Advantages of SAP S/4HANA Finance

This report explores the advantages of using SAP S/4HANA Finance for better financial control, real-time decision making, and streamlined processes. It discusses the features of SAP S/4HANA Finance, its differences from SAP ERP FICO, and the benefits realized by businesses through its adoption. The report also evaluates case studies of companies adopting SAP S/4HANA and the challenges they face in its adoption.

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Executive Summary
This report has been conducted for analysis and examination of the various features and
benefits provided by the cloud-based accounting software of SAP S/4HANA. It has been
discussed within the report that SAP HANA accounting software is superior as compared to the
features provided by initial software of SAP such as SAP ERP FICO. This is because it provides
advanced features for processing of the financing activities. In addition to this, it has taken the
example of the case studies of Apple and Nestle for demonstrating the significant issues that
companies face in adopting to this accounting software. The major issues as identified within the
report are migration of large volume of data, technical complications, requiring higher cost and
time and overcoming employee resistance to changes.
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Contents
Introduction.................................................................................................................................................4
Part 1: SAP S/4HANA Finance Overview......................................................................................................4
Part 2: Distinction between SAP S/4HANA Finance and current SAP ERP FICO...........................................5
Part 3: Advantages of working with SAP S/4HANA Finance.........................................................................7
Part 4: Case Study of Companies Adopting SAP S/4HANA & their Significant Challenges.........................10
Conclusion.................................................................................................................................................12
References.................................................................................................................................................14
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Introduction
The businesses at present are under increasing competitive pressure to adopt the new IT
systems and processes for conducting their various activities in a simplified and quick manner.
As such, they are also emphasizing towards the adoption of cloud-based accounting software to
better manage their accounting and financial activities. This software provides the benefits of
better managing the large volume of accounting and financial data by integrating it in an
effective manner. As such, this report has aimed to provide an insight into the accounting
software of SAP S/4HANA that is largely being used by businesses at present to manage their
financial functions. The report has conducted an overview regarding the accounting software, its
differences from the SAP FICO and the different benefits realized by businesses through its
adoption. This is followed by evaluation of the case studies of Apple and Nestle that are
migrating towards SAP S/4HANA and the significant challenges faced by them in its adoption.
Part 1: SAP S/4HANA Finance Overview
A company was incorporated in 1972 named SAP “SystemAnalyse und
Programmentwicklung” (System Analysis and Program Development) by precedent teammates.
The blossoming of the emerging company’s initial programs went on usually at nights and on
last days in the week.The main goal was to develop standard application software that performs
online data processing. SAP has employed 9 people and earns DM 620,000 at the end of first
year. SAP established its registered office in Weinheim, Germany. So many versions of SAP has
been developed and introduced to meet the financial accounting needs of the users. SAP tries to
check its flexibility for the first time in 1974 by converting its RF system from DOS operating
system to operating system. In 1975 with SAP RM System Company is able to integrate its
processes like purchasing, inventory, management, invoice verification etc. In 1976, a sales and
support subsidiary named SAP GmbH Systeme Anwendungen und Produkte in der
Datenverarbeitung (Systems, Applications and Products in Data Processing) was formed as a
limited liability company(Barua, 2016). SAP has started installing its system for the foreign
customers in 1977. Asset Accounting Module was created in 1978 and implemented on a modal
company. John Deere developed the company’s accounting software in a newer version in
French language to take a trial of international potential of software. In 1979, for the first time
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SAP started centralizing its operation on its own server, Siemens 7738. This way company
continues to achieve success and then in 2011 users have implemented the Platform of SAP
HANA, first in – memory product. This product makes users able to analyses data in online (S/4
HANA Finance - An overview, 2017).
To become a Pioneer of inter-enterprise business networks based on cloud in the fastest
growing networks, SAP acquired Ariba that results end to end procurement solution online. In
2016 SAP and Apple has announced that they have become partners to merge vernacular app for
iPad and iPhone that have the capability of cutting – edge on platform of SAP HANA. Based on
the SAP Cloud Platform, companies planned to give for the product iOS, SDK a new SAP Cloud
Platform. SAP and Google announced a planned innovative partnership that has made available
SAP HANA on Google’s public cloud platform. SAP HANA is accessible by this partnership on
the three biggest platforms- Amazon AWS, Google Cloud Platform and Microsoft
Azure(Ahmed, 2019).
SAP S/4HANA Finance was known by the name ofSAP Simple Finance having
characteristics of online evaluation, streamlined design and universal journal. SAP S/4HANA is
actually SAP ERP 6.0 suite that runs on database of SAP HANA. The next generation finance in
the new trail is SAP S/4HANA Finance for financial accounting, management accounting, risk
management, financial planning and more. To meet current financial reporting requirements Sap
S/4HANA finance has been developed. Some features of SAP HANA FICO have been recorded
to take a step ahead towards SAP Simple Finance (version 1.0) to expand financial accounting
module. In September of 2015 SAP Simple Finance began to know by the name of SAP
S/4HANA Finance. Some major Components of SAP S/4HANA were refreshed to include them
in SAP S/4HANA Finance; names are Functional Component/ Core Component, Reporting
Component, App Componentand Presentation or User Experience (UX) Component. (SAP
S/4HANA Finance, 2018).
Part 2: Distinction between SAP S/4HANA Finance and current SAP ERP
FICO
SAP S/4HANA Finance and current SAP ERP FICO has some differences. These
differences are explained as follows:
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Complete new platform
SAP S/4HANA is introduced as a new binary bosom and a direct advancement from SAP
ERP FICO (SAP ERP) for current SAP ERP users.
A New Database
Unnecessary tables have been removed and faster evaluation is possible on introduction
of SAP HANA, the new database platform in memory. In finance view, Separate accounting
ledgers have been unified in to a single physical table known as universal journal with SAP as it
has changed the corporeal data structure. SAP has made the profitability analysis faster and
enhanced other functional capabilities.
Elimination of redundant functionality
There are two general ledger structures in SAP ERP but in SAP S/4HANA a new
structure for general ledger accounting s has been spontaneously executed considering migration
to S/4HANA. A separate SAP ECM system is created by SAP in ERPwhereas in SAP S/4HANA
Extended Warehouse Management (EWM) activities have been implanted in to the central
system(Etemadi and Kazeminia, 2014).
Some components in ERP have no direct reinstatement in SAP S/4HANA
The process of switching of an enterprise to SAP S/4HANA has been discarded as some
of the component in SAP ERP will not be directly reinstated in SAP S/4HANA guidelines.
ERP Replacementand on – prem process with SAP cloud LoB Solutions
For example human capital management has been replaced with supplier relationship
management and SAP Success factors with Ariba.(Jones and Burger, 2011).
Embodiment of standalone solutions in S/4HANA core of SAP
S/4HANA of SAP has taken in to its core two separate solutions such as SAP Extended
Warehouse managementand SAP Transportation Management. (Carencro, 2015).
New practical capabilities
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SAP has released new operational abilities to work with in memory computing and SAP
S/4HANA. For instance central finance, SAP cash management and SAP BPC optimized have
been included in SAP S/4HANA has subsumed SAP cash management, SAP BPC optimized and
central finance required additional license.
There are some quite remarkable changes in the SAP S/4HANA and SAP ERP in respect
of its functional scope. Some Components of SAP ERP can be run on S/4HANA. Financial
management solutions will be dealt respectively by SAP S/4HANA finance. Reconciliation
efforts can be reduced by having a common view on consistent data of finance. Multiple back
end data source has been combined in the Central finance by SAP S/4HANA Finance. SAP
S/4HANA Finance eliminates the barriers have been eliminatedby SAP S/4HANA Finance
between conventional, planned and undiversified system to provide immediate recognition and
evaluation(Welz and Rosenberg, 2018).
In SAP ERP, the main operational module is SAP FICO. SAP FICO has aimed at
recording and tackling systematic financial statements for analytical and for the purpose
reporting. Financial planners have become able to take efficient business decision and make
business plans. SAP ERP FICO is combination of the two functionalities- SAP Controlling (CO)
and SAP Finance (FI). Overall SAP Finance (FI) handles accounting and finance
activitieswhereas SAP Controlling (CO) works on controlling cost of financial planning and
management. SAP FICO is an integrated module that is an integration of SAP Finance (FI) and
SAP Controlling (CO). Various Key functions such as account receivables, accounts payables,
Asset accounting and bank accounting are accurately completed with SAP FICO(Aduamoah,
Yinghua, Anomah and Ahmed, 2017).
Part 3: Advantages of working with SAP S/4HANA Finance
An entity’s all line item has been stabilized and minimal number of errors in
reconciliation occurred with the use of S/4HANA Finance. SAP S/4HANA’s benefits are
explained below in detail.
Controlled financial processes: Accounting results and finance functionalities related to finance
and management are in immediate control of the SAP S/4HANA Finance’s users.
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On line and ON time decisions: Finance part of SAP S/4HANA makes it able for the business
to take effective and relevant decisions in real time perception on time(Pan and Seow, 2016).
Universal Journal: It is considered as universal journal in relation to finance and management
accounting. All finance functionalities can be performed by accessing the data once updated in to
the system that means SAP S/4HANA Finance eliminates redundancy of data and as no need to
put data again and again in system, this Product has saved time and cost of the business.
Changed from manual to real time- On the top of the SAP in memory Platform, SAP
S/4HANAFinance has been developed. All lengthy batch oriented processes have been converted
in real time processes for finance business(Muzumdar, 2018).
Standalone activities to provide deep business comprehension: SAP S/4HANA Finance has
combined all finance activities as a standalone function that provides a deep business
comprehension.
Analytical business decision impact: SAP S/4HANA Finance enables analytical financial effect
of strategic and purposive business decisions(El-Sayed and Youssef, 2015).
Boost confidence of users: For financial and operational activities, the derivation of genuineness
is SAP S/4HANA Finance.
Integration of financial Data: A general view towards the data related to finance like
traditional, present and future data is recognized on the SAP Platform’s in - memory of SAP
S/4HANA Finance. The real time systematic planning process in place of the traditional annual
planning processhas been turned up by SAP S/4HANA Finance. (Kristandl, 2017).
Performing qualitative techniques for better understanding-Financial reporting, strategic
methods and qualitative techniques such as forecasting, simulation and what if analysis can be
performed on financial data with the use of S/4HANA Finance.
Global Coverage:Each one of the the major finance areas are covered by S/4HANA Finance
with more than 26 industries, 45 years of experience and 62 country versions.
Reduction in time and closing cost:Reduction in General ledger and annual closing cost has
been possible in S/4HANA Finance system. Economist has stated on the basis of studies of
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market that annual close of the top quartile companies is 26% days less than their competitors.
Due to reduction in time the annual general ledger and closing cost has been reduced by 61%
(Information and Communications Technology, 2018).
Non disturbance on migration: No disruption has been noticed in current financial operation
of business due to migration of SAP old version to SAP S/4HANA Finance.
Development of Smart Applications: Integration of key financial functions with the new
intelligent services is possible like loT, modern analytics, machine learning etc. For example
SAP S/4HANA Finance matches receipt with sales invoice automatically with machine
learning(Alamin, Yeoh, Warren and Salzman, 2015).
Shared service model: All the finance transactions are able to run on S/4HANA Finance’s
shared service model, as every single transaction is combined to the core. Cash and Liquidity of
the entity’s all line itemsis managed centrally in the S/4HANA Finance system of SAP.
(Fehrenbacher and Djamasbi, 2017).
Complete and compatible choice: S/4HANA Finance‘s line of code, Extract data structure and
digital consumer experience are compatible with both on the premise and on cloud.
Account analysis and financial planning: A Common planning model has been provided by
the SAP S/4HANA Finance to enable strategic planner to take strategic business decisions on
time and analyses the same in real time for accounting purpose by the SAP S/4HANA Finance.
(Carnero, 2015).
Update about legal compliance: A very prominent feature is developed in SAP S/4HANA
Finance. It ensures timely update about the legal, statutory and all regulatory compliance by the
company(Fagbemi and Olaoye, 2016).
Consumer grade experience: SAP Fiori designs for finance functions have been promptly
acknowledged by S/4HANA Finance for a promising consumer experience.
Risk minimization and compliance with simplicity: Risk of occurrence of Frauds and
deliberate errors have been reduced with the use of S/4HANA Finance. It ensures compliance as
well as enterprise risks.
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The S/4HANA Finance is a very promising product that enables all the financial
activities like collection, recording, posting, generating reports and updating about the tax and
regulatory compliance on cloud in real time in minutes without any delay. It has control above
the financial operations to reduce frauds caused by deliberate errors done in the entity. On an
overall evaluation S/4HANA, it seems user friendly product that enables users to grow their
business drastically(Perdana, Robb, Rohde and Birt, 2018).
Part 4: Case Study of Companies Adopting SAP S/4HANA & their
Significant Challenges
Apple has recently developed a partnership with SAP S/4HANA todevelop its operating
system of iOS and developing its various mobile products such as iPhone, iPad and iPod Touch.
However, the challenges that have been faced by the company in migrating to the system of SAP
S/4HANA can be stated as follows:
Increase in Complexity of Business Processes
The implementation of the SAP S/4HANA accounting software by the company requires
changes in its business processes to increase their flexibility for quickly adopting to the new
requirements. The business managers are required to enhance the integration and transparency in
the business processes and the data of the overall company. Also, there will be increased
reporting requirements of data at each department level with migration to the new accounting
software resulting in enhancing the complexity of the business processes (Jackson, 2013).
Requirements of IT
This is also a significant challenge present before the company as it requires increasing
IT systems and resources to migrate to the new accounting software. It is the responsibility of the
IT department of the company for ensuringconsistency of systems and processes for avoiding the
occurrence of any type of breaks within the installation process of the new software(Werner,
2017). This requires changes in the IT systems and processes of the company for supporting the
new business model. The IT team must prepare themselves of any changes in the software
systems currently installed in the company will undergo and the adoption of the new system and
supporting different departments to handle the significant changes(Franklin, 2016).
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Overcoming Change Resistance
The company might face resistance from its employees in the process of migration to the
new accounting software of SAP HANA. This is due to lack of knowledgeamong the employees
and their reluctance to understand the new business process requirements and fear of not being
able to adequately meeting the new work roles and responsibilities. The knowledge transfer to
the employees can be regarded as the most significant challenge that is being faced by the
company(Wongsim, 2016). This requires developing training programs to transfer knowledge to
the employees and make them ready to accept the significant change. This will result in incurring
significant time and resources on the part of the company for meeting the new strategic goals and
objectives. Therefore, it can be said that the conversion to S/4HANA on the part of the company
is not only a technical process but also requires changes in the ways in which business operate
through indicating an overall change in the attitude and ways of working of the employees(SAP
S/4HANA Finance, 2018).
Migration of large volume of data
The company can incur significant issue in migrating large volume of data to the new
accounting software which can be a tedious and time-consuming process for the company. This
requires support from employees at all levels in creation of a centralized accounting and financial
system within the company.
Nestle, a giant food and pharmaceuticals company, has also recently undertaken the
decision of implementing a new ERP system of SAP S/4HANA. The challenges that have been
faced by the company during its implementation can be stated as follows:
System Training
It is the major challenge being faced by the company as it requires providing training of
the new softer systems and processes to the business managers and employees so that they are
able to meet their new job roles and opportunities(Zainol, Fernandez,and Ahmad, 2017). The
successful implementation of the new accounting software requires providing full training to the
employees. However, the company is requires to incur significant cost and time in the overall
process.
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Lacking Expertise
The lack of expertise within the company possessing knowledge about the advanced
features of SAP HANA is also a significant issue. This requires on the part of the company to
hire an expert having knowledge about the softer to provide training to the employees for
implementing the use of its different financing applications in data processing and maintenance.
The hiring of a suitable IT expert is a challenge before the company for providing basic
knowledge regarding the new accounting features to the employees at all levels(The End of the
Beginning- SAP HANA has “crossed the chasm, 2013).
Customizing the Business Processes
The adoption of SAP HANA accounting software on the part of the company requires
customizing the different business processes. Therefore, each and every business process
requires significant changes that can take a long time to adopt with the relevant changes and the
requirements. The major issue that has been faced by the company is regarding the impact of the
project on changing the business processes. It is therefore highly essential to undertake a
complete survey regarding the significant changes that would be incurred by the adoption of the
SAP HANA accounting software and improving the flexibility in the business processes to meet
the changing needs and requirements(Schreiner, 2016).
Integration of Financial Data
The migration to SA S/4HANA accounting software also requires the business managers
to integrate the various financial modules such as purchasing and sales financing activities. The
development of a centralized financing function within the company is quite a complicated
process that requires integration of financial and sales processes with the software(SAP HANA
and SAP S/4HANA, 2010).
Conclusion
It can be said from the overall discussion conducted within the report that use of SAP
S/4HANA accounting software by businesses is providing them the benefit of centralizing all
their accounting and financing activities and thus facilitating better decision-making. SAP
HANA is superior in terms of features provided as compared to SAP ERP FICO as it provides
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advanced functionalities for centralizing and processing of financial and accounting data. The
companies such as Apple and Nestle are migrating towards the adoption of SAP HANA
accounting software to streamline their various business processes and managing the associated
financial activities in a better way. However, they face significant challenges such as lack of
knowledge, data migration, technical complexity and incurring high cost and time that impedes
the process of implementing the new accounting software.
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