Historical overview of SAP S/4HANA Finance
While reimagining the finance for digital age with SAP S/4HANA Finance solution that was formerly known as SAP Simple Finance, operates on in-memory platform of SAP HANA. It supports the planning for accounting and finance, cash and treasury management, accounts receivable and payable and risk management. It is further used for (i) on-premise or cloud deployment (ii) easy and flexible consumable reporting (iii) common view for all the operational and financial data and (iv) automated process (Baumgartl et al. 2016). The main purpose of the report is to focus on the historical overview of the financial solution SAP S/4HANA. It will highlight various features of the software started from its announcement date to its advantages and limitations. The report will progress with highlighting the difference among the SAP S/4HANA Finance and SAP ERP FICO in use at present. SAP FICO is the cost controlling and finance module under SAP ERP where FI stands for the term financial accounting and other part that is CO stands for controlling. This module is significantly robust and it covers almost entire business process those are encountered in different industries. It is considered as one of the most widely implemented and important modules under SAP. In the next part the report will highlight the benefits of SAP S/4HANA finance solution for the purpose of business. This part will cover various benefits those can be gained by the businesses through using that software as compared to other financing solutions. In the last part of the report various case studies will be presented for those entities those have faced some issues while migrated to SAP S/4HANA Finance. Finally, based on the discussion the report will provide the conclusion.
For last more than 40 years, SAP is working with large number of customers all over the world world for helping them to become the best run business in their respective industries through solving the IT challenges and complex businesses. Success of the SAP’s ERP solution is perfect instance for stating the way in which the best run businesses have been enables over the last 4 decades. However, the economy continues evolving and it is reshaped through top trends that includes hyper connectivity, supercomputing, cloud computing, cyber security and smarter world including of artificial intelligence, robotics, 3D printing and sensors (Discuss.asug.com 2018). Combination of these trends is driving the entities for innovating the way in which they can simplify and operate the underlying systems for competing and growing under digital economy. SAP identified the trends in early stage and developed the framework for digital business in order to support the customers in making way through the digital transformation. It started during 2011 for the 1st time while the SAP launched the SAP HANA as next-generation in-memory platform that is designed as simpler platform for the customers. It was launched for inventing and re-inventing the business based on real-time insight. During 2013 January, SAP business suite was launched by SAP business that was powered by the SAP HANA for assisting the entities in driving the business on real-time basis. It simplified the way in which the business uses the SAP business suite through bringing the analytics and transactions together into single in-memory platform (May, Bo?hm and Lehner 2017). The reaction from market was remarkable as more than 2000 customers attained in less than 2 years time that made it the fastest growing software. Moving ahead, during 2014 June it turned the focus to particular customers and business line and were able to drive the insight on real time basis. It further simplified the way in which the businesses are carried out with the SAP system (Plattner and Leukert 2015). Finally during 2015 February it announced next generation business suite named as SAP business suite 4 HANA that is known as SAP S/4HANA Finance. It was the new product entirely and the largest improvement since SAP R/3. SAP S/4HANA is considered as complete business suite that was built on most advanced platform for on-memory (Nieuwenhuis, Ehrenhard and Prause 2018). This was designed with award winning ‘Red Dot award for Design Concept’
Difference between SAP S/4HANA Finance and SAP ERP FICO
Before going to further discussion regarding SAP S/4HANA, it is crucial to recognize the importance of running the SAP Business Suite apps under the platform of in-memory and its difference with other in-memory platforms as against the relational traditional system for database management. With the SAP business suite that is powered by HANA the user can improve the performance as compared to the relational database (Sulit and Buenviaje 2016). It was represented as alternate new database for the existing customers with only requirement of migration into the real time system. Further, it was identified as the advanced platform based on in-memory as it offers the data base architecture that combines the OLAP (high volume real-time analytical processes) and OLTP (high volume transaction processing). These offer the entities great advantages with the aspect of running the business as the application is based on unified data model without the layer of redundant data that is required by the traditional systems based on RDBMS.
However, even if it is advantageous for running the business under SAP business suite on the platform for in-memory, it must be noted that all the in-memory platforms are not alike as the add-on in the memory platforms or the platforms those are focussed on in-memory partially and hold the balance analytical and transactional data on the disk. 2 major ways in which the businesses are effected the business application with these kinds of platform based on in-memory (Wang, Syaiful and Nurul 2017). 1st one is that the data utilised by the users of business application becomes ‘cold’ immediately that led to slowing the process for business which in turn determines that the business is not operating on the basis of real-time. 2nd one is that the data is held under 2 different silos that lead to various types of errors. It further leads to wide complex system with the effort of high engineering and requires unnecessary high cost for system maintenance.
SAP S/4HANA is focussed on the financial specialists and professionals for all the industries that include the CFOs (Chief Financial Officers) and other persons associated in tax, accounting, financial operations, treasury, compliance and risk. On the other hand, SAP FICO is considered as the core functional component for SAP ERP Central Component that enables the organization to deal with the financial data. Major purpose of SAP FICO is assisting the entities in generating and managing the financial statement for the purpose of reporting and reporting and assisting in effective decision making and planning of the business. It includes 2 models that is SAP Finance (FI) and Sap Controlling (CO) and each of the modules are used for particular purpose of finance. Whereas the FI deals with the overall purpose of accounting and financial reporting, CO is focussed on monitoring and planning the costs. FI and CO originally were released as the separate modules. However, now it is tightly integrated that the most of the people refer them as single module (Sun, Gregor and Keating 2016). Major differences among the 2 are as follows –
- General ledger under FICO contains all the transaction of the company under charts of accounts that lists entire accounts in system. Further the transactions are recognized under the sub-modules that can be reconciled with data of general ledger in the real time. On the other hand, SAP S/4HANA introduced new concept for ledger that is the extension ledger. 4 types of the ledger accounts are there under SAP S/4HANA – (i) leading ledger where the records are recorded to the table ACDOCA (ii) non leading ledger that is recorded in non-leading ledger in table ACDOCA (iii) extension ledger and the leading ledgers only are considered as part of the extension ledger (iv) day ledger.
- Under FICO, Accounts receivable takes into consideration the transaction and it manages the customer accounts. The transactions include the posting of credit memo, posting of invoice, down payments, dunning, executing the reports of the customers and payment of invoices. On the other hand, under SAP S/4HANA, it boosts the payment and cash flow visibility, improve the relationship with vendors, cut costs, payment and pricing through obtaining the tighter control over the process of invoice management. Further, through monitoring the payments and receivables in the real time. This software assists in responding rapidly under the fluctuating market conditions, identifying the risks involved in accounts and improving the financial health.
- Under FICO, Asset accounting controls all transactions associated with the fixed asset of the entity like heavy equipment, buildings and land. The transactions include acquisition of asset, sales, retirement, revaluations, transfer, sales and depreciation. Under SAP S/4HANA different accounting principles are controlled through setting up various areas for depreciation. new asset accounting is the area where the app further optimized for running with the additional functionality and under new structure for data with full integration and the ACDOCA table.
- Under FICO, Accounts payable includes all the transactions associated to vendors and it further manages all the vendor accounts. Transaction involves posting of credit memo, posting of invoice, down payments, dunning, executing the reports of the customers and executing the vendor reports. On the other hand, SAP S/4HANA improves the accuracy and sped for the accounts payable and receivable procedure with SAP. It uses latest technologies for assessing the credit risk of the customer on quick basis. It further simplifies the system of billing, maximises the visibility and improves the management of invoices.
- Under FICO, Bank ledger manages all the bank accounts data and transaction of the entity. It further can reconcile the transactions recorded under the bank statement and then compares them with transactions included in system. Conversely, under SAP S/4HANA it creates bank account for the master data and each bank account is allocated with technical ID at the time of creation.
- With the help of consolidation the entity can combine the financial statements for various companies that provide the company’s overview for the financial position as whole.
Benefits of SAP S/4HANA Finance for business
SAP S/4HANA is becoming the most successful system of ERP under SAP all over the globe. It is the 4th suite of ERP developed by the ERP software. Over last 4 decades, ERP (enterprise resources planning) is the core of the SAP. SAP S/4HANA differentiates itself from others in aspect of unique architecture that is quietly varies from classical relational database. It works on in-memory with the data store in the columns that will allow faster and real-time analytics and it can compute capabilities. Most importantly, the SAP S/4HANA enables the organizations for seamless working in the digital economy. It is considered as the key driving factor for different businesses those are using SAP ERP for long periods to consider whether they shall adopt the modernized ERP solutions. The software is natively written for SAP HANA platform and it is radically advanced with regard to increasing of efficiency, simplification, and implausible new features. It offers the unique benefits to businesses managers, IT managers and other employees (Pattanayak 2017). It reduces the maintenance costs, generates the report in faster way, increases the contextual awareness, enables the entities to become ready for digital core and democratizes access to data. Other benefits of the app for the businesses are mentioned below –
- Simplification – it brings about the immense simplification regarding administration and management for IT landscape. In fact simplicity is one of the key features that is brought by the ECC application structure. It further enables centralizing of the network and hardware resources and it serves as digital core for the simplification of business procedure through deploying the power of in-memory database. In past times, the enterprise often ran for the issues associated with multiple batch run. Exclusion of the aggregate tables, reduction of the processing time and easiness with which the systems can reciprocate to the queries and transactions, assures that the users will be able to spend the efforts towards strategic growth
- Increased performance – it improves the performance through allowing the users to execute, plan, generating reports, analysing the data and triggering the closing periods and providing the improved predictions. It further enables the company in providing better services for the customer centric apps. HANA provides increased awareness and access to democratized data (Okungbowa 2015).
- Easy in using – Fiori 2.0 offers modern design for completely new experience to the users that enables them to access the overview pages, list reports and work lists easily. SAP Fiori’s UI is specifically designed to become highly intuitive, responsive, personalized and simple that allows the users to question promptly and access the required details irrespective of the deployment or device. It enables the entity to evolve and drive additional revenues eventually. It further connects with the customers at deeper level, access big data; obtain relevant insights in real time which in turn will support in faster decision making (Okungbowa 2015).
- Innovation – SAP S/4HANA sets stage for the purpose of future innovation. Technology is rapidly evolving that means just keeping up will not cut it any further. Enterprises required staying ahead of curve and taking the future ready decisions. The application leverages the speed, data accessibility and context. It further adopted the cloud through business that is the platform that enables the organizations in delivering the innovative solutions and widening the capabilities provided by the S/4HANA itself.
- Cost effectiveness – adoption of the app is smart move if the cost effectiveness aspect is considered. The user will be able to bring together all transactional and analytical capabilities of plethora systems into 1 location. It further enables in better decision making (Ritter 2015).
The economy, society and industries are undergoing digital transformation rapidly. It will not only alter the procedures within the entity but also have an impact on the business models. It changes the requirement for the entity regarding IT architecture that creates the requirement for the solutions that can be flexible and can be adapted quickly with the changing conditions (Missbach et al. 2016).
As the digital transformation required more innovations regarding processes and structures in future years Fujitsu required migrating to SAP S/4HANA Finance. Fujitsu announced launch of SAP S/4HANA conversion service that offers the comprehensive support to migrate from the existing SAP ERP system to Case Studies of companies and the issues they faced migrating to SAP S/4HANA Finance. The target customers migrating from the existing ERP system SAP S/4HANA Finance offers comprehensive support in preparing the migration and in post migration verification. Great advantage of implementing the app is process-spanning platform that channels, simplifies and consolidates the procedures for the entity (Fujitsu.com 2018). On the other hand the traditional ERP system redundant the documents and other data very often. This prevents the breaks and offers the users with overview of the entire procedures. However, as even nicest weekend trip needs careful preparation and consideration, Fujitsu also required to consider various factors while implemented the software (Burns 2018). IT specialists required considering about operational and technological integration. In this way, the hardware for the SAP systems was never been cheaper. However, being cheap is possibly the decisive factor with regard to infrastructure. Further, secure as well as fast operation and implementation, in combination with high flexibility leads to difference in implementation of SAP S/4HANA Finance (Maheshwari 2017).
SAP S/4HANA Finance implementation for Wipro went live on 15th January 2015. They implemented various areas of the application including – (i) S/4HANA Finance (ii) SAP Fraud Management (iii) SAP Financial Cockpit (iv) SAP risk and treasury management and (v) SAP cash management. These components were implemented for achieving the business objectives. Though there are different ways for moving on to the S/4HANA, Wipro migrated to it through central finance. It is considered as one of the usage approach that will assist the customers with different non-SAP as well as SAP systems for achieving the immediate advantages in finance that comes with the SAP S/4HANA Finance (Wipro.com 2018). However, various challenges faced by Wipro while migrated to SAP S/4HANA Finance are as follows –
- Inconsistencies of data – migration of financial data plays major role during the time of conversion. The transactional data is transferred into new data model under universal journal. For successful migration of the existing data, they shall be consistent and clean. However, irrespective of the fact that the data integration has been managed in well manner, there always exists the likelihood of errors. One of the most common errors is the difference among sub-ledgers and general ledgers (Menon 2016).
- Changes in functionality – some of the significant changes to functional scope of the app were there while it is compared to the SAP ERP. For instance, liquidity and cash management under SAP classic is not available under SAP S/4HANA. This function is replaced by an entire new application that is required to be configured and deployed. Further, credit management is replaced with the SAP Credit Management. Again, for using the solution the user need to configure it (Ghattamneni 2016).
Conclusion
From the above discussion regarding SAP S/4HANA Finance it is concluded that it is an important tool for the business entities as it assists the entities in driving the business on real-time basis. Further, it simplified the way in which the business uses the SAP business suite through bringing the analytics and transactions together into single in-memory platform. It reduces the maintenance costs, generates the report in faster way, increases the contextual awareness, enables the entities to become ready for digital core and democratizes access to data. Though it has some differences with SAP ERP FICO, various benefits of the app like cost effectiveness, simple and easy to use, innovative and enhances the performance motivates the business entities to implement SAP S/4HANA Finance.
References
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