Computerized Accounting in ERP Systems

This study provides a critical analysis of the historical overview of SAP S/4HANA Finance, differences between SAP S/4HANA Finance and current SAP ERP FICO, benefits of SAP S/4HANA Finance for businesses, and case studies of companies migrating to SAP S/4HANA.

Computerized accounting in ERP
systems

Table of Contents
Introduction......................................................................................................................................3
Main Part.........................................................................................................................................3
Historical Overview of SAP S/ 4 HANA Finance 600................................................................3
Difference between SAP S/4HANA Finance and current SAP ERP FICO................................4
Benefits of SAP S/4HANA Finance for businesses....................................................................6
Case studies of company and problems at the time of migrating to SAP S / 4 HANA...............8
Conclusion.....................................................................................................................................10
References......................................................................................................................................12

INTRODUCTION
The present study is based on the critical analysis and evaluation of the historical overview of
SAP S/4HANA Finance, followed by considering the key differences in SAP S/4HANA Finance
and present SAP ERP FICO. Along with this the study also covers the benefits of making use of
SAP S/4HANA Finance, particularly for business. The prevailing study also emphasizes on case
study of Thomas Cook as well as Larsen & Toubro Infotech (LTI), and the issues faced by them
while migrating towards SAP S/4HANA Finance. The study will be supported by key findings,
arguments with discussion and comparison of different perspectives.
MAIN PART
Historical Overview of SAP S/ 4 HANA Finance 600
The main objective the ERP software is to cover the routine process of the company and provide
core capabilities. It combines the function from operational activities to the industry solution;
recombine the aspects of SAP business suites (Elbahri, & et.al 2019). SAP business suite is the
group of several business applications, by which the process and information of company can be
integrated. With this aspect, SAP business suite 4 only performs on the SAP HANA data base,
therefore it is referred as one product, which is called SAP S / 4 HANA (Ossimitz, Wieder, and
Chapman, 2016). However, it was noted that SAP S/4HANA showcased a transformational shift,
but raising questions regarding the pricing, functionality, migration that surrounded S/4HANA
and availability.
The platform of SAP HANA has been accessible since 2010, as well as SAP applications such as
SAP Business Suite have been capable to operate on the SAP HANA database. Furthermore, the
introduction of new suite known as SAP S/4HANA occurred on 3rd February in the year 2015.
The SAP S/4HANA is known as the largest updated of SAP to the ERP strategy as well as
platform in over twenty years. SAP S /4 HANA is the SAP ERP 6.0 suite, which is capable to
operating on a database of SAP HANA. Further steps are taken by the SAP S/ 4 HANA finance.
Many important elements of the earlier FI/CO have been recoded, by which estimated
advantages of SAP S / 4 HANA can be obtained (Plattner, and Leukert, 2015). Several

additional benefits on SAP HANA optimized version for the fiscal accounting module has been
added to SAP Simple finance (version 1.0), which was released in the year 2014. Further, in the
year 2015, another version of SAP Simple Finance 2.0, which is the part of SAP S/4 HANA, was
released. The SAP Simple Finance version 1.0 was recoded and redesigned, and resulted into the
SAP Simple Finance 2.0 (Ghattamneni, 2016). There are several ERP systems with the similar
intention, certain of the competitors of product in the software as a space of service which are
namely, Workday, Inc, Oracle, and Microsoft .
From the year 2015, the word SAP Simple finance was out of date, and it is replaced with the
word SAP S / 4 HANA. There are four elements, by which SAP S / 4 HANA made of, which are
as follows –
 The main and Functional Elements
 The user experience and presentation component
 The reporting and analytical component
 App component
Difference between SAP S/4HANA Finance and current SAP ERP FICO
S/4 HANA is considered suite built over in the platform of SAP, HAHA. Further, the S/4 HANA
suit is inclusive of the ERP capabilities throughout most of distinct business area like Supply
Chain, HR, Procurement, Sales and so on. SAP S/4HANA Finance is the S/4HANA suite field
addressing especially with the solutions based on financial management. It allows a general
financial data view being stable company-wide, reducing higher efforts that are required to be
placed on reconciliation (Bardhan and et.al. 2017). In addition, it also allows universal journal
mean for financial or controlling data, while enabling central finance for consolidation of
multitude back-end data sources. SAP S4 HANA finance is stated as a significant module which
is employed for the better management of SAP Finance as well as Accounting. Businesses
consider BI tools for conducting financial as well as accounting activities in a more realistic way.
In general, SAP HANA assists in measuring the organizational financial conditions as a whole.
On the other hand, SAP FICO is a key functional element in the SAP ERP that enables
businesses to effectively manage the financial data (Baumgartl and et.al. 2016). It aims to assist
companies in producing and managing financial statement for critically analyzing and reporting,

while aiding with optimal business planning as well as decision making process as large. SAP
FICO, FI means financial accounting and CO means controlling, this is generally employed for
the purpose of external reporting, illustrated by an example; preparing income statement and
balance sheet.
Thus, the fundamental difference that is held is that SAP HANA falls under the category of
technical module whereas the SAP FICO falls under the category of functional module (Sampat,
2016). Additionally, SAP HANA is considered as a reporting tool, on the other hand the SAP
FICO assist business in management of activities in regards with accounts, while it can be
incorporated with several modules such as SD, MM and PP etc. SAP ECC operates on IBM
DB2 and Oracle etc; however SAP S/4HANA considers leveraging on in built capabilities and
principles of designing of SAP HANA.
While comparing, it can be evidenced that S/4HANA aims to administer by assisting in
addressing complex issues and handling multiple data, it is accessible within on-premises
modules. In accordance with the SAP, there is no requirement of Batch processing in S/4HANA,
as it eases the use of processes and ensure the same on real time basis meaning, that businesses
have the accessibility to get better insights on data in real time for the purpose of predicting,
planning, stimulating and executing (Riesner and Sauer, 2017). Moreover, the SAP Simple
Finance is the major element of S/4HANA, intending to streamlining financial process and
allowing realistic financial data analysis. However, the SAP FICO includes two key modules,
which are used for particular financial process. Furthermore, the SAP FI handles the inclusive
financial reporting and accounting.
It can be stated that, SAP S4 HANA is placed as the new digital aspect and an evolution from the
SAP ERP Central Component for current ECC business and customers. In addition, the SAP is
presently providing appealing discounts for nudging this implementation forward (Plattner and
Leukert, 2015). However, it is not considered as a direct replacement for SAP ERP in regards
with the capabilities and functionalities. On other hand, the main changes held in SAP S4 HANA
in comparison with SAP ECC ERP are namely; introduction of new data base, changes in
functional scope, alleviation of duplicate functionality, certain functionality in ECC possess no
direct replacement to S/4HANA, ECC replacement and on-perm functionality integrated with

SAP cloud LoB solutions, integration of stand-alone solutions within the core of S/4HANA and
new functional capabilities.
Benefits of SAP S/4HANA Finance for businesses
There are several benefits associated with SAP S4 HANA Finance which a business can take
benefit of. The features and techniques SAP S4 HANA Finance are helpful for the business. It
possesses new functionalities which are easy for the management of ERP system in the business.
Its benefits are inclusive of, real time reports, financial close, financial planning, financial
reporting and acts as a best combining tool. SAP S / 4 HANA business benefits are; simplicity is
added to the data model, there is drastic reduction in data foot print, rich user experience is
facilitated, decision making is eased by making use of stimulation and prediction, instant
accessibility to financial insight, reconciled financial process is ensured for realistic financial
data analysis, and there is presence of easy deployment methods (Pete and et.al. 2018).
It is required by the company to hold the digital age for balancing with the new and innovative
business models and provide the decision maker with prompt perception. With this aspect, SAP
S/ 4 HANA finance allows the company to build a combined picture of entire operational and
fiscal data to provide elastic and relaxed reporting along with the mechanization of the processes
(Friedl, and Pedell, 2017). Further, this software also provides the simulation and prediction, and
analysis of data on the basis of real time. Thus, it can be said that company can reimagine
finance for the digital age with the help of SAP/4HANA finance. It also provide the assistance to
the company with the aspect of building financial strategies, accounting, cash managements, risk
management, debtors, creditors and many more (Lorenc, and Szkoda, 2015). There are several
new features contained in the SAP S / 4 HANA finance, which gives many benefits to the
company. Some of the benefits which can be availed by company by implementation of SAP S /
4 HANA are as below –
 The placement of this software is possible on the cloud as well as on – premises.
 For entire financial and operational data, this software provides the common view
(Missbach, & et.al 2016).
 The automation features of this software are very helpful for company.

 This software carries the significant and large process and technological easiness with a
system that eliminate data duplication, resolutions, and terminations.
 This software is mainly engaged in elastic process of business, in which it reform and
optimize the process to emphasis on exclusions and comprehensive tasks. It is flexible;
therefore it can easily change the process of business as per the requirement (Missbach,
& et.al 2016).
 Everyone can take the advantages from cross-company self-learning. By the
implementation of this software a company can get the benefit of best practices across the
organizations. Several roles have right to use implanted statistics, reporting, and
benchmarking (Cocca, & et.al 2018).
 This software also assists the company to take the benefit of this software with the
matters related with financial planning and analysis. Organization can implement it end
to end process of panning and apply the actual time operational data to remove the time
gap and dismissal (Erkut, 2016). Further, ad hoc changes are also possible with the SAP
S / 4 HANA.
 Various accounting related activities are also performed by this software in a well
manner. It assists in execution of the closing tasks and inters period process in actual
time. With any direction, this software provide the real time reporting with fully drill
down.
 It also enhances the productivity and minimizes the risk of company because it apply the
single, integrated data model, which leads to the simplification and easiness of the
process (Saeed, Shaikh, and Naqvi, 2018).
 Company also manages the cash and financial risk by the implementation of SAP S / 4
HANA. It provides the integrated framework for the cash flow analysis and business
strategies, consisting of the liquidity lifecycle (Rajšp, & et.al 2016). By this company can
easily identify their requirement of finance and availability of the finance and accordingly
it can managetheir financial planning. Further, actual position of bank valance and
currency exposure also possible through this software, which is very beneficial for the
company (Jones, Biswas, and Chacko, 2018). The best eample for this is the NIKE
Company, as it has improvised its cash management system with the help of SAP S / 4
HANA.

 At the transaction level, this software is capable to process the large amount of data, by
which the company can detect the any fraud. Further, monitoring and the investigation
activity can also carry out by management in the effective manner because of the
centralized system. Moreover, by regularizing the strategies of revealing, it assists in
reduction in the false alarm.
 By getting the real time data and information a company can respond in the fluctuating
dynamic market in an effective manner. Thus, it assists in cooperative finance operations
of company (Okungbowa, 2015).
Case studies of company and problems at the time of migrating to SAP S / 4 HANA
For keeping the pace with the emerging tourism industry Thomas Cook Company implemented
the SAP S / 4 HANA in the organizations. Since the digital age of the industry taking the travel
and tourism company at a new place, and Thomas Cook had an idea how to reach up to that
destination. With this aspect, digital business planning of the provider of Airline Company, it
search for the manner to mechanize, standardized, and streamlines the process of business.
Earlier, infrastructure related with the information technology of Airline Company was consisted
with disparate solutions and non-uniform process for addressing tour operator and settlement of
airport sales. Due to this, Thomas Cook group streamlined the process of business with the help
of SAP S / 4 HANA Enterprise Cloud (Bonneau, 2017). However migrating to SAP S/ 4 HANA
was not an easy task for the company. in other words, it can be said that transforming an SAP
database and applications, with its connected system software and the products is one of
significant task for company, as unsuccessful migration may leads to significant loss to
company. With this aspect, one of the challenges faced by company is to provide education,
training, and knowledge to the employee to operate and maintain the latest system. Transfer of
knowledge is a necessary challenge, which is addressed by company by providing proper
education and activities of handover. Along with this, identifying the requirement of the existing
consumer is another challenge, which is faced by company. Since, at present a customer can get
the real time updates related with the timing of arrival and departure of flight, they can download
their boarding pass and many other facilities, this is only possible through shifting in the
technology. Another challenge of migration is related with the budget, as if the company spends
too much on the cost of implementation of software without proper strategies, then it will make

the adverse impact. On the implementation of SAP S / HANA, Thomas Cook, select to perform
the new part and old part simultaneously, this leads to the reduction of the risk for the new
platform. Despite all the issues, the company has successfully implemented the Sap S/ 4 HANA
in the organization. The first 50% of the project was for integration of accounting for tour
operator, addressing the airport sales solution, and Airline Revenue Clearing and Information
System, which objective is to enhance the speed of processing of the data while generating the
settlement. On the basis of sales and distribution function of the software, this solution is
founded. Further, the access of data and information for the accounting and sales end user
become very easy, and they can analyze the data as they required. Core processes of the
company such as booking, reservation of the flight, have been automated and regular (Riesner
and Sauer, 2017). Overall, it increases the efficiency and effectiveness of company and lowers
the cost of processing.
By analyzing the case study of company, it has been identified that company has successfully
implemented the SAP S / 4 HANA. The main reason behind this success is that, company has
keenly observed the existing process of business. By identifying the problems such as how much
customization in the current process of business as a part of new software, whether it is feasible
to implement the earlier codes in the new system and many others aspect, run the new software
(Missbach and et.al. 2016).
The SAP S/4HANA is considered as the next generation business suite of SAP, which has served
several benefits to the current SAP businesses and customers. Many organizations are in pursuit
of the migration towards SAP S/4HANA; however doing so come up with some challenges and
issues, and this can be complicated and risky (Wang, Syaiful and Nurul, 2017). The experiences
of companies with the implementation and migration state that they are required to fully interpret
the challenges and resolve any of the issues coming in their way.
Another case study of a company is of Larsen & Toubro Infotech (LTI) which is global
technology digital solutions and consulting company that assists over 250 clients succeed in the
globe wherein business is evolved by digitalization. For assisting clients in stimulating their
digitalization pathways, supported by social interactions, internet, data analytics, and cloud
infrastructures. In the year, LTI come up with a new brand identity, reflecting how the company
is assisting clients in finding ways for the automation of core process that is to optimally

digitalize their business. Further, this unveiling also agreed with the company’s individual
digitalization program for adopting SAP S/4HANA, which is an in-built memory database,
offering real time data on the performance of company so that better decision making can be
facilitated.
The enduring SAP customer, LTI operated its SAP systems from an on-premises data centre, on
the other hand, the company was willing to operate a SAP S/4HANA from the infrastructure of
cloud computing. There were several challenges posed in migrating from an on-premises
environment to the one of cloud. However, by this the company can make reduction in their
capital IT and after that there would be no requirement to buy complex hardware. By this, the
company would be able to make the IT more agile (Business Standard, 2019). It can be stated
that LIT specialized in the SAP system migration from on-premises to the one of cloud and made
use of SAP as well as could migration expertise for launching the replica test environment meant
for SAP S/4HANA. It would have been complex for the company to build the SAP S/4HANA
infrastructure and transfer the data from on-premises data center, being a totally challenging
process. But, at present, the SAP S/4HANA infrastructure supports all of the SAP financial as
well as procurement applications of SAP.
Thus, it can be stated that, a new implementation and migration is always accompanied by the
challenges of handling the customized in-house development and applications based on legacy.
In addition, issues can also come in form of seamlessly integrating the solutions into existing
system environment, and using the traditional standard in the same respect (Singh, 2017). Hence,
there are various types of questions often encountered by the companies tending to migrate
towards SAP S/4HANA.
CONCLUSION
By considering the above aspects, it has been observed that SAP S / 4 HANA are the biggest
updating over the enterprise resource planning strategy. It is considered as transformational shift
on the basis of its functionality. Further, it has been seen that there are four main component of
the SAP S / 4 HANA. By the implementation of the software, a company can get more
information on the real time basis. Along with this, it also assists the company for making the
financial planning and strategies. Various accounting functions are also performed by this

software. Thus, it can be said that it covers all operational process to industry solution. However,
it has been also evaluated that, there are several challenges faced by company at the time of
migrating to SAP S / 4 HANA, but company can make the substantial improvisation in the
business reporting and time of transaction with the successful migration.

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