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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.



Comments

Thanks for writing, it gives a very clear perspective on Central Finance.
It is very difficult to imagine Global 1000 enterprise will run their business on one system. They will always find Central Finance very useful. More importantly, it is good place to start as well.

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