technologies like cloud computing, virtualization (Masdari, Nabavi and Ahmadi 2016), Internet of things have been incorporated by the organizations all across the world. One such technology which is presently been used by the organizations is SAP ERP FICO which is used in the Finance departments for faster and accurate results and calculations.

Although this technology has many advantages, there are many disadvantages as well which will be discussed in the following paragraphs. This report will highlight the different aspects of comparison between the traditional SAP ERP FICO and SAP S/4HANA. A clear overview as well as the history of the SAP S/4HANA technology as well as their advantages will be discussed in the following paragraphs. By the end of this report, the reader will have a clear understanding of the working principle of the SAP S/4HANA technology considering case studies form two companies on how they have implemented and are successfully running this technology in their organization. Through the upcoming paragraphs, the reader will be able to develop an in-depth idea about the working principles associated with the different versions of SAP that are being used within the organizations.

In this, report the case studies of two most renowned companies will also be studies in details which ash been able to successfully implement SAP S$ HANA within their work operations: Delloite and the famous Japanese IT company Fujitsu. The different issues faced by the companies will also be studied in details in the case studies.

Overview of SAP S/4HANA finance:

SAP HANA platform is being used since 2010 and different other applications of SAP such as SAP ERP as well as the SAP Business suite were designed in a way, which is capable of running even on a SAP HANA or any other database as well. On 3 February 2015, a new version of SAY called the SAP S/4HANA was launched at the New York Stock Exchange, which was an improved version of the earlier technology (Ghattamneni 2016). “SAPPHIRE NOW” which is the annual conference for the customers of SAP was help on 6^th May 2015 Florida, also announced the newly released cloud integration technology of SAP.

Difference between SAP S/4HANA and the present SAP ERP FICO

Until today, SAP S/4HANA is SAP’s biggest ERP strategy platform in the last 20 years. By April 2015, S/4HANA was quite popular in the market and had had around 350 customers. By October 2015, Sap confirmed that 4HANA had more than 1300 customers. By the fourth quarter of 2016, there were around 5400 users of SAP S/4HANA and by June 2018, there are around 9000 customers now. Therefore, it can be seen that the technology has immensely popularized in the markets due to its numerous operational advantages in the financial domains, within the organizations.

Considering the present digital age all across the world, the organizations should come up with a more improved version of the financing software that they use in their working operations. The complexities in finance calculations as well as the business tasks led them to adopt the technology of SAP S/4HANA, formerly known as SAP Simple Finance. This is an ERP software for performing financial tasks that runs on a SAP-HANA platform located within the memory. It is used to perform important tasks such as financial planning as well as accounting management tasks, management of treasury as well as cash, accounts payable as well as receivable, calculation and management of risk within the organizations etc (Oqayyel 2017). The major tasks of this technology can be briefly mentioned below:

• It gives an overall common view of the different operational as well as financial consolidated data in one place.
• It can be integrated with cloud computing for more secure data storage (Missbachet al. 2016).
• It is flexible and easy to use.
• It automates and makes all process much faster and smoother within the organization.

Difference between SAP S/4HANA and the present SAP ERP FICO:

SAP S/4 HANA is an improved version of the SAP ERP FICO, which is being used presently across the companies. There are different differences with respect to different technical aspects, which are briefly described below in the following points:

• Simple finance or the SAP S/4 HANA runs on a HANA platform whereas the corresponding module of FI is based on an ECC 6.0 environment. The latter is going to be obsolete by 2025. Another sub module of finance is Co-controlling which is present in the newer SAP S/4 HANA and is not there in the already existing FICO version (Kale 2014).
• SAP S/4 HANA runs only on a HANA database, whereas FI runs on SQL as well as oracle server databases as well as with compatible third party databases also (Sampat 2016).
• Only a single table called ACDOCA stores all the important function level information, which is considered as a universal journal. N number of unorganized tables such as BSEG, MSEG and FI are not required anymore which the technicians had to mug up earlier.

The differences can be clearly understood by understanding how exactly the different technologies work. SAP S/4HANA Finance was originally known as SAP Simple Finance, which was the first business solution, which was developed for the HANA platform (Plattner and Leukert 2015). It is an improved version of the traditional FICO model, which eliminates the issues related to transactional, planning systems as well as analytics in order to provide instant in depth analysis of important organizational financial data.

For example, a leader within an organization can make use of SAP S/4HANA Finance to forecast potential decisions as well as re-model data through a real time strategy to consolidated financial data from different sources. Finance professionals like Chief Financial Officers (CFOs) and other personnel who are involved in the different accounting and treasury management operations, financial operations, tax calculation and risk as well as financial compliances mainly use the SAP S/4HANA Finance technology in carrying out their working operations (Okungbowa 2015). All kinds of companies including multinational fortune 100 companies use this technology.

SAP S/4HANA Finance benefits for an organization

One of the major advantage of the SAP S/4HANA Finance technology is extremely fast processing speed unlike the older FICO technology, thereby allowing faster reconciliation of important financial strategies and processes (e.g. quarterly close). It acts as a single point of contact for all financial information for the entire company as a whole.

SAP FI on the other hand is technology that can report both internal as well as external financial factors of an organization. Its main objective is to keep a track of all the financial transactions carries out by a particular entity and produce the final financial results and statements at the end of a trading cycle. The major functionalities associated with the SAP ERP FICO model are discussed below. These aspects are not present in the newer SAP S/4HANA Finance technology (Grunow, Matthes and Roth 2013).

• Accounts receivables: This is a sub module, which is useful in capturing and storing all the customer centric information in the databases (SE 2014). Separate accounts for all customers are created, which store the different transactions done by them, in their specific accounts. A general ledger updates all reconciliation accounts, which includes real-time figures and calculations for better understanding of the financial professionals. Posting of invoices and their payments, down payments, customer report execution and credit memo posting are some of the important tasks performed by the Accounts receivables module of the SAP ERP FICO model (Dockrell et al. 2014).
• Accounts payables: This module captures the different transactions with the different vendors and helps in managing the vendor accounts. Individual vendor accounts are created and maintained and whenever a customer account gets a new transaction entry, a real time update operation of the reconciliation accounts takes place. These accounts are stored in the general ledger, and are updated with the figures in real time. Invoice payment, invoice posting, vendor reports, credit memo-posting, down payments, are some of the important transaction tasks being done by the accounts payables module (Loc 2017).
• Asset accounting: The tasks managed by this module are asset depreciation, asset sale, asset revaluation, asset acquisition, asset retirement as well as asset transfer. Reconciliation accounts are again real time updated whenever a new transaction is posted in the asset account (Lee et al. 2013).
• Bank accounting: All the bank account transactions are reconciled which are recorded on the bank statements after comparing them to the system transactions.
• Consolidation: Multiple financial statements from different companies can be combined, thereby providing a clear idea about an organization’s financial position.
• Funds Management:This module in the SAP ERP FICO model determines the different expenses and cost factors to the company (Okungbowa 2015).
• Special Purpose Ledger: It is useful for reporting purposes.
• Travel Management:Different travel related expenses as well as other related aspects, such as hotel bookings are handled by this module.

SAP FICO is the short form for FI or Financial Accounting and CO or controlling. SAP FICO is an integral part of ERP. FI as well as CO store important organizational financial information in a secure format. Whereas with the SAP S/4HANA Finance, a common viewpoint for all financial as well as operational data can be created, thereby producing a more friendly and flexible process within the organization (Riesner and Sauer 2017).

SAP S/4HANA Finance benefits for an organization:

Enterprise Resource Planning (ERP) is a software for business management, which is used by almost all companies in today’s world, which helps in creating, developing as well as marketing of the products in a strategic manner. Due to the complexities associated with handling the ERP solution, SAP S4 HANA Finance was introduced for its numerous benefits in the organizations. It has much more advanced features as well as functionalities, which in turn makes ERP implementation within an organization much easier and simpler (Merzbach 2017). Some of these advantages are described below:

1. Faster operations:

 The financial closing is run in a much faster way and on a real time basis and it is built within the inbuilt memory platform of SAP. Therefore, lengthy processes, which were earlier batch oriented, are real time operated now, thereby reducing the time taken for complicated operational tasks, largely.

Fig 1: Real-time operation of SAP S4 HANA Finance (Source: As used by the author).

Prevention of data duplication as well as aggregation:

Better identification of reasons behind cash movements. Applications can work on the same level as of the items, thereby producing much deeper and details insights to the business. It helps the leaders to make more efficient business decisions.

Conclusion

Single source of financial truth:

There is improved accuracy and much faster intercompany reconciliation. The universal journal used for financial as well as management accounting is incorporated in the SAP S4 HANA Finance thereby keeping all the financial data up-to-date in the databases. Its operation can be explained in diagram below:

Fig 2: Single source for financial information (Source: As used by the author).

Combines transactional as well as analytical data:

An annual planning, which used to be static is now a real time based dynamic planning. SAP S4 HANA Finance is capable of correlating historical, predictive as well as actual data, thereby putting them on a common view for easy understanding of the finance professional.

Smarter applications:

Invoices and payments are matched automatically with the use of machine learning. Intelligent services such as internet of things (Collignon 2017), modern analytical tools as well as machine learning are now being used to integrate the core processes of finance in order to produce automation as well as predictive opinions about the financial operations.

Replacement that is non-disruptive in nature:

It ensures a smoother transition phase of customized business specific applications. SAP S4 HANA Finance ensures a proper and systemized disaster recovery system within the organization.

The finance management is centralized:

The S4 HANA centrally manages liquidity as well as group cash. It can work on the model of shared services thereby centralizing all the transactions into a consolidated output.

It is a compete and consistent choice for the organizations:

It makes use of a simplified data model code line and gives a premium and user-friendly experience, which remains same for both cloud as well as on premise data infrastructures.

An excellent global reach of the technology:

The technical databases are up to date and S4 HANA abides by all the ethical and regulatory compliances. It is spread across 26 industries and 62 countries, and therefore the expertise it has is capable of handling any and every financial situation that can arise in an organization (Keskinen 2017).

10. Attractive user interface for the consumers:

The SAP fiori design is implemented in all the financial applications thereby giving the applications a very professional look thereby attracting more consumers. It gives a very beautiful and user-friendly consumer grade professional experience to all the finance professionals using the SAP S4 HANA module (Karthikeyan and Director 2017).

SAP S4 HANA implementation within Fujitsu:

Society, economy as well as the industry are going through a digital transformation. There are dynamic changes within the IT infrastructure of the companies which led them to switch to the 

SAP S4 HANA technology.

 One such company in which the SAP S4 HANA technology was implemented is the famous Japanese IT company Fujitsu. The different questions associated to this case study will be discussed. How can SAP S/4HANA be implemented in a successful manner and what are the relevant approaches to do so? What will be the exact changes with respect to individual users as well as the entire organization? The implementation of the SAP S4 HANA technology have different aspects such as Social, Analytics, Cloud, Mobile as well as Internet of things, which also open up avenues for new challenges (Srikantarao and Radhika 2014).

Fujitsu aspects taken into consideration:

• Process mining technologies.
• Workshops for analysis.
• High-end IT architecture development.
• Process Value Discovery Dashboard implementation within Fujitsu.
• Preparatory activities such as Unicode migration.
• Addressing customer requirements
• Migration plan to SAP S/4 HANA.
• Fiori application implementation.
• SAP activation.

Challenges associated to implement the technology within the organization:

• Immediate response to dynamic requirements is not possible due to rigidity of the process
• Reporting process is very complex.
• Data analysis as well as evaluation is very problematic.
• Lack of transparency within the organization.
• Breaks are not possible for the systems.
• Huge expectations in terms of a user-friendly interface.
• Legacy applications need customized developments in order to be properly used, which is a time taking and complicated procedure.
• Conventional standards are overused.
• Delloite case study:

Deloitte deployed SAP S/4HANA solutions to cope up with its digital transformation. When it shared its experience after the successful implementation of the technology, it shared different kinds of information with its customers. It clearly explained why it chose SAP for its financial business operations, which are mentioned below:

• Delloite had old systems, which had to be replaced by a newer and faster technology suitable for making efficient financial decisions.
• Delloite has experience in SAP solutions for over two decades
• Delloite vision was to make use of SAP to derive the best possible results and prove to be an example for its customers as well as other organizations (WANG, CHEN and YU 2016).

After-value-Driven Results

• Improved standards of finance and accountancy as well as revenue generation within the company.
• Marked visible improvement in performance as well as profitability within the organization.
• Delloite was able to explain its client the better side of digital transformation using the advantages of SAP S4 HANA technology.

Challenges faced by Delloite:

            Some of the major challenges faced by Delloite in the implementation of SAP S4 HANA are discussed below:

• While migrating to SAP S4 HANA technology, Delloite needed to make decisions on a real time basis about resourcing as well as deliverables, but the much needed information was not always readily available the finance professionals working on ground )(Waizy et al. 2015).
• A chain of client engagements based on performance as well as profitability was required to for group tasks and projects to be done together.
• A clear visibility was needed all throughout the entire process of creating as well as maintaining projects, which was a difficult task for the organization.

Conclusion:

            Therefore, it can be concluded from the above report that SAP S4 HANA has multiple advantages for the professionals working in the finance departments within the organizations but even then, there are multiple disadvantages associated to it as can be seen from the two case studies discussed above. Some of the commonly faced issues, which are faced by the companies, can be summarized as increased costs factors to the organizations as well as scarce availability of resources.

These are practical issues are faced by the engineers as well as finance professionals in the real time scenarios within the organizations. In this report a clear understanding of the concepts of SAP S4 HANA along with their advantages were discussed and also a complete and detailed analysis has been shown on how it is different for the presently used SAP ERP FICO model which has been identified to be an obsolete technology by the year 2025. SAP S4 HANA is an advanced form of the SAP ERP FICO model, which is being used by the different organizations in today’s world, all across the globe. If the limitation s as discussed above can be properly overcome and the mitigation techniques of the threats and risks implemented within the organizations, then this technology can take the organizations to newer heights in the future.

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