SAP

Discuss business intelligence, integration, compliance and a host of other SAP-related topics – implementation, best practices and resources to negotiate the world of SAP better!

Main

March 20, 2019

Leveraging best of 'Green' and 'Brown' with Hybrid adoption approach for SAP S/4HANA

 

Choosing the right adoption approach which maximizes business value at reduced TCO is key for enterprises embarking on a SAP S/4HANA driven transformation. Depending on the extent of retention of current investments and extent of redesign, the most commonly adopted approaches are Greenfield and Brownfield, representing the two extreme ends of a spectrum.

In a layman's terms greenfield could be compared to building a new house while brownfield could be compared to refurbishing existing house. A greenfield approach primarily involves redesigning existing business processes in a new SAP S/4HANA system with SAP Best practices and Model company as a reference. Business transformation along with business process/ model reinvention are the key drivers. There is minimal or no reuse of existing investments on processes and solutions. Transaction and Master Data migration is limited to open items and balances with no need of historical data. Deployment can be staggered or Big bang. Compared to this a brownfield approach represents similar to technical upgrade and involves system conversion of existing SAP ECC to SAP S/4HANA based on a SAP guided tool based procedure with primarily mandated innovations. Existing enterprise structures, business processes, custom developments and historical data are retained. Deployment needs to be mandatorily big bang. The approach is preferred by enterprises who have a mature process template with limited need of process redesign and would like to leverage existing investments while adopting the new innovations with S/4HANA

However, many large enterprises have a need of combining selective business process redesign in certain areas with high value realization potential along with reuse of existing investments/processes in areas with mature template and solutions. E.g. a enterprise has a mature finance process template with Shared services setup and would like to reuse most of it while for production planning and procurement they would like to redesign/reengineer existing business processes and template. Also in order to mitigate risk of business disruption such enterprises would like to go for a wave based rollout approach for deployment instead of big bang. All these requirements cannot be fully met by either the greenfield or brownfield adoption approaches. Such enterprises need a 'Hybrid' approach for S/4HANA adoption which combines the 'best of green and brown worlds'. A Hybrid approach could also be looked as further variation of brownfield approach with more flexibility to decide the processes and solutions which need to be redesigned and those which should be reused.

How does Hybrid approach for S/4HANA adoption work?

While there can be multiple variations of this approach based on whether enterprises have a single instance or distributed landscape, in this blog I will focus on explaining this approach for a enterprise with single instance SAP ECC system.



 

Hybrid Approach for S/4HANA adoption with Shell copy


High level steps involved in this approach shown in Figure above as below

Step 1: Create a shell copy of existing SAP ECC system leveraging tools like SAP Landscape Transformation (LT) or third party tools like SNP. The shell copy contains only configuration, custom code from existing ECC system but no transaction and master data

Step 2: In the SAP ECC target shell, selectively modify or delete configuration to redesign or enhance the process template for specific areas. Also if required enterprise structure elements like operating concern, controlling area, Chart of Accounts, plants etc. can be harmonized. Unused custom code can be deleted. Since there is no transaction and master data in this system these changes are not complex

Step 3: System conversion of the ECC shell to S/4HANA using the standard SAP guided procedure for system conversion with tools like SAP DMO and SUM. The custom code needs to be remediated to meet the S/4HANA data model requirements. Again since there is no transaction and master data involved the conversion is pretty fast with low downtime. Perform delta configuration for S/4HANA specific innovations to enhance the process template for selective areas e.g. New Asset accounting in Finance

Step 4: Migrate Master Data and Transaction Data to the S/4HANA target system leveraging standard SAP tools like SAP Migration Cockpit, SAP Data Services. If historical data for past years needs to be migrated then additionally SAP Landscape Transformation (LT) or third party tools like SNP need to be used. The migration of data can also be done in staggered manner for the countries/company codes Going Live in each Wave/Phase

The Hybrid approach leveraging SAP LT had also been referred by SAP as 'Blackfield' in the past. Similar approach with its variations leveraging third party SNP is referred as 'Bluefield'.

Now, let us look at some of the key drivers and considerations for enterprises while evaluating the Hybrid approach for S/4HANA adoption as compared to Greenfield or Brownfield approach


  1. Selective Value based Process Reengineering: Enterprises who want to do selective redesign of their process template while reusing the existing template for most of their processes should consider Hybrid approach. However, if majority of the processes need to be redesigned then a Greenfield would be more feasible then Hybrid.

  2. Staggered deployment with Brownfield: Large enterprises with single SAP instance, operations in multiple countries across the globe and a mature process template. Big bang with Brownfield is a high risk option for such enterprises due to risk of business disruption across the globe. Hybrid approach provides flexibility for such enterprises to safeguard their existing investments with reuse and also mitigate the risk of Big Bang with a rollout approach phased by Business Unit/Org unit etc.

    However, on the flip side such enterprises should consider the additional cost and complexity of maintenance of dual landscape based solution with interfaces (ECC and S/4HANA) in the interim period

  3. Structural Simplifications: Harmonization and simplification of existing enterprise structure elements like Operating Concern, Controlling area, company codes, plants etc. in SAP while reusing the existing process template is also driver for adoption of Hybrid approach. In a Brownfield approach such harmonization would need to be handled either in a pre or post system conversion phase

  4. Selective Data Transformation: A brownfield involves full retention of historical data, while a greenfield primarily involves only migration of master data and open items. Enterprises with need for selective historical data migration and transformation based on various parameters should consider Hybrid approach

  5. Organizational restructuring: Enterprises embarking on Divestiture, Carve outs, mergers and acquisitions with a target S/4HANA system based on selective process reengineering and largely reuse of existing process template/solutions with selective transformation of historical data

  6. Multi- tenant Cloud Deployment: Enterprises adopting a S/4HANA Cloud multi-tenant (public) deployment option would necessarily have to adopt Greenfield approach only. Hybrid and Brownfield approaches are not supported

 


June 1, 2017

Understand key watch outs and mitigations for your SAP S/4HANA Central Finance program

 In my last blog titled Leverage quick wins with Central Finance solution in SAP S/4HANA I had explained the quick wins which can be leveraged by enterprises embarking on a digital transformation in Finance with S/4HANA. However, before embarking on this least disruptive option for S/4HANA adoption it is important for enterprises to gain a good understanding of some of the key watch outs, challenges, product nuances and current limitations of the Central Finance (CFIN) solution. These would enable them to prepare a future proofed plan of the project timeline, scope, solution and roadmap. In this blog I have captured some of these key learnings and challenges along with potential mitigations based on our CFIN client implementation and Proof Of Concept (POC) experiences. I will classify these experiences and learnings based on primary four categories below:

I. Project Plan and Approach
II. Solution Architecture
III. Product Issues
IV. Skills and Resources


I. Project Plan and Approach


• CFIN should always be planned as an interim or medium term solution in the roadmap for transformation to a single Finance instance with S/4HANA. Also in the long term the S/4HANA CFIN instance can be leveraged to build and deploy a global template for Finance transaction processing in S/4HANA
• Harmonized and optimized enterprise structure and master data design are key foundation for a scalable CFIN solution. Sufficient time needs to be provisioned during design phase of CFIN for these activities. 
• Co-deployment of CFIN and Global template build introduces dependencies and additional complexities which need to be considered while preparing the project plan.
• Realization of non-standard functionalities in CFIN is development heavy and scope needs to be tightly managed. Also extensive involvement from SAP for product support needs to be planned for such non standard functionalities
• SLT (System Landscape Transformation) does not support all non-SAP databases for real time replication to CFIN system. Hence a POC is recommended at a early stage of CFIN program to evaluate alternate tools like BODS (Data Services)/Web methods etc. to be used for replication of documents from non-SAP source systems/databases, not supported by SLT, to CFIN system

II. Solution Architecture

• Based on the current product features in S/4HANA 1610 Enterprise Management (EM), CFIN solution can primarily be leveraged for below functions:
o Enterprise level financial reporting at a detailed line item level for heterogeneous landscapes
o Centralized group wide reporting and monitoring functions like credit management, financial planning, financial consolidation etc.
It cannot be leveraged for centralized transaction processing scenarios like Centralized Invoice Processing, Central Period End Closing, and Central Asset Accounting etc. in a distributed Finance landscape. Primary reason being there are no reverse postings possible from CFIN system to source systems. Also a open item replicated from source system to CFIN system cannot be used in subsequent follow up transactions like Invoice, Clearing, Payment etc. in the CFIN system. This is planned in subsequent release of S/4HANA EM
• Finance Enterprise structure elements (company code, controlling area, operating concern etc.)  should be optimized, harmonized and finalized at the start of a CFIN program. This would avoid a lot of rework at later stages of a finance transformation journey
• Since primary benefit of CFIN is integrated financial reporting for a heterogeneous landscape decision on the reporting framework and structures as per statutory and management requirements, needs to be done at a early stage of the CFIN design phase
• Design decisions on key Finance foundational elements like Document splitting, Parallel ledgers, Account Based COPA etc. needs to be taken during CFIN design phase. Most of these design decisions are irreversible and hence need to be taken after a detailed analysis, since a lot of complexity and efforts are involved for any retrospective change in future.
• Guiding principles for master data transformation and cleansing to be defined at early stage of CFIN program. CFIN solution with MDG (Master Data Governance) should be leveraged for harmonizing Finance master data objects like profit centers, cost centers, Chart Of Accounts from decentralized systems. This will avoid the added complexity and cost involved in harmonization of master data in a later stage of a Finance transformation program
• Fixed asset postings from source system can only be replicated to a General Ledger account in CFIN system and not to Asset sub ledger. Due to this asset based reporting is not possible in CFIN and needs to be considered while finalizing the solution design
• With multiple OSS notes being released every month by SAP on CFIN, upgrade of the target CFIN and source systems to the latest service pack or installation of latest version of OSS notes is must.
• Data migration strategy for historical data load should be restricted to only GL balances and not line items since the initial load of FI documents in CFIN system is not triggered through SLT but via RFC to source systems. Line items load could result in performance issues in such a situation

III. Product Challenges

• SLT does not support out of box Master data replication from source to CFIN systems. Recommended to evaluate other tools like BODS (Data Services) for master data replication with additional developments
• Replication of project data (WBS elements) and is not supported out of box. Custom development required in SLT and S/4HANA CFIN system for replication of these objects on a real-time basis
• Challenges in out of box replication and transformation of Costing based COPA data from source systems to Account based COPA in target CFIN system. Custom enhancements required to support replication of Costing Based COPA documents from source to Account Based COPA in target CFIN system
• Replication of documents without document splitting activated in source system to New GL with document splitting in target CFIN systems is not supported out of the box and requires complex custom development
• Although standard reconciliation reports have been introduced for CFIN in S/4HANA 1610 EM, based on our experience these are not robust and user friendly. Also these do not support source non SAP systems. Infosys proprietary reconciliation tools can be leveraged for improved auditability and traceability in CFIN
• Lack of data validation and integrity check for business mapping maintained in MDG. If certain data (e.g. UoM) is not created in CFIN system but mapped in MDG, document is still successfully replicated in CFIN system without giving any error.
• GL open items from open item managed GL accounts are not replicated as line items during initial load. This is a product gap which was corrected by SAP through a customer specific OSS note
• Replication of reversals and clearings of documents where original document is missing is not supported out of box in CFIN. SAP product support required to resolve this issue or manual workaround required to manage these postings during balances take over

IV. Skills and Resources

• With new scenarios and features being added continuously by SAP in CFIN and with not many enterprise level customers as early adopters, it is very important to leverage SAP Customer care, Value assurance and other services from SAP throughout a CFIN program for rapid resolution of product issues
• Adequate representation required from Business and internal IS in early phase of the project to support organizational design and learn the new technologies and solutions. This will mitigate the risk associated with change management at a later stage
• The required technical skillsets within IS in niche areas such as BODS (Data Services), MDG (Master Data Governance), SLT (System Landscape Transformation), Fiori, embedded BI reporting , HANA CDS view design etc. need to be identified and provisioned upfront in a CFIN program




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.


Continue reading " Leverage Quick Wins with Central Finance solution in SAP S/4HANA " »

Subscribe to this blog's feed

Follow us on

Blogger Profiles

Infosys on Twitter