Computerized Accounting with SAP S/4HANA: Importance, Challenges, and Benefits

This report outlines the importance, challenges, and benefits of computerized accounting with SAP S/4HANA. It covers the history of the software, its significance in the business, and the difference between SAP S/4HANA Finance and current SAP ERP FICO. The report also discusses the benefits of SAP S/4HANA Finance for businesses, including real-time processing of data, secure data management, and faster decision-making.

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Computerized Accounting
Introduction
SAP S/4HANA is a computer software used by business organisation to run there day
to day operations. SAP S/4HANA has helped in faster analysis and generation of financial
reports. This report on SAP S/4HANA outlines the importance and challenges of the software
on business, user experience in using SAP software, whether it is user-friendly or not is
described in the report. The companies using SAP software have considerable experience in
providing real-time reports and global regulatory and compliance abilities across all
languages. SAP S/4HANA software has helped the firms in closing monthly reports (Arik
2002, p14), it has brought a lot of changes in the business environments, and provide an
added advantage on business firms over their competitors. This report on SAP S/4HANA
contains a brief history of the software, that is, when and where it was launched and whether
it is a multinational corporation. The significance of SAP S/4HANA in the business for
examples, it promotes real-time reporting and secure data management (Maheshwari 2017,
p36). Also the challenges of implementing this application are outlined in the report.
History of SAP S/4HANA Finance
SAP S/4HANA Finance was earlier known as SAP simple finance, is a business suite
application software that was developed to integrate most of the business transactions into
one process. This software application can work for both small business organisations and
multinational companies. The finance departments in this companies adopted the use of this
software in profit and cost accounting and any other financial operations. This platform has
eliminated the traditional barriers in the organisation, whereby most of the transactions were
processed individually. SAP S/4HANA has four modules that allow integration of business

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process and real time generation of reports. The functional module is the first component that
promotes a variety of finance capabilities. This is the core component of the business suite
because it gives life to the other modules.
The presentation component is another module that promotes user experience in SAP
S/4HANA Finance. The use of SAP fiori has made the software to be user friendly and allow
easy interaction between the client and the software. The reporting module is a component in
SAP S/4HANA Finance that predicts future trends of the organisation. This module is used to
tell the future financial position of the organisation. The top management are able to make
strategic decisions concerning the future of the organisation. The integration of all this
components has brought success to the organisations that have adopted the use of SAP
S/4HANA Finance.
SAP S/4HANA Finance is application software that was launched in February 2015
by SAP SE Multinational Corporation in Germany as an upgrade of SAP HANA that was
launched in 2013. This software is the fourth generation of SAP business enterprise resource
planning, for many years SAP has been working to solve complex business process. The
launching of SAP S/4HANA finance has ensured the success of the business suite. This
software application has promoted the processing of vast volumes of business information in
real time. SAP database concept has allowed writing off millions of codes. The ERP system
has been made simple and easy to use in data entry, storage, and processing of large volumes
of transactional data (Anon 2018). SAP has presented an opportunity for companies to
reinvent their business models by utilizing the internet of things. SAP S/4HANA uses real-
time processing of information; it doesn't require batch processing of data. The clients can
receive their data in real time for simulation and execution of their data. SAP S/4HANA and
SAP Fiori have interlinked together to provide user-friendly display functions that allow easy
use of SAP in a variety of devices (Anon 2017).

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SAP S/4HANA was initially referred to as SAP RF and was growing at a very high
rate. In the year 1992 SAP R2 was introduced and launched. By the year 1992 SAP R3 was
started as an update of the previous application. In the year 2004 SAP ERP was launched
which had more features and components that the business world required. The central
enterprise component was also another name given to SAP ERP which was well received in
the business world with many customers using it. SAP ERP gained popularity very fast which
prompted the company to develop new modules as the technology was changing quickly. The
system offered a variety of services. Due to the advancement in technology, the SAP
Company produced another module in 2015. The SAP S/4HANA was launched as the most
updated Enterprise Resource Planning of all time. This SAP S/4HANA has many up to date
modules which helps in the running of the business. The primary objective of SAP S/4HANA
is to run an enterprise resource planning which uses the memory available to be effective and
easy to use (Bhaskar and Williams, 2013).
In 2016, 5,400 clients had already implemented the use of SAP S/4HANA finance.
Due to the competition available in the market, SAP S/4HANA had to be reinvented to offer
an added advantage over other competitors like Microsoft or Oracle. The simplifications of
business processes have paved the way for live data to be accessed. Live data has enabled a
secure method of producing real-time reports. There were many transactions and news
involved with the previous versions of SAP ERP, but the new SAP S/4HANA reduced the
number of reports and sales required. It integrated most of the processes into one making
them compound to reduce the number of reports generated. The database storage is only
exclusive to SAP software only, unlike the previous versions which supported databases form
other companies. The use of only SAP database saves the cost of purchasing databases from
other companies (Gunawardana 2015, p13).

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SAP S/4HANA is divided into several logistics and modules which simplifies the
different departments of business environments. The first module is the inventory
management, this module of enterprise management give a simplified information model
which helps in tracking inventory in the business firm. Inventory management outline what,
when and how the stock is taken in the company. It simplifies the manual checking of stock.
Procurement is another module of enterprise management in SAP, and it has increased the
efficiency of the procurement officer in procuring and payment of the suppliers (Breen and
Calvert 2003, p87). There is efficient management of what was purchased and the amount of
the products. Reports from the procurement officer can easily be generated with the help of
SAP. Material requirements planning and order management are modules of enterprise
management in SAP S/4HANA (Belloc 2010, p.63).
The difference between SAP S/4HANA Finance and current SAP ERP FICO
SAP FICO enables business firms to manage and organize all financial data and
information by generating financial statements for reporting and analysis by the business
management. It is divvied ton two units, SAP FI for Finance and SAP CO, which stands for
SAP controlling. SAP S/4HANA is only one unit which supports only the finance option.
SAP Finance (FI) helps in business financial reporting, that is generating of all the financial
statements required by the company. It is also involved in the accounting department of the
business firm. On the other hand, SAP Controlling (CO) is involved in the planning and
monitoring of the company income and expenses. SAP FI and SAP CO were launched as
different modules while SAP S/4HANA was launched as one module containing different
units in it for processing and analyzing information. SAP FICO worked as different units
combined, but SAP S/4HANA works as one unit (Ismail and Ali, 2013, p.123).
The SAP FI modules include: account receivables unit, general ledger, accounts
payable, asset accounting and fund management amongst other groups. The asset accounting

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module manages all the operations that are related to the organizational assets, that is,
acquisition or disposal of an asset. The SAP CO units include the following: cost elements,
profit analysis, and product costing. This unit is mostly used by the top management of the
company in the analysis of profits and other related expenditure. The above arguments show
that SAP FICO worked separately in producing several reports but in SAP S/4HANA all the
units are integrated to allow real-time analysis provision of reports. The reports will be easily
generated because all the data required by the software for analysis is readily available in the
same place (Jackling and Spraakman 2008, p.69).
The profit accounting sector and the cost accounting sector in SAP S/4HANA finance
has brought new face in the finance departments. Profits in most of the business organisation
that have adopted the use of SAP are well accounted. The companies are able to predict
future profits and allow maximum profit generations. Business firms are able to cut the cost
of operations because the SAP S/4HANA helps in tracing unproductive business transactions.
Therefore, a firm will be able to focus on those business transactions that will ensure
maximum generations of profits. However, in SAP FICO, the profit and cost accounting
wasn’t that effective because it could not separate unproductive business operations. SAP
FICO only focused on the top management and the administration departments of the
business organisation. The controlling department benefited a lot by using the SAP FICO
software.
One of the significant elements of SAP S/4HANA is the SAP Fiori function which
promotes user-friendliness of the software. This has enabled access to the software form
desktop computers, mobiles devices or even laptops. SAP FICO does not have such feature in
it. Even though it produces the same result, SAP S/4HANA is more user-friendly than SAP
FICO (Leon 2014, p.12). In November 2015, SAP S/4HANA introduced another business
module called Materials Management and Operations, and this unit helps in the management

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of inventories and procurement of company's stock. In January 2018, human capital
management was integrated by SAP S/4HANA as one of the new modules to manage the
human resource, on the other hand, SAP, FICO has no recent update. 4HANA software has
integrated its module into one whole software application which helps in faster analysis of
data.
Benefits of SAP S/4HANA Finance for business
SAP S/4HANA have brought a lot of profits into the business world, and the
enterprise resource planning has changed how business data is being processed. Both
financial and managerial accounting has been combined for secure and faster processing of
information. Real-time processing of data has led to the availability of crucial information for
decision making (Little and Best, 2003). The SAP S/4HANA has sped up the process of
decision making by the top management for proper running of the business organization.
Because of SAP S/4HANA, there is a universal journal entry which has led to the easy
reconciliation of financial transactions. For example, Boar's Head Provision Company in
New York has adopted the use of SAP S/4HANA to generate real-time reports used in
decision making. In 2016, during a board meeting, some financial statements were lost, and
the board had demanded them. Due to the availability of this software, the finance officer was
able to process the same information within a quick time and submitted the same to the
board. Therefore SAP S/4HANA has helped companies in processing data in real time and
accurately (Pattanayak 2017, p56).
Audi Automobile Manufacturer in Germany is one of the successful company that
have implemented the use of SAP/S4HANA Finance. The company deals in manufacturing
and distributing of cars worldwide and it has nine facilities that are integrated into one
module. All these facilities are interconnected by SAP S/4HANA Finance which has

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automated all the transaction in the company and has allowed easy transactions with the
suppliers. After the implementation of the SAP business suite, the company realised an
increase in their profits with efficient utilisation of the resources. The business transaction
between the suppliers and the customers of the company have been all integrated to allow
easy processing of accurate reports. The company had issues in generating customer and
supplier reports, but once the SAP S/4HANA finance was adopted, real-time reports are
generated quickly without any delays.
Business organisations are able to predict future markets and make strategic decision
on how to satisfy customer demands. Companies are able to use predictive analytics to show
how their profit margins will be flowing in future, and position themselves in a way that they
don’t become obsolete. A lot of companies have failed to survive the in competitive markets
due to obsolete business applications that doesn’t match with the technological trends.
However, SAP S/4HANA finance has ensured competitive advantage to their users because it
redesign all the business transactions to allow faster transactions.
SAP has been working for years to solve Complex Information Technology and
business problems in the business platform. The launch of SAP S/4HANA has brought a
significant change in the operational and transactional processes of the business. The business
environment is evolving rapidly with technological trends in cyber security and cloud
computing which has prompted the differences in ways of conducting business transactions
(Kurbel 2016, p.25). Business firms innovate how they do their operations to cope with the
changing business environments. SAP recognized the gap in the global business and
developed a digital framework which helps their clients do business in a more safe and secure
environment. SAP has promoted their clients to do transactions in a digital way whereby
there are easy storage and analysis of business data (Murray 2010, p.69).

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Efficient reporting is another benefit of using SAP S/4HANA. The accuracy of the
financial report is one of the most critical parts of the business. The database table has all the
data that allows the software to compute and provide accurate reports in real-time. There is
no data replication because it is being processed in real-time and therefore there is no
requirement for batch processing. Due to the accuracy and availability of financial reports,
the business can enjoy faster financial closing (Parkes 2011, p85). The closing of financial;
periods, e.g., Annually, semi-annually, quarterly or even monthly, it has been made easy, and
the finance officer can close the period with ease. Statement of comprehensive income and
that of the financial position that is required in decision making is readily available (Menashe
and Julian, 2006 pg:89).
Asset accounting has been improved, and there is no recording of depreciation value
because SAP S/4HANA has brought in a new module of asset valuation (Machera 2017,
p375). The use of asset accounting module efficiently manages Acquisition, depreciation, and
disposal of assets without the confusion of the company day to day business. Liquidity
management component has replaced the cash management. A business firm can manage
short-term cash positions and ensures that there is no or little theft of company’s cash. In the
recent year, most companies lost a lot of cash due to theft by the employees, but with SAP
S/4HANA all the liquid can be traced to the person who withdrew the money (O’Donnell
2004, p.75). This software promotes faster tracking of the money; hence there is no loss for
the business. Ego pharmaceutical company in Australia lost millions of dollars before
integrating SAP S/4HANA. The employees were able to sell the drugs for their benefit
without the company's knowledge. They used the back door in selling the stock because the
company was not in a position to trace their share. When SAP S/4HANA was applied in the
management of the financial sector in the company, there were no losses experienced since

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then. Inventory management has helped the company trace their stock without losses
(Moscarola and Chabouni 2010, p143).
The flexibility of SAP S/4HANA in the business world is a significant improvement
in the company's system. Finance officer can get the financial reports faster without the
lengthy, time-consuming reconciliations. The software generates both financial and
managerial statements in a way that it saves time. During an emergency meeting, the reports
can easily be generated from the system without any constraints. The use of Fiori has
improved the user interface and promoted user productivity. The software is flexible in that
there is a simple, easy way to use an analytical function to produce financial statements. User
productivity and the flexibility of SAP S/4HANA has led to increasing profits in the
organization (Schfer and Melich 2016, p72).
Cost saving is one of the most critical parts of any business firm, most of the
businesses are focused on reducing the cost of production and the expenses of the company.
The companies nowadays spent a lot of money on software productions IT strategy. With the
implementation of SAP S/4HANA, a company can save cost because it optimizes data
volumes and removes the overlapping of data. Operating and infrastructure costs can be cut
down by the use of SAP S/4HANA because its operation is in a way that it saves cost
(Marriott 2015, p480).
Migration to SAP S/4HANA
Coca-Cola Company
An adoption plan for implementing SAP S/4HANA can be quite tricky despite the
flexibility part of SAP. The process of choosing SAP product, to begin with, is very
complicated. The reason for the company's challenging move to switch SAP S/4HANA is a
massive investment in enterprise resource planning implementation. The existing database

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management system, e.g., a structured query language server and therefore they have to
switch to 4HANA (Wagner and Monk 2008, p26). The decision of which process should be
run on the SAP S/4HANA and which transaction should be run differently is a challenge for
the top management. One of the significant challenges of migrating to SAP S/4HANA is the
cost involved, and it is quite expensive to install and maintain the software. The
functionalities of the system is also a significant concern because a lot of clients are not
conversant with the use of SAP S/4HANA enterprise resource planning. Companies are also
concerned with the number of resources they will need to run the software, and this is
regarding human resource and the availability of the required hardware. Despite the benefits
involved with SAP S/4HANA, there are challenges involved in the installation and use of
SAP S/4HANA (Yaftian and Mihret 2017, p326).
Coca-Cola Company is one of the multinational corporations that have adopted the
use of S/4HANA software. Despite the several success of the SAP software in the company,
there were several challenges during the adoption of the application. The restructuring and
redesigning of business processes were one of the main challenges Coca-Cola faced during
the adoption of SAP. It requires a lot of time and works to install and configure the SAP
software. The amount of work and time required to configure the software is quite
cumbersome. Data migration from the previous database should be done by expertise to avoid
data inconsistency (Withers 2010, p18).
Braskem petrochemical company
Braskem petrochemical company migrated to SAP S/4HANA ERP in the year 2017.
This company based in Latin America has become one of the biggest petroleum company in
the world. The company integrated SAP S/4HANA, but it encountered difficulties during the

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implementation of the software. The company experienced challenges with the suppliers
because they needed extra workers to work on spreadsheets. This led to data inconsistency
during the computation of final reports for payment. This brought a lot of data redundancy;
hence it displayed the wrong information. Conversion means that the company had to
redesign the business process involved with their clients because of the changes in the
interface. The company had large volumes of data which it was hard to transfer the data to
the new 4HANA. The original clients and vendors were replicated into the master data before
the installation of SAP S/4HANA enterprise resource planning (Pavel and Evelyn 2017, p5).
Financial data migration should be done carefully because any alteration of the data
can lead to the loss of valuable information by the company. Data migration should be
consistent during the transfer of data from the master database (Tonder 2006, pg36). Data
inconsistency is one of the major challenges involved in the migration of SAP S/4HANA. For
example, Braskem Petrochemical Company based in South America have been operational
for decades. They implemented the use of SAP S/4HANA recently, but despite the success of
the software the company had gone through difficulty during the installation of the SAP
S/4HANA software. Data inconsistency nearly caused them to lose data during data transfer.
Braskem petrochemical company had made an inconsistent update which costed the
company. The company had made direct updates to the database which is very uncommon,
and the updates are usually made consistently via the database interface. Despite the data
inconsistency of the insurance company, it was able to recover all the data it needed (Sachan
and Jain 2018, p58).
Chiron Corporation
The functionality changes is another challenge that is involved in the installation of
SAP S/4HANA software. The SAP ERP used classic cash in the analysis of cash inflow and

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cash outflow, but in SAP S/4HANA ERP cash management module is in operational in place
of classic payment. This brings a lot of changes in the process of analyzing the income and
expenses of the company. The company has to transfer the old credit management master
data to the new cash management module. For example, Chiron Corporation was able to
adopt the new changes in financial reporting. Their cash inflow and outflow were integrated
into the new SAP S/4HANA software whereby the board implemented it without any
difficulty. The biotechnology company experienced a lot of challenges during the
implementation of the SAP ERP software, especially the changes in the processes (Sugut
2012, p25).
The architecture of SAP S/4HANA is quite complicated and require a lot of modules
to be installed and activated for the software to work well. Fiori, gateway and HANA studio
is one of the few components that need to be installed for the proper functioning of the SAP
S/4HANA. Chiron Corporation implemented the use of SAP S/4HANA software to improve
business processes in their organization. The application Programming interface is one of the
updates made by the corporation to customize their products for their clients. During the
architecture programming, the company nearly lost their data because the ERP they were
using was entirely obsolete the architecture definitions is usually done before the installation
of the SAP S/4HANA application (Sori 2009, p44).
Conclusion
In conclusion, computerized accounting is fundamental in global business
transactions. The companies that have adopted the use of SAP S/4HANA in doing their
business transaction have an added advantage over their competitors. Faster forecasting and
planning, quick report analysis, real-time analysis are amongst the benefits of SAP S/4HANA
software. However, data inconsistency and data migration are amongst the challenges

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associated with the implementation of SAP S/4HANA. The problems can be avoided by
carefully transfer of data and preventing significant updates of the software. The integrity of
the data can be checked by keeping the master database without any alteration of data. For a
company to become a successful digital business, a proper data management strategy needs to
be installed to provide a competitive advantage over their competitors. The architecture of
SAP S/4HANA has many modules and components that allow real-time generation of
financial reports.

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