SAP S/4HANA Finance

SAP S/4HANA Finance

 

SAP S/4HANA Finance is SAP’s flagship financials solution and successor to SAP ERP Financials. First released in 2014, it boasts many process improvements for the financials world, including the introduction of a single source of financial truth, real-time financial close, and predictive accounting. It was developed to run off the SAP HANA platform and primarily utilizes the SAP Fiori user interface.

 

Table of Contents

  1. History of SAP S/4HANA Finance
  2. SAP S/4HANA Finance Innovations
    1. Changes from SAP ERP Financials
    2. Features Introduced in SAP S/4HANA
  3. SAP S/4HANA Finance Deployment Options
    1. On-Premise
    2. Cloud
    3. Two-Tier (Hybrid)
  4. SAP S/4HANA Finance Migration Options
    1. Greenfield
    2. Brownfield
    3. Central Finance
  5. SAP S/4HANA Finance Release Cycle
  6. Other Key SAP S/4HANA Finance Terms
  7. Additional Resources
    1. Blogs
    2. Books by SAP PRESS

 

History of SAP S/4HANA Finance

Originally termed SAP Simple Finance, the solution was launched at the 2014 SAPPHIRE NOW technology conference in Orlando, Florida. Nine months later, it would undergo a name change to SAP S/4HANA Finance when SAP announced its new SAP S/4HANA enterprise resource planning platform, broken down into lines of business such as finance, supply chain, sales, and more.

 

Innovative features of the first release of SAP S/4HANA Finance included the Universal Journal that provided a single place to store both financial and management accounting documents with relevant details. This led to better reporting, easier access to KPIs utilized by managers, and cockpits tailored to specific end users to help them make more informed decisions.

 

Since then, SAP has continuously built upon the foundation of SAP S/4HANA Finance. Major yearly releases have added new, innovative functionality to the solution, and as of 2019, SAP S/4HANA’s latest features include improved financial closing capability, centralized payables and receivables, predictive accounting, and more embedded analytics.

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SAP S/4HANA Finance Innovations

Central to the SAP S/4HANA Finance solution’s unique selling proposition are the process and reporting improvements available thanks to SAP HANA. While some of these were just processing speed upgrades—the SAP HANA database boasts analytics and reporting capabilities that are 1800x faster than SAP ERP—many were brand-new to SAP S/4HANA Finance. This includes things like the Universal Journal, centralized processing, data drilldown, and ability to integrate multiple ERPs into one place for data collection.

 

Universal Journal Overview

Changes from SAP ERP Financials

SAP was clear from the beginning that the “simple” in SAP S/4HANA Finance’s first iteration was multifaceted. Those using the new solution would find not only automatic, up-to-the-minute financial reporting, but a streamlined data model and lightweight architecture.

 

Initial FI-CO functionality improved upon the existing ERP. This included updated financial planning and analysis, accounting and financial close, treasury and financial risk management, collaborative finance operations, and enterprise risk and compliance management.

 

Features Introduced in SAP S/4HANA

SAP S/4HANA Finance introduced to the financial world the tangibility of a single source of truth—that is, an aggregated total of all financial data across departments, ledgers, and even continents. This was enabled by SAP HANA’s ability to store large amounts of data in-memory and to produce analytics reports at a moment’s notice for anyone with access who wanted it. This provided immediate value to accountants looking at current and past activity, project managers running complex projects on tight budgets, and planners looking to utilize past and present numbers to forecast future expectations.

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SAP S/4HANA Finance Deployment Options

There are multiple avenues through which SAP S/4HANA Finance can be deployed. Here’s a brief overview of each.

 

On-Premise

An on-premise deployment encompasses traditional in-house IT infrastructure models. This deployment model describes an instance of SAP S/4HANA Finance that is physically hosted on company property.

 

Cloud

There are two cloud options for SAP S/4HANA Finance deployment, both of which involve the use of external cloud integration. In a public cloud deployment, a company leases a siloed piece of server space shared with other clients running SAP S/4HANA. In a private cloud deployment, a company leases a unique server to run SAP S/4HANA. In both cases, the application is owned by the customer but all management of the technical infrastructure is outsourced.

 

Two-Tier (Hybrid)

In a two-tier or hybrid deployment, both on-premise and cloud deployments are utilized. This may be done for a number of reasons, including testing the feasibility of both instances or hosting an on-premise deployment at headquarters while utilizing a cloud deployment in a satellite office.

 

Two-Tier SAP S/4HANA Implementation

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SAP S/4HANA Finance Migration Options

Depending on a company’s unique business requirements, one of the following three migration options will make the most sense. These can be performed in house or with the use of third-party consultants.

 

Greenfield

In a greenfield implementation, the SAP S/4HANA system is built from scratch and initially contains no data. This is the implementation all new SAP customers undertake. Some existing SAP customers may choose to perform a greenfield implementation if they have an over-customized, legacy, SAP ERP Financials system.

 

Brownfield

In a brownfield implementation, an existing SAP ERP Financials system is converted into an SAP S/4HANA Finance system. This involves the migration of financial data from the legacy system to SAP S/4HANA. Companies that did not heavily customize their legacy system might be drawn to this approach rather than starting from scratch.

 

Central Finance

In a Central Finance implementation, disparate financials systems in SAP ERP are connected to a single Central Finance system. This mimics the single source of truth that SAP S/4HANA Finance provides, and allows the reporting and analytics benefits of SAP S/4HANA Finance to be used on data.

 

Central Finance

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SAP S/4HANA Finance Release Cycle

SAP S/4HANA Finance receives multiple updates each year. Cloud-deployed instances will receive quarterly updates, while on-premise deployments are updated once, usually in September.

 

The naming conventions for SAP S/4HANA releases follows this four-digit format: year/month. For example, the 1909 release of SAP S/4HANA refers to the release that came out in the year 2019 (19), month of September (09).

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Other Key SAP S/4HANA Finance Terms

In addition to the information laid out above, there are a handful of important SAP S/4HANA Finance terms you should also be familiar with. Here are they are in list form:

    • Actual costing: A way of assigning scenario-dependent value to materials used in the production of a product. Actual costing with SAP S/4HANA provides a more accurate valuation than standard accounting processes for determining the cost of goods sold.
    • Blockchain: A distributed ledger and decentralized database replicated across peer-to-peer network that can improve accounting transparency.
    • Material ledger: A subledger that provides a detailed view of inventory transactions.
    • SAP Analytics Cloud: A cloud-based planning, analytics, and predictive solution that integrates with SAP S/4HANA to enable users to view and analyze historical financial data.
    • SAP Concur: A travel and expense management solution used by employees to get reimbursed for work-related expenses.
    • SAP Financial Closing Cockpit: SAP’s current entity close solution used to make reporting easier and faster.
    • Universal Journal: A single repository of financial and other relevant information available to give instantaneous insight into a company’s finances.

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Additional Resources

Eager to learn more about SAP S/4HANA Finance? These blogs and books can help.

Blogs

Books by SAP PRESS

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