The Functional Scope of SAP S/4HANA Finance

Figure 1

The value map of SAP S/4HANA Finance comprises five end-to-end processes

Deployment Modes

• On premise. The full scope of the business suite, including lines of business and industry solutions, continues to be enhanced, and continues to be available on premise, meaning each customer installs and maintains the software, and can also extend the software. New innovations will be released on an annual basis.
• Private cloud. The private cloud offering also includes the full scope of the business suite, the difference being that the software is maintained by SAP. New innovations will also be released annually. There are two options for the private cloud. The SAP HANA Enterprise Cloud allows for full extensibility and customizations. The SAP S/4 HANA Cloud, private option, relies on standard modules and does not allow modifications, but does allow for extensibility via the SAP Cloud Platform, where SAP continues to provide standard applications and innovations, such as SAP RealSpend and SAP Cash Application. New innovations will be released on an annual basis; for the SAP HANA Cloud, private option, those innovations will be upgraded by SAP as soon as they are available.
• Public cloud. SAP S/4HANA Cloud for finance is a new solution that refers specifically to capabilities available in the public cloud, and it is maintained by SAP. The core financial capabilities are available, which are often used for subsidiaries, acquired companies, and small and medium-sized enterprise (SME) companies, but can also be leveraged by large enterprises. Configuration is possible, but no changes to the core code can be made. Extensibility is provided by the SAP Cloud Platform. New innovations will be released on a quarterly basis.

Innovations within SAP S/4HANA Finance

• SAP Accounting powered by SAP HANA. With the in-memory technology of SAP HANA, there is no more need for totals and summary tables or index tables, which reduces the system footprint required to run Finance. In addition, the separate tables across finance and controlling are all combined into one table, the universal journal (table ACDOCA). This includes the general ledger (customers can migrate to the universal journal either from the classic general ledger or from the SAP General Ledger); subledger information, including accounts payable, accounts receivable, and fixed assets; managerial accounting data such as cost centers, internal orders, projects, and so on; the material ledger; and account-based profitability analysis (the CO-PA module configured to include G/L accounts). Only cost-based profitability analysis (the CO-PA module configured to use value fields) continues to use its own database, since there is no 1:1 mapping from general ledger accounts to value fields. Also, operational information is now included in the universal journal, such as customer, vendor, asset, and product codes, enabling better cross-functional reporting. Business users can configure the fields that they need, without requiring IT intervention.
• SAP Smart Business cockpits. The transactions available in the universal journal can be accessed directly in real time, enabling a real-time calculation of summary information, such as account balances for financial statements and profit and cost center balances; the calculation of key performance indicators (KPIs) such as operating margins; trends such as outstanding receivables over time; and predictive capabilities such as cash and liquidity planning. These capabilities are delivered using dashboards, leveraging SAP Fiori. In addition to providing executive-level detail, individual business users can configure the parameters of these KPIs—for example, adjusting the tolerance of receivables outstanding. These dashboards also facilitate drill down into the granular details if the KPIs indicate an issue.
• Integrated business planning. The vision behind this scenario is that planning should not take place in silos, and should include operational planning. From a supply chain perspective, the solution is referred to as SAP Integrated Business Planning. From a financial perspective, in the past there were different plans for cost centers, internal orders, projects, profit centers, and so on; however, these plans were not tied together. In addition, there are operational plans that also have a financial impact, such as sales planning and pricing affecting revenue plans, and production and HR plans affecting cost plans. Finally, subsidiary and business unit planning need to roll up to corporate plans. SAP Integrated Business Planning for finance seeks to bring all these plans together, to enable what-if simulations to determine the best course of action. From a product perspective, customers have two options. Newly available with SAP S/4HANA is an embedded SAP Business Planning and Consolidation (SAP BPC) as part of the SAP S/4HANA infrastructure, so no replication to another server is necessary; this is referred to as SAP Business Planning and Consolidation for SAP S/4HANA. SAP BPC can still be implemented on a separate server, for example, by using SAP Business Planning and Consolidation for SAP S/4HANA, version for SAP NetWeaver.

 

SAP S/4HANA Finance and the Digital Core

 

SAP S/4HANA is the next-generation business suite, and as such, it is the digital core of the entire ecosystem of solutions offered by SAP. The digital core includes the core enterprise management capabilities across lines of business, including finance and the supply chain. The core SAP S/4HANA system uses release numbers, just as release numbers are used in the SAP ECC world. The releases are based on year and month of release. For an on-premise deployment, new releases are planned on an annual basis, for example 1511 (released November 2015); 1610 (released October 2016); and 1709 (September 2017). For the SAP S/4HANA Cloud, releases are planned on a quarterly basis, for example 1705 (released May 2017); 1708 (released August 2017); and 1711 (released November 2017). These release numbering is consistent for the entire SAP S/4HANA digital core, even though different lines of business re-architected at different times. For example, finance was the first line of business to leverage the SAP S/4HANA infrastructure, and there is still continued work to expand these innovations; in these earlier releases, other lines of business are still available in SAP S/4HANA, but were just not yet optimized. Manufacturing also adopted the naming of SAP S/4HANA Manufacturing, even prior to the release or the re-architected capabilities; the first release where the manufacturing line of business optimized for the SAP S/4HANA infrastructure was in the 1511 release, followed by significant enhancements as part of the 1610 release. At the same time, for SAP S/4HANA, there is built-in integration to “edge” solutions; these solutions are not part of the digital core, or central infrastructure delivered with SAP S/4HANA. These “edge” solutions are available in a cloud deployment. Customers have the choice of implementing a hybrid model of on-premise and cloud solutions, or an all-cloud scenario if using SAP S/4HANA Cloud for finance. The categories of these cloud solutions are shown in Figure A:

• Customer Experience (Omnichannel): SAP Hybris allows you to take individual customer buying patterns and preferences and create campaigns to market to an audience of one. In addition, it provides a complete end-to-end experience across marketing, orders, delivery, and invoices. From a finance perspective, it also includes integration into the universal journal to record revenue, cost of sales, accounts receivables, and profitability analysis for margin reporting.
• Workforce Engagement: SAP SuccessFactors helps manage the workforce, including on-boarding, talent development, and analysis of skills, as well as payroll processes. For finance, the payroll and benefits payout processes are handled as a special case of accounts payable.
• Ecosystem Collaboration – Business Networks: Several solutions enable collaboration with the larger ecosystem surrounding the company. SAP Ariba enables the evaluation, selection, and collaboration with suppliers, including invoice management. SAP Fieldglass helps with the management of a contingent workforce when the need arises. Concur helps to manage travel partners and expense reimbursements. For finance, each of these scenarios is a use case for the integration into accounts payable.
• Assets and the Internet of Things (IoT): The SAP HANA platform allows for the combining of internal, external, social, and sensor data to enable real-time visibility, to quantifiable measures of customer activity and other market dynamics, with qualitative measures of customer intent and behavior. This is further supported by SAP Leonardo, to provide capabilities for the IoT, machine learning, blockchain, analytics including prediction, and Big Data. As an example for finance, proactive management of assets based on sensor information has an impact on maintenance costs, and external information can be leveraged in predictive planning scenarios.

Figure A

SAP S/4HANA Finance sits within the digital core, where business transactions are used to provide intelligent insights, across all five pillars of the finance value map