ERP: Historical Overview, Differences between SAP S/4HANA Finance and SAP ERP FICO, Benefits for Businesses, Case Studies, and Issues Faced

This article provides a comprehensive overview of ERP, including its historical background, differences between SAP S/4HANA Finance and SAP ERP FICO, benefits for businesses, case studies, and issues faced. It also highlights the advantages of SAP S/4HANA for businesses.

Running head: ERP
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Name of the Student:
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Contents
Historical overview:.........................................................................................................................2
Differences between SAP S/4HANA Finance and SAP ERP FICO:..............................................3
Benefits of SAP S/4HANA Finance for businesses:.......................................................................6
Case Studies of companies and the issues they faced migrating to SAP S/4HANA Finance:......11
Conclusion:....................................................................................................................................13
References:....................................................................................................................................15

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Historical overview:
Continuous innovation and development of new technology has led to a complete
revolution of sought in accounting practices of business entities. Standard Accounting Practice
(SAP) is a complete solution for Enterprise Resource Planning in computerized environment.
With ever increasing complexity of businesses the complexity of managing resources have also
increased significantly. Built on operational database of SAP’s proprietary system SAP
S/4HANA is a business suit developed to manage the resources of business in memory
computing platform. Also known as SAP HANA, the objective of the software is to cover all day
to day operations and processes of an organization (Plattner and Leukert, 2015). The software
platform from SAP HANA is available ever since 2010 in different applications such as SAP
ERP and other business suits of SAP. On February 3, 2015 the launce of SAP S/4HANA took
place at the New York Stock Exchange. Both cloud and on premise editions of SAP S/ 4HANA
were introduced and launched on the day. Over the last two decades it was the biggest update by
SAP in its ERP strategy. It was accepted that the introduction of the system is a transformational
shift however, there were number of questions raised about the functionality, availability and
pricing of the system. The data migration to SAP S/4HANA has also been question by the
experts subsequent to its introduction on February 3, 2015. Within a period 75 days from the
introduction of SAP S/4HANA on February 3, 2015, 370 customers purchased the software and
reported positive feedback of using the software. Positive growth of the software was reported as
more 1300 customers used the ERP package by the end of October 2015. At the end of 4th
quarter of 2016 SAP reported a customer base of 5400 who were using the software for
managing enterprise resources (Shalaby, 2017). As per the official report on use of SAP

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S/4HANA by the end of June 30, 2018 a total 8,900 were using the software successfully to
manage their resources.
Diagram below depicts the three broad characteristics of SAP S/4 HANA:
Differences between SAP S/4HANA Finance and SAP ERP FICO:
There have been number of reports of positive impact of using SAP S/4 HANA on the
management of enterprise resources and processes. It is important to note that the objective of
continuous modification and development of existing and new products respectively on SAP
platform is to improve the experience of customers by enabling better resource planning within
an organization (Cocca et. al. 2018). The latest software in the SAP platform launched on
February 3, 2015 at the New York Stock Exchange, SAP S/4HANA, has improved on the ease of
use aspect. In fact earlier the software was known as Simple Finance due to its qualitative
characteristic in easy use of the software. The software has been successful in removing
traditional barriers between transactions, analysis and planning stages which were present in

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earlier version of the ERP software including SAP ERP FICO. The current system, SAP
S/4HANA provides the facility of instant analysis and insights into the financial data of different
level which was not present in SAP ERP FICO. As a result the feedback from the customers of
the usefulness of the software, SAP S/4 HANA is mostly positive (Schmidt-Karaca, 2018). The
instant access to the financial data at different levels including the impact on the planning stages
of different levels within an organization helps the management to take better decisions in
managing the resources of the organization. The traditional barriers in transactions, analysis and
planning in SAP ERP FICO has made the software not as attractive as SAP S/4 HANA. The
managers of modern day business entities have to take instant decisions to ensure better
management of the organizations and their resources. The advanced software, i.e. SAP S/4
HANA have all the attributes to help the managers of business organizations in the current
competitive world to use all the features of transaction processing, analysis benefits and planning
attributes to take better decisions. In comparison the traditional barriers in SAP ERP FICO do
not allow the managers to take instant decisions. As a result of the delay in the decision making
process the business entities lost some edge to the competitors that are using advanced software
and ERP packages (Waizy et. al. 2015).
Creation of forecasts for potential decision making process is available in SAP S/4 HANA which
helps the managers to forecast the expected financial implications of different decisions. On the
basis of the forecasts the manager can take best suitable decisions for an organization. This
facility of creation of forecasts is not available in SAP ERP FICO. As a result the users of the
software lacks the competitive edge as compared to the users of SAP S/4 HANA. Further, the
creation of forecasts in SAP S/4 HANA is possible using real time financial data without any

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delay in data processing thus, the managers can take decisions quickly by using the ERP
software package as opposed to the users of SAP ERP FICO (Plattner and Leukert, 2015).
The following diagram shows the advantage of using S /4 HANA:
The processing speed in SAP S/4 HANA is extremely efficient. Combined with the speed of
processing data in real time the integration feature with various elements of financial accounting
and management accounting help an organization in its entire management and planning of
resources at each and every stage of the organization. Lack of speed and integration features in
SAP ERP FICO and other such software are holding back the progress of business entities in
extremely competitive modern business world (Nica et. al. 2017).

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The advanced financial qualitative characteristic of SAP S/4 HANA have made it an extremely
useful software for the financial and accounting professionals. The accounting and finance
professionals can use the benefit of real time data processing feature of the software to improve
the quality of accounting and financial reporting (Kerzner and Kerzner, 2017). Finance
professionals can conduct different types of analysis by using the advanced analytical features in
the software. This will help the professionals to evaluate the impact of different decisions on the
financial aspects of an organization. With the benefits of real time analysis the financial
professionals can also take better and swift decisions without delaying. FICO on the other hand
is primarily for accounting and financial reporting as the advanced analytical and planning
features of SAP S/4 Hana are not present in FICO. Thus, the users of FICO will not be able to
forecast the financial and operational implications of different decisions of the management with
real time data processing (Ptak and Schragenheim, 2016).
Benefits of SAP S/4HANA Finance for businesses:
The benefits of the above ERP package to an entity conducting business operations are
numerous.. The diagram below shows the primary benefits of S/4 HANA.

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Here a detailed discussion on these benefits have been provided to help the readers to understand
the number of benefits which accrue to a business subsequent to installation of SAP S/4 HANA
(Tian, F. and Xu, 2015).
Real time processing:
Use of the above software would transform the lengthy batch oriented processing to real time
data processing. It is due to the in-memory platform in which the software is built that allows

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business organization to move from lengthy batch processing to real time data processing system
(Nwankpa, 2015).
Limiting the source of truth to one:
Other ERP packages which do not have Universal journal feature for accounting and financial
reporting have more than one source of truth. SAP S/4 HANA however due to its Universal
journal feature for accounting and financial reporting accept only single source of up-to-date.
Thus, all finance applications accepts data from single up-to-dated source (Tarhini, Ammar and
Tarhini, 2015).
Restriction to data duplication:
The enhanced security system inbuilt within the ERP package restricts data duplication. As a
result the data processing quality and results are improved significantly. The applications in the
system work at the line item level. The business insights provided by the system software is
much deeper than any other ERP software from the same platform (Leon, 2014).
No aggregation:
With the use of line item travel for applications in the system data aggregation along with data
duplication is completely restricted. Thus, use of SAP S/4 HANA has improved the quality of
data processing and resultant decision making process with the use of the ERP package as
opposed to use of any other ERP package (Bi, Da Xu and Wang, 2014).
Feature to combined transactional and analytical data:
The ERP package has the feature to combine the transactional and analytical process. As a result
the business managers can use the benefit of analysis subsequent to the real time data processing
to take better business decisions (Antero, 2015). The real-time data processing feature along with

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analytical features of the software has enhanced the usefulness of the software to a business
organization.
Applications of the software are relatively smart:
There are number of features in the ERP software including new intelligent services such IoT
that helps the management to forecast the possible implications of different decisions on the
business organization. Apart from that features as machine learning and modern analytics
features of the software help the user organization to conduct detailed analysis of different
business decisions (Tian and Xu, 2015). Based on the findings of the analysis the managers can
take correct decisions to improve the business processes and operations within the organization.
Integration of useful features with core finance operations:
The inbuilt features of ERP software allows the business organizations to integrate these features
with core finance processes of the organizations to deliver important insights into business
decision making process. Automation and predictive insights help the managers of a business
organization to take correct decisions to manage the organization efficiently (Seethamraju,
2015).
Ease of replacement without any disruption:
The custom applications within a business organizations are replaced without disruption. The
transition process is relatively simple with applications are replaced without any disruption to the
operations and processes within an organization. The current and existing operations are not
disturbed due to the transition to SAP S/4 HANA from earlier version of software from SAP
platform (Tasevska, Damij and Damij, 2014).
Centralized finance:

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The group cash and liquidity position is managed centrally. Thus, all the cash and other liquid
assets of the group are managed centrally. This helps in maintaining required cash balances for a
whole group. The liquidity position is also managed extremely well with the use of SAP S/4
HANA. Use of SAP S/4 HANA in shared service model is a centralized process that accumulates
all transactions into a consolidated instance. Instant data replication is allowed in the software
allows centralized data processing to manage cash and liquid assets of the group centrally
(Chang et. al. 2015).
Innovation at the work place:
Use of SAP S/4 HANA allows innovation at the work place with code line technology of the
software. Simplified data model improves innovation at the workplace with consistency and
completion of technology. Both cloud and on-premise editions have the features to allow
innovation at the work place (Leon, 2014).
Unlimited storage capacity:
Unlimited storage capacity in the cloud edition of the software helps an organization to expand
its operations without considering the impact of the expansion of availability of storage space.
Unlimited storage capacity allows business entities to operate effectively and efficiently without
considering the impact of such expansion (Misra et. al. 2016).
Coverage:
The features within the ERP package allows automatic up-to-date of regulatory and statutory
requirements with global coverage. More than 45 years of industry experience in 62 countries
across 26 different industries SAP S/4 HANA have consider all major financial scenarios to
ensure that the requirements with regulatory and statutory requirements (Chofreh, Goni and
Klemeš, 2018).

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Consumer-grade features:
SAP S/4 HANA provides customer preferred user interface to enrich the customer experience.
The experience of customers have enhanced drastically with the use of the ERP software.
Case Studies of companies and the issues they faced migrating to SAP S/4HANA Finance:
WIPRO and European Bakery have implemented S/4HANA to improve the quality of
processes and operations within the organization. In Wipro the implementation of 4/ HANA has
been made in the following areas:
I. S/4 HANA Finance.
II. Financial Cockpit management within the company.
III. Fraud management within the company.
IV. Cash management of the company.
V. Treasury and risk management within the company.
IBM on other hand has helped in implementation process of S/4HANA in European bakery to
achieve complete digitization of its processes and functions. Elimination of errors, cutting costs,
and improvement in production were the main objectives behind implementation of the ERP
package in the company.
Apart from that the business objects of these companies were also part of the overall
implantation of SAP S/4 HANA. The common issue faced while implementing the ERP package
is the rapidly discuss functionality in the software as opposed to other SAP products. In case
Wipro no outside functionality in relation to financial aspects was implemented within the
company. With the implementation scenario of the company, the biggest problem it seems is the
unclear objective behind implementation of the ERP system within the organization. Was the
implementation of SAP S/4 HANA was because the software has what Wipro needed to improve

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its business processes and operations or was it to sell the ERP system in the market (Leon, 2014).
With all technology companies, SAP S /4 HANA was also meant to improve the quality of
experience of Wipro thus, the objective behind implementation of SAP S/4 HANA was not clear
in this particular implementation. Self-implementation of S/4 HANA by consulting companies
across the globe is due to the immense desire of including the skills of operating in S/4 HANA in
the resume of the consultants. Thus, the main driving factor behind implantation of S/4 HANA in
Wipro was also the desire to include in the resume the skills of operating in S/4 HANA. The
implementation of S/4 HANA in the various aspects of Wipro is explained in brief here.
Finance: The implementation of S/4 HANA was mainly due to the desire of inclusion of
experience in the resume of the consulting company of ability to use the software. Hence, there
was not much though behind implementing S/4 HANA Finance (Misra et. al. 2016).
Financial cockpit management: Before even evaluating the implications on financial cockpit
management of S/4 HANA Wipro decided to implement the system. Thus, there was not much
though behind implementation of the ERPO package in the financial cockpit of the company.
The lack of credibility resulted in lacklustre services of the system software in the company.
Frau Management: Wipro already had an effective fraud management system in place. There was
definitely no need to overhaul the existing fraud management system. However, with the
implementation of S/4 HANA the company replaced the existing fraud management system
within the organization. Though S/4 HANA also provides significant features to improve fraud
management but the cost of replacement of an effective fraud management system is not
justified.
Cash and liquidity management: The central management facility of cash and liquidity assets of
an entity in S/4 HANA is very effective. In case of Wipro the implementation of S/4 HANA has

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resulted in improvement of Cash and liquidity management of the company. The benefits of real
time processing has helped the company to improve its cash and liquidity position to meet the
day to day requirements of cash in business (Plattner and Leukert, 2015).
Treasury and risk management: S/4 HANA is an effective ERP software that allows real-time
data processing by replacing the lengthy batch processing system. Treasury and risk management
system of Wipro has improved significantly subsequent to the use of S/4 HANA.
In case of European Bakery, transformation of complete process was the main objective behind
implementation of S/4HANA. As a result it was definitely a suitable scenario to conduct the cost
benefit analysis of implementation of SAP S//4 HANA. The cost benefit analysis showed the
expected benefits is significantly higher than the cost associated with implementation of the
package.
However, it is important to mention that the implementation of the ERP software in two
companies were completely different from each other. In Wipro, it was not supported by credible
thought process of the management. In fact the primary driving factor for the consulting
company was to include the skills and knowledge of operating in the system in its resume to
improve its resume. In case of European Bakery, there was significant objective behind
implementation of the system and it was supported by the attributes and characteristics of SAP
S/4 HANA.
Conclusion:
Taking into consideration the above it can be concluded that Enterprise Resource Planning
system is an effective tool in the hands of an organization provided that the standard procedure is
followed. It is important that all necessary due diligence are conducted prior to decide whether
to implement a new system software or not. It is a huge responsibility on the management to

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successfully implement a new system without any disruption. Also features of a system and the
needs of an organization must be evaluated at the beginning before finalizing on the system to be
implemented. SAP S/4 HANA is an ERP system which is the most advanced ERP system from
SAP platform. It is important to conduct thorough analysis of usefulness of the system specific to
an organization before deciding to implement the system.

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References:
Antero, M.C., 2015. A Multi-case Analysis of the Development of Enterprise Resource Planning
Systems (ERP) Business Practices. Morten Friis-Olivarius The Associative Nature of Creativity.
Bi, Z., Da Xu, L. and Wang, C., 2014. Internet of things for enterprise systems of modern
manufacturing. IEEE Transactions on industrial informatics, 10(2), pp.1537-1546. Bi, Z., Da
Xu, L. and Wang, C., 2014. Internet of things for enterprise systems of modern
manufacturing. IEEE Transactions on industrial informatics, 10(2), pp.1537-1546.
Chang, B., Kuo, C., Wu, C.H. and Tzeng, G.H., 2015. Using fuzzy analytic network process to
assess the risks in enterprise resource planning system implementation. Applied Soft
Computing, 28, pp.196-207. Chang, B., Kuo, C., Wu, C.H. and Tzeng, G.H., 2015. Using fuzzy
analytic network process to assess the risks in enterprise resource planning system
implementation. Applied Soft Computing, 28, pp.196-207.
Chofreh, A.G., Goni, F.A. and Klemeš, J.J., 2018. A roadmap for Sustainable Enterprise
Resource Planning systems implementation (part III). Journal of Cleaner Production, 174,
pp.1325-1337.
Cocca, P., Marciano, F., Rossi, D. and Alberti, M., 2018. Business Software Offer for Industry
4.0: the SAP case. IFAC-PapersOnLine, 51(11), pp.1200-1205.
Kerzner, H. and Kerzner, H.R., 2017. Project management: a systems approach to planning,
scheduling, and controlling. John Wiley & Sons. Available at: https://books.google.co.in/books?
hl=en&lr=&id=xlASDgAAQBAJ&oi=fnd&pg=PR19&dq=enterprise+resource+planning+syste
ms+and+its+usefulness&ots=Xb3qTTS4CV&sig=KQ7301Nos-

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NwpLPAfXykCTwcWWU#v=onepage&q=enterprise%20resource%20planning%20systems
%20and%20its%20usefulness&f=false [Accessed on 8 October 2018]
Leon, A., 2014. Enterprise resource planning. McGraw-Hill Education.
Leon, A., 2014. Enterprise resource planning. McGraw-Hill Education.
Misra, S.C., Singh, V., Jha, N.K. and Bisui, S., 2016. Modeling privacy issues in distributed
enterprise resource planning systems. International Journal of Communication Systems, 29(2),
pp.378-401. Misra, S.C., Singh, V., Jha, N.K. and Bisui, S., 2016. Modeling privacy issues in
distributed enterprise resource planning systems. International Journal of Communication
Systems, 29(2), pp.378-401.
Nica, A., Sherkat, R., Andrei, M., Cheng, X., Heidel, M., Bensberg, C. and Gerwens, H., 2017.
Statisticum: data statistics management in SAP HANA. Proceedings of the VLDB
Endowment, 10(12), pp.1658-1669.
Nwankpa, J.K., 2015. ERP system usage and benefit: A model of antecedents and
outcomes. Computers in Human Behavior, 45, pp.335-344.
Plattner, H. and Leukert, B., 2015. The in-memory revolution: how SAP HANA enables business
of the future. Springer. Available at: https://books.google.co.in/books?
hl=en&lr=&id=6IdNCwAAQBAJ&oi=fnd&pg=PR7&dq=SAP+S/
4+HANA+and+its+benefits+&ots=THFG9poJ3Q&sig=ExP8W_afIMPryt050Yw35v9q3xA#v=
onepage&q=SAP%20S%2F4%20HANA%20and%20its%20benefits&f=false [Accessed on 8
October 2018]

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Plattner, H. and Leukert, B., 2015. The in-memory revolution: how SAP HANA enables business
of the future. Springer.
Ptak, C.A. and Schragenheim, E., 2016. ERP: tools, techniques, and applications for integrating
the supply chain. Crc Press. Available at: https://www.taylorfrancis.com/books/9781420056020
[Accessed on 8 October 2018]
Schmidt-Karaca, M., SAP SE, 2018. Process execution using rules framework flexibly
incorporating predictive modeling. U.S. Patent Application 15/333,745.
Seethamraju, R., 2015. Adoption of software as a service (SaaS) enterprise resource planning
(ERP) systems in small and medium sized enterprises (SMEs). Information systems
frontiers, 17(3), pp.475-492.
Shalaby, M., 2017. Development & Deployment of Enterprise Applications on SAP HANA
Cloud Platform. Available at:
https://www.theseus.fi/bitstream/handle/10024/124842/BachelorThesis%20-
%20FinalVersion.pdf?sequence=1 [Accessed on 8 October 2018]
Tarhini, A., Ammar, H. and Tarhini, T., 2015. Analysis of the critical success factors for
enterprise resource planning implementation from stakeholders’ perspective: A systematic
review. International Business Research, 8(4), p.25.
Tasevska, F., Damij, T. and Damij, N., 2014. Project planning practices based on enterprise
resource planning systems in small and medium enterprises—A case study from the Republic of
Macedonia. International journal of project management, 32(3), pp.529-539.

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Tian, F. and Xu, S.X., 2015. How Do Enterprise Resource Planning Systems Affect Firm Risk?
Post-Implementation Impact. Mis Quarterly, 39(1).
Tian, F. and Xu, S.X., 2015. How Do Enterprise Resource Planning Systems Affect Firm Risk?
Post-Implementation Impact. Mis Quarterly, 39(1).
Waizy, A., Kasper, D., Schrage, J., Höppner, B., Salfner, F., Schmitz, H., Böse, J.H., Potsdam,
S.I.C. and Helmert-Str, D., 2015. Storage Class Memory Evaluation for SAP HANA. HPI
Future SOC Lab: Proceedings 2013, 88, p.63.

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Case Studies are available:
(i) Wipro: http://www.scmfocus.com/saphana/2017/08/17/wipro-s4hana-case-study/
(ii) European Bakery: https://www-935.ibm.com/services/case-studies/s4hana-bakery/

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