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March 29, 2017

Leverage Quick Wins with Central Finance solution in SAP S/4HANA


SAP S/4HANA Finance solution has revolutionized the way Finance functions are performed in a organization while addressing today's business trends and setting a new trend towards simplification. However most of the large enterprises have a complex and distributed systems landscape consisting of multiple SAP and non-SAP financial instances, set up based on multiple geographies, lines of business, business function (Finance, Logistics etc.). SAP S/4HANA Central Finance solution provides a least disruptive approach to these enterprises for S/4HANA adoption while also generating some quick wins!

Simply put, Central Finance is a deployment option for S/4HANA in which existing SAP and non-SAP instances are untouched, and the financial postings (financial accounting and controlling documents) in the existing instances are replicated in real time through tools like SLT-R (System Landscape Transformation Replication Server) or BODS (Business Objects Data Services) to a separate S/4HANA instance. S/4HANA Central Finance solution can also be considered as a separate product from licensing perspective since there is a separate license required to be purchased from SAP for this whole solution including the SLT-R tool in addition to a S/4HANA Finance add-on or S/4HANA Enterprise Management license.

Since the existing systems are untouched while implementing CFIN solution, it can be implemented within a period of 6 to 12 months, depending on the complexity of existing system landscape, Finance master data and reporting structures. Let us now look at some of the quick wins which large global enterprises with distributed system landscape can leverage with S/4HANA Central Finance (CFIN) solution

  • Integrated Financial Reporting over unified group data model is an extremely time consuming & complex activity for such enterprises with multiple versions of truth and lack of data integrity. CFIN solution primarily provides integrated enterprise level financial reporting on a real time basis at granular level leveraging S/4HANA Finance innovations like Universal Journal, Account Based COPA etc. in the Central Finance instance. Enterprises can reduce their reporting data footprint in short term by replacing their existing SAP BW/BI based operational Finance reporting solutions with CFIN based reporting in S/4HANA

 

  • Enterprises on the path of inorganic business growth through mergers, acquisitions and take-overs face significant challenges in integration of the legacy IT systems (SAP or non-SAP) of merged or acquired companies. CFIN provides such enterprises with a solution for rapid integration of financial reporting of the acquired/merged entities to quickly analyze the topline and bottom-line impact, instead of spending a lot of time and effort in system consolidation and process harmonization of these entities.

 

  • Since all the Financial documents (FICO)  are replicated in real time to the CFIN instance, it can be easily leveraged in short term for implementing some of the group wide centralized reporting and monitoring functions like
    • Credit, collections and dispute management with FSCM in S/4HANA
    • Intercompany reconciliation with improved ICR tool in S/4HANA
    • Dynamic and Integrated Financial planning leveraging  embedded BPC solution in S/4HANA based on actuals

However, it is important to note that other centralized transaction processing scenarios like Centralized Invoice Processing, Central Period End Closing, and Central Asset Accounting etc. are not currently supported in CFIN solution as of the latest version, S/4HANA Enterprise Management (EM) 1610. This means that the CFIN instance cannot be currently leveraged for implementing a Shared Accounting Services model by large enterprises to reduce their Finance transaction processing costs

  • With the out of box SAP Master Data Governance (MDG) solution available in S/4HANA Enterprise Management  (EM) 1610, the CFIN solution also generates quick win for harmonization and optimization of Enterprise structure, Finance Master Data and Reporting structures from multiple SAP and non-SAP systems in a distributed system landscape. This can set the Foundation for a future roadmap towards a single finance instance for transaction processing to realize cost benefits from implementation of a shared accounting services model (not currently possible with CFIN)


  • Since all the Financial (FICO) postings from multiple systems are replicated in real time in CFIN instance, it can also be utilized for real time financial consolidation with Embedded BPC functionality available in S/4HANA EM 1610. Even if other consolidation solutions like Hyperion, SEM-BCS etc. are in use, CFIN can help to accelerate the group financial consolidation with a centralized interface from a single instance for rollup of financial data to the consolidation systems, instead of time consuming file loads and interfaces from multiple source systems. CFIN solution can also provide a faster extraction of consolidated financial data for various external statutory and compliance audit requests.

 

Large enterprises with a heterogeneous system landscape should primarily look at CFIN as a short or medium term solution in their S/4HANA adoption roadmap for Finance. In the Long term such enterprises can evaluate the consolidation of their multiple systems into a single S/4HANA instance based on a harmonized process template. CFIN provides these enterprises with a de-risked approach for S/4HANA adoption for Finance in a shorter time frame with quick wins in reporting and other areas thus mitigating risks associated with a larger S/4HANA Global template build and rollout program. CFIN implementation can also help enterprises reduce the change management efforts by providing Finance business users a 'look and feel' of S/4HANA for reporting before adopting it for centralized transaction processing and critical period end closing activities.

As per various analyst reports, most of the S/4HANA adoption in the market is currently restricted to enterprises in small and medium segment. These enterprises have a relatively less complex landscape with majority of them having a single SAP instance. Consequently at present, CFIN solution adoption has been also relatively low in the market. However as more and more of the large enterprises with distributed landscape embark on a S/4HANA adoption journey, CFIN solution adoption is also expected to increase proportionally in the market.



Transform the way you Standardize Material Number

The Material Number you use in your SAP ERP system is arguably one of the most important data element as it goes on for years. Years and decades passes and depending upon type of material there are hundreds or thousands of documents created - Purchase Orders, Production orders, Sales Orders, Deliveries, Material Documents etc. What would you do when you need to rename keys for several Material masters? Whatever be the reason - be it due to a new deployment planned for MDM or MDG system, or simply because you want the Material key to speak for itself with new intelligent naming or decide to standardize the use of material keys to match with a buyer company post an M&A, or you were using less digits earlier and now want to add a couple more in the alphanumeric key.

 

Companies have tried methods to overcome the problem, albeit the solution have proven to be sub-optimal.

For example , a lesser known method that is in use is based on Supersession of parts. For example - You have a Material Number 'A' for which you want a new number key 'B' to be used going forward. In such case a new Material Master is created with new Number Key 'B'. The relationship is maintained in Material Masters for substituted and superseded material. The whole process of new number key replacing old material number may take some time. For this, the older Material's stock need to get exhausted and it should not be purchased or sold any longer. Easy as it may sound, there are some disadvantages such as when you have to analyze you always have two Material Numbers to look at and consolidate for any reporting or analysis on historic data. Plus, certain enhancements are required in application such as in Material Requirement Planning to execute runs on new Material Number.

 

This could be a nightmare for companies with long historical usage of material to work with multiple keys for one material number, not to mention confusion this will add when working with other stakeholders like customers and suppliers in the ecosystem.

 

Material Number Rename Solution using SAP Landscape Transformation 2.0 (LT 2.0) provides a cleaner and efficient way to handle this requirement. We can perform the conversion/Rename of material number in SAP system based on 1:1 material rename mapping (old Part number: New Material number). This tool driven transformation takes care of changes in customizing data, master data and transaction data for each material rename that is needed.

 

As a pre-requisite, it is important to identify all the Material numbers which require renaming. You can combine this activity with identifying materials which are no longer needed and are obsolete. Material Numbers which need standardization are listed, whereas, non-active material masters can be discussed for archiving or Status change.


Next, a standard naming for Material need to be decided. This new naming should be intelligent nomenclature that your team of experts decide with the objective to provide solution to original problem that triggered this requirement of renaming.


Data conversion/renaming of Material Number is handled in systematic way in SAP system using SAP LT2.0 licensed software procured and installed. SAP LT2.0 assists with useful system analysis. Analysis include runtime analysis to estimate time required to run conversion or downtime required; Analysis to identify hard coding of old Material number in ABAP objects etc. After analyzing the impact and resolving any actionable tasks in ABAP or in customization, test conversions are carried out in test environment using the material mappings. Success is verified using Standard reports which are run before and after the conversion of material number rename. After repeating the testing in SIT and UAT phases the data conversion is performed in production system generally over a weekend.


Most important benefit that you get using SAP LT2.0 driven Material Number Rename is that the system after conversion is in a state that end user feel as if system always had the new Material number key in usage. In customizing data, master data, open transaction data, and historic transaction data everywhere new material key reigns. Old key is replaced completely. During the conversion, it is possible to save original material number key in 'Old Material Number' field in Basic data view of material master. This facilitates the search of Material Master using old Material key. 

 

Take the right step by choosing tool driven SAP Transformation Services by Infosys in your data harmonization needs.    

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