02 Feb “S/4 HANA Financials – A Logical Step Forward
I’ve heard the question a lot from clients — “Is this new S/4 HANA with a single financial ledger the right strategic direction for our company?” The SAP marketing drive has caught their attention, but these are savvy SAP users with many years of experience. They were indoctrinated in the benefits of management reporting separated from financial reporting, reaped the benefits of a customized business information warehouse, and have seen a few offerings go from the “next great thing” to being obsolete without ever being widely used. Custom reports, processes, and data models embracing the fundamental concepts of multiple ledgers within SAP ERP have been built to support the unique requirements of their business.
My response is that SAP S/4HANA Finance (SFIN) with its Universal Ledger is indeed the logical direction of the future. In my mind it represents the next evolutionary step in a journey that started with Special Ledgers, went to Profit Center Accounting, and finally reached the New General Ledger. Each of these solutions brought a little bit more management reporting capability without sacrificing the rigors of the general ledger. Working together with our clients, we have taken the basic elements provided by these ledgers and enriched them with cross-functional value by reconstructing the production, sales, and logistics processes. In essence we’ve been building the Universal Ledger in ABAP reports or BW data models for years.
The hardware and database advances offered by HANA now provide us the opportunity to realize these same “single source of the truth” reporting models directly within the transactional system. SAP has taken great strides to make this a reasonable transition, but it won’t be done without some effort. Business rules, allocations, and distributions that have lived outside the ERP system will need to be analyzed to see if they can be determined at the time of the original transaction. Customized reporting solutions will need to be reviewed, understood, and tested. They may be replaced, revised, or made obsolete. Finally, the unpredictable yet inevitable business requirements like realignments and restatements may impact the fields included in the Universal Ledger.
The next great question becomes “when should we make this transition?” Of course the answer is that “it depends” upon the client. Key factors will include hardware stability, licensing costs, strategic initiatives that may benefit from S/4HANA, and competing projects that demand a stable system. Ironically the same customers who have most fully developed their SAP footprint may face the most change management in taking this next step. There are even a few areas of functionality where features that were optional in the past will now become prerequisite to using S/4 HANA. SAP has pledged continued support to the existing “any database” solutions until 2025, but I envision situations where business improvement opportunities supported by HANA are delayed due to lack of readiness in the finance department. While the time to act may vary by client, there is no time like the present to start planning!
Matt Christensen is a Principal Consultant with Phoenix Endeavors. He has more than seventeen years of experience implementing a broad set of SAP solutions, including configuration and development in ERP and Business Intelligence. Matt holds an undergraduate degree in computer science and an MBA in finance.