It’s really exciting to see the next generation SAP Business Suite, S/4HANA, taking shape. S/4HANA Finance is the first ‘module’ of the SAP Business Suite that has been re-written to take advantage of SAP’s in memory database, SAP HANA. I thought I’d share some thoughts gathered from my experience of our own S/4HANA Finance 2.0 migration touching 3 basic areas - what is S/4HANA Finance, why should you adopt it and how do you migrate to it? Incidentally, Simple Logistics is not far behind (Nov 2015) so I’ll write on what I know about it so far within the next couple of weeks.
What is S/4HANA Finance?
At a high level, it is a fully comprehensive Finance solution addressing the management and statutory accounting needs of both large and small organisations, with a modern, consumer grade and mobile user experience; SAP Fiori.
It contains everything you would expect from a Finance solution such as a general ledger with P&L & Balance sheet, Accounts receivable, Accounts payables, Asset and Project accounting, Budgeting and Forecasting and Reporting.
S/4HANA Finance is a great way to start your journey with SAP if you want a platform for growth and if you’re an existing SAP customer, it’s important to plan your migration so that you can benefit for all the innovations that SAP and its partners are bringing to the HANA platform.
Why should you adopt S/4HANA Finance?
My description of S/4HANA Finance all sounds pretty ordinary so what makes it different from other finance systems out there and indeed its SAP predecessor?
The fundamental difference is that it’s built on SAP’s HANA in memory, column store database platform. The benefit of this platform is that it’s possible to get data both in and out quickly with exponential performance gains. I’ve highlighted just a few benefits that flow out of this below.
Any application built on this platform is able to take advantage of transactions and reporting in the same solution instead of a separate transaction and reporting data warehouse solution with the associated time lag between transacting, reporting and decision making.
Your CFO can keep their finger on the pulse with a financial health cockpit of the business on the device of choice, desktop, smart phone or tablet, knowing that the information is current.
Flexibility to change reporting dimensions
In S/4HANA Finance, financial transactions are stored at their lowest level of granularity without any predefined aggregation. For example, many finance systems, including SAP ECC on a non-HANA database, are designed around how you are expecting to report on the data.
By way of example, many businesses would choose to look at their revenue by line of business and financial period and therefore due to technical constraints summary tables are predefined and populated by these criteria to speed up operational reporting.
This is great, until you want to look at the information differently. What if I’m actually interested in the revenue by customer, by week because I want to detect patterns in buying behaviour? By storing the data in its rawest form we can aggregate on ‘the fly’ to get the information required. This also means that it’s easier to produce new reports as the needs of the business change.
Exception based finance applications
The SAP HANA platform facilitates the building of exception based applications. These applications highlight issues and performance against KPIs rather than having to trawl though data to find that one nugget of information required to react to a situation or make an important decision.
For example, in the area of S/4HANA Finance Cash and Liquidity management, a number of KPIs are delivered as standard.
- Liquidity Structure - Displays your liquidity situation in a structured view
- Bank Risk - Displays deposit amounts by bank rating
- Cash Pool Deficit - Displays cash pools with deficits and the total deficit amount in cash pools
- Liquidity Forecast - Displays a liquidity trend for future days
- Cash Position - Displays cash positions by location, company, and currency
- Cash Flow - Provides an overview of the daily cash inflow and outflow
- Bank Statement - Displays the import status of bank statements for all the bank accounts that are set to be monitored
It’s also possible to create your own KPIs and monitor the thresholds you set against actual data on your Fiori ‘Launch pad’.
Dynamic ‘Integrated Business Planning’
I really like what SAP have done in this area in S/4HANA Finance. Budgeting and forecasting is fully integrated with the transactional system with pre-delivered excel layouts for P&L planning by profit centre, cost centre etc. It’s referred to as ‘Integrated Business Planning’.
The excel templates are ‘connected’ in real-time to the live system using Business Objects Analysis Office, an ‘add-on’ to Excel, and this allows you to view up to date actuals to support your forecasting process. Below is an example of cost centre planning by period with the actuals from the prior year pulling through from the live system.
How do I migrate if I’m already on SAP? I’m on Business Suite on HANA already (ECC 6.0 EHP 7 on a HANA database).
If this is you, install the add-on to your NetWeaver stack and get a FICO consultant to perform a functional migration. The functional migration transfers and reconciles the data that is being moved from the ‘old’ Finance tables to the ‘new’ S/4HANA Finance tables (of which there are far fewer because there are no predefined aggregates now index tables aren’t required anymore).
The most fundamental change affecting the migration is the Unified or Universal Journal. Each finance journal now joins together all data related to statutory and management accounting (FI, CO and account based COPA) in a single journal. This links back to my comment earlier around no aggregation and the reporting flexibility that results.
However, I can hear you saying, “what about my custom code or reports that are pointing to ‘old’ tables - do I need to re write the lot?” Fortunately not, SAP has stayed true to their mantra of non-disruptive innovation and all ‘old’ tables have been recreated as table views that point to the new table(s).
What’s in the box?
The ‘add on’ includes new NetWeaver Business Client roles for S/4HANA Finance for the heavy lifting transactions and forecasting as well as a 100 plus Fiori applications.