Analysis of SAP S/4HANA Finance vs SAP ERP FICO with Case Studies

This report provides a comparative analysis of SAP S/4HANA Finance and SAP ERP FICO, emphasizing the advantages and disadvantages of implementing SAP S/4HANA in organizations. It begins with an overview of SAP S/4HANA Finance, highlighting its functionalities and benefits such as faster operations, prevention of data duplication, and a centralized finance management system. The report then delves into the differences between SAP S/4HANA and SAP ERP FICO, explaining the technical aspects and improvements in the newer version. Case studies of Fujitsu and Delloite are presented to illustrate real-world implementations, the challenges faced, and the value-driven results achieved. The report concludes by underscoring the significance of SAP S/4HANA in today's competitive market and its role in enabling faster and more efficient decision-making within organizations.

Running head: COMPUTERIZED ACCOUNTING IN AN ERP SYSTEM
COMPUTERIZED ACCOUNTING IN AN ERP SYSTEM
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COMPUTERIZED ACCOUNTING IN AN ERP SYSTEM
Executive Summary:
SAP ERP FICO as well as S4 HANA are two most important and widely used
technologies in today’s world, which are being incorporated by most of the companies. There are
different advantages as well as disadvantages of implementing the SAP S4 HANA in the
organizations. SAP S4 HANA is nothing but an advanced form of the SAP ERP FICO, which is
presently being used across the world.
The following report will highlight the different aspects associated to the usage of SAP
S$ HANA using the case studies of Delloite and Fujitsu which has incorporated the technology
in the recent past. By the end of the report, the reader will have a clear understanding on the
working principles associated with the technologies.
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Table of Contents
Introduction:....................................................................................................................................4
Overview of SAP S/4HANA finance:.............................................................................................5
Difference between SAP S/4HANA and the present SAP ERP FICO:...........................................6
SAP S/4HANA Finance benefits for an organization:....................................................................9
1. Faster operations:..................................................................................................................9
2. Prevention of data duplication as well as aggregation:......................................................10
3. Single source of financial truth:..........................................................................................10
4. Combines transactional as well as analytical data:.............................................................11
5. Smarter applications:..........................................................................................................11
6. Replacement that is non-disruptive in nature:....................................................................12
7. The finance management is centralized:.............................................................................12
8. It is a compete and consistent choice for the organizations:..............................................12
9. An excellent global reach of the technology:.....................................................................12
10. Attractive user interface for the consumers:...................................................................13
Case studies:..................................................................................................................................14
1. SAP S4 HANA implementation within Fujitsu:.................................................................14
Fujitsu aspects taken into consideration:...............................................................................14
Challenges associated to implement the technology within the organization:......................15
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2. Delloite case study:.............................................................................................................15
After-value-Driven Results........................................................................................................16
Challenges faced by Delloite:....................................................................................................16
Conclusion:....................................................................................................................................16
References:....................................................................................................................................18
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Introduction:
In today’s world, organization are facing huge competition in the market. Due to the
increasing competition, it has become exceedingly important for the organizations to come up
with more faster and flexible business strategies through which the leader will be able to take
more efficient decisions in the within the organizations. Different technologies like cloud
computing, virtualization (Masdari, Nabavi and Ahmadi 2016), Internet of things have been
incorporated by the organizations all across the world. One such technology which is presently
been used by the organizations is SAP ERP FICO which is used in the Finance departments for
faster and accurate results and calculations. Although this technology has many advantages, there
are many disadvantages as well which will be discussed in the following paragraphs. This report
will highlight the different aspects of comparison between the traditional SAP ERP FICO and
SAP S/4HANA. A clear overview as well as the history of the SAP S/4HANA technology as
well as their advantages will be discussed in the following paragraphs. By the end of this report,
the reader will have a clear understanding of the working principle of the SAP S/4HANA
technology considering case studies form two companies on how they have implemented and are
successfully running this technology in their organization. Through the upcoming paragraphs,
the reader will be able to develop an in-depth idea about the working principles associated with
the different versions of SAP that are being used within the organizations.
In this, report the case studies of two most renowned companies will also be studies in
details which ash been able to successfully implement SAP S$ HANA within their work
operations: Delloite and the famous Japanese IT company Fujitsu. The different issues faced by
the companies will also be studied in details in the case studies.
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COMPUTERIZED ACCOUNTING IN AN ERP SYSTEM
Overview of SAP S/4HANA finance:
SAP HANA platform is being used since 2010 and different other applications of SAP
such as SAP ERP as well as the SAP Business suite were designed in a way, which is capable of
running even on a SAP HANA or any other database as well. On 3 February 2015, a new version
of SAY called the SAP S/4HANA was launched at the New York Stock Exchange, which was an
improved version of the earlier technology (Ghattamneni 2016). “SAPPHIRE NOW” which is
the annual conference for the customers of SAP was help on 6th May 2015 Florida, also
announced the newly released cloud integration technology of SAP. Until today, SAP S/4HANA
is SAP’s biggest ERP strategy platform in the last 20 years. By April 2015, S/4HANA was quite
popular in the market and had had around 350 customers. By October 2015, Sap confirmed that
4HANA had more than 1300 customers. By the fourth quarter of 2016, there were around 5400
users of SAP S/4HANA and by June 2018, there are around 9000 customers now. Therefore, it
can be seen that the technology has immensely popularized in the markets due to its numerous
operational advantages in the financial domains, within the organizations.
Considering the present digital age all across the world, the organizations should come up
with a more improved version of the financing software that they use in their working operations.
The complexities in finance calculations as well as the business tasks led them to adopt the
technology of SAP S/4HANA, formerly known as SAP Simple Finance. This is an ERP software
for performing financial tasks that runs on a SAP-HANA platform located within the memory. It
is used to perform important tasks such as financial planning as well as accounting management
tasks, management of treasury as well as cash, accounts payable as well as receivable,
calculation and management of risk within the organizations etc (Oqayyel 2017). The major
tasks of this technology can be briefly mentioned below:
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COMPUTERIZED ACCOUNTING IN AN ERP SYSTEM
 It gives an overall common view of the different operational as well as financial
consolidated data in one place.
 It can be integrated with cloud computing for more secure data storage (Missbachet al.
2016).
 It is flexible and easy to use.
 It automates and makes all process much faster and smoother within the organization.
Difference between SAP S/4HANA and the present SAP ERP FICO:
SAP S/4 HANA is an improved version of the SAP ERP FICO, which is being used
presently across the companies. There are different differences with respect to different technical
aspects, which are briefly described below in the following points:
 Simple finance or the SAP S/4 HANA runs on a HANA platform whereas the
corresponding module of FI is based on an ECC 6.0 environment. The latter is going to
be obsolete by 2025. Another sub module of finance is Co-controlling which is present in
the newer SAP S/4 HANA and is not there in the already existing FICO version (Kale
2014).
 SAP S/4 HANA runs only on a HANA database, whereas FI runs on SQL as well as
oracle server databases as well as with compatible third party databases also (Sampat
2016).
 Only a single table called ACDOCA stores all the important function level information,
which is considered as a universal journal. N number of unorganized tables such as
BSEG, MSEG and FI are not required anymore which the technicians had to mug up
earlier.
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The differences can be clearly understood by understanding how exactly the different
technologies work. SAP S/4HANA Finance was originally known as SAP Simple Finance,
which was the first business solution, which was developed for the HANA platform (Plattner and
Leukert 2015). It is an improved version of the traditional FICO model, which eliminates the
issues related to transactional, planning systems as well as analytics in order to provide instant in
depth analysis of important organizational financial data. For example, a leader within an
organization can make use of SAP S/4HANA Finance to forecast potential decisions as well as
re-model data through a real time strategy to consolidated financial data from different sources.
Finance professionals like Chief Financial Officers (CFOs) and other personnel who are involved
in the different accounting and treasury management operations, financial operations, tax
calculation and risk as well as financial compliances mainly use the SAP S/4HANA Finance
technology in carrying out their working operations (Okungbowa 2015). All kinds of companies
including multinational fortune 100 companies use this technology. One of the major advantage
of the SAP S/4HANA Finance technology is extremely fast processing speed unlike the older
FICO technology, thereby allowing faster reconciliation of important financial strategies and
processes (e.g. quarterly close). It acts as a single point of contact for all financial information
for the entire company as a whole.
SAP FI on the other hand is technology that can report both internal as well as external
financial factors of an organization. Its main objective is to keep a track of all the financial
transactions carries out by a particular entity and produce the final financial results and
statements at the end of a trading cycle. The major functionalities associated with the SAP ERP
FICO model are discussed below. These aspects are not present in the newer SAP S/4HANA
Finance technology (Grunow, Matthes and Roth 2013).
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- Accounts receivables: This is a sub module, which is useful in capturing and storing
all the customer centric information in the databases (SE 2014). Separate accounts for
all customers are created, which store the different transactions done by them, in their
specific accounts. A general ledger updates all reconciliation accounts, which
includes real-time figures and calculations for better understanding of the financial
professionals. Posting of invoices and their payments, down payments, customer
report execution and credit memo posting are some of the important tasks performed
by the Accounts receivables module of the SAP ERP FICO model (Dockrell et al.
2014).
- Accounts payables: This module captures the different transactions with the different
vendors and helps in managing the vendor accounts. Individual vendor accounts are
created and maintained and whenever a customer account gets a new transaction
entry, a real time update operation of the reconciliation accounts takes place. These
accounts are stored in the general ledger, and are updated with the figures in real
time. Invoice payment, invoice posting, vendor reports, credit memo-posting, down
payments, are some of the important transaction tasks being done by the accounts
payables module (Loc 2017).
- Asset accounting: The tasks managed by this module are asset depreciation, asset
sale, asset revaluation, asset acquisition, asset retirement as well as asset transfer.
Reconciliation accounts are again real time updated whenever a new transaction is
posted in the asset account (Lee et al. 2013).
- Bank accounting: All the bank account transactions are reconciled which are
recorded on the bank statements after comparing them to the system transactions.
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- Consolidation: Multiple financial statements from different companies can be
combined, thereby providing a clear idea about an organization’s financial position.
- Funds Management: This module in the SAP ERP FICO model determines the
different expenses and cost factors to the company (Okungbowa 2015).
- Special Purpose Ledger: It is useful for reporting purposes.
- Travel Management: Different travel related expenses as well as other related
aspects, such as hotel bookings are handled by this module.
SAP FICO is the short form for FI or Financial Accounting and CO or controlling. SAP FICO is
an integral part of ERP. FI as well as CO store important organizational financial information in
a secure format. Whereas with the SAP S/4HANA Finance, a common viewpoint for all financial
as well as operational data can be created, thereby producing a more friendly and flexible process
within the organization (Riesner and Sauer 2017).
SAP S/4HANA Finance benefits for an organization:
Enterprise Resource Planning (ERP) is a software for business management, which is used
by almost all companies in today’s world, which helps in creating, developing as well as
marketing of the products in a strategic manner. Due to the complexities associated with
handling the ERP solution, SAP S4 HANA Finance was introduced for its numerous benefits in
the organizations. It has much more advanced features as well as functionalities, which in turn
makes ERP implementation within an organization much easier and simpler (Merzbach 2017).
Some of these advantages are described below:
1. Faster operations:
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The financial closing is run in a much faster way and on a real time basis and it is built
within the inbuilt memory platform of SAP. Therefore, lengthy processes, which were
earlier batch oriented, are real time operated now, thereby reducing the time taken for
complicated operational tasks, largely.
Fig 1: Real-time operation of SAP S4 HANA Finance (Source: As used by the author).
2. Prevention of data duplication as well as aggregation:
Better identification of reasons behind cash movements. Applications can work on the
same level as of the items, thereby producing much deeper and details insights to the
business. It helps the leaders to make more efficient business decisions.
3. Single source of financial truth:
There is improved accuracy and much faster intercompany reconciliation. The universal
journal used for financial as well as management accounting is incorporated in the SAP
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S4 HANA Finance thereby keeping all the financial data up-to-date in the databases. Its
operation can be explained in diagram below:
Fig 2: Single source for financial information (Source: As used by the author).
4. Combines transactional as well as analytical data:
An annual planning, which used to be static is now a real time based dynamic planning.
SAP S4 HANA Finance is capable of correlating historical, predictive as well as actual
data, thereby putting them on a common view for easy understanding of the finance
professional.
5. Smarter applications:
Invoices and payments are matched automatically with the use of machine learning.
Intelligent services such as internet of things (Collignon 2017), modern analytical tools as
well as machine learning are now being used to integrate the core processes of finance in
order to produce automation as well as predictive opinions about the financial operations.
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