A Detailed Research Report on SAP S/4HANA Finance, BAO6714, T3 2018

This report provides a comprehensive overview of SAP S/4HANA Finance, an enterprise resource planning (ERP) system designed to streamline business processes. It begins with a historical overview of SAP S/4HANA Finance, tracing its evolution and highlighting its key features. The report then contrasts SAP S/4HANA Finance with SAP ERP FICO, detailing the differences in functionality and capabilities. A significant portion of the report focuses on the benefits of SAP S/4HANA Finance for businesses, including improved processing speed, real-time data analysis, and enhanced user experience. The report incorporates case studies of companies that have implemented SAP S/4HANA Finance, examining the challenges they faced during migration and the strategies they employed to overcome these obstacles. The report concludes with a summary of the key findings and insights gained from the analysis.

Running Head: COMPUTERIZED ACCOUNTING IN ERP SYSTEMS
COMPUTERIZED ACCOUNTING IN ERP SYSTEMS
Name of the Student:
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Executive Summary
Evolving technology and digitization makes every process easy in life. Moreover, with evolution
of technology there are changes in business models and the traditional ways of doing a business
process. The introduction of new systems help in better collection and organization of data.
Better insights about the collected data can also be acquired to study the market trends and
customer behavior. ERP or Enterprise resource planning is an enterprise related software that
helps in managing the business processes. SAP ERP is a very famous and one of the most used
resource planning enterprise software across the globe and was developed by SAP SE, a German
company. This report will provide a detailed research and study of ERP systems along with SAP
S/4HANA Finance software. Some of the challenges or difficulties faced by organizations in
implementing the SAP S/4HANA Finance are as well deliberated through this report with
several case studies.

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Table of Contents
Introduction......................................................................................................................................3
Discussion........................................................................................................................................4
SAP S/4HANA Finance History.................................................................................................4
SAP ERP FICO............................................................................................................................4
Difference between SAP S/4HANA and SAP ERP FICO..........................................................5
Advantages of using SAP S/4HANA Finance.............................................................................6
Case Studies of companies and the issues they faced migrating to SAP S/4HANA Finance.....8
Conclusion.....................................................................................................................................15

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Introduction
Advancement in technology also marks for the changes it brings with it. The huge data
flow over the internet is not useful until there is a proper way to collect and use it. Modernization
should be adapted by the organizations fast for better processing and evaluation of the
organizational data. Mainly, the aim of a business process is to accomplish a solid or fixed goal
by the stakeholders, through a number of steps (Hammer 2015). Business processes can be both
manual and automatic. Management of business process can be a huge challenge for most of the
organizations today. Business process management or BPM is a process for identifying and
improving the performance of an organization by means of various methods to automate the
business processes (Rosemann and vom Brocke 2015). If there is a lack of proper management
of these business processes then the organizations can face a lot of difficulties related to time
management, greater number of errors, data handling and might demoralize the employees. To
overcome these challenges, introduction of a proper and advanced system in the organization is
very important and for this reason ERP (Enterprise resource planning) applications comes into
action (Tarhini et al 2015).
ERP as stated earlier is a software to manage business processes efficiently and allows
organizations to automate many process (Hoch and Dulebohn 2013). The ERP includes
integration of various process like product planning, sales and marketing and also human
resource planning. The ERP software is a form of enterprise utility software that consist of
different modules which needs to be purchased individually (Seethamraju 2015). These modules
are used in some combination according to the requirements of the organization. The most
common ERP modules used by an organization are for product planning, controlling the

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inventory and distribution of products, marketing and sales, finance management and HR
management (Hoch and Dulebohn 2013).
SAP ERP is a very popular ERP used across the world by many large scale organizations
(Sikka et al. 2013). The company that developed SAP ERP was a German company known as
SAP SE. In 2011, SAP HANA was launched that provided real time insights of the data. SAP
Business Suite launched by SAP, in 2013 was driven using SAP HANA that provided a single
platform for transactions and analytics (Brunel et al. 2015). Finally, in 2015 in the month of
February, SAP Business Suite 4 HANA (SAP S/4HANA) was introduced which is considered as
the most advanced ERP till date.
Discussion
SAP S/4HANA Finance History
SAP S/4HANA Finance is basically a financial application that is based upon SAP
S/4HANA ERP platform, previously recognized as SAP Simple Finance (Prassol 2015). The
interconnected array of financial management tasks deliver actual-time data and monitoring. The
SAP HANA platform is in existence ever since 2010. The programs developed by SAP like the
SAP ERP and SAP Business Suite used the database of SAP HANA to run. SAP S/4HANA
finance was brought into market in 2015, 3rd February at the New York Stock Exchange (Pedell
et al. 2017). There are two editions available in the market which are cloud and the other one on
premise. Sources reveal that by October 2015, the customer database of SAP S/4HANA was
1300 (May, Böhm and Lehner 2017).

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SAP ERP FICO
The financial and cost controlling module in SAP ERP is commonly known as SAP
FICO (Maier, Laumer and Weinert 2015). The FICO comprises of mainly two parts, where FI is
for Financial Accounting and CO means Controlling. Recording all the financial transactions and
producing them at the end of trading period is the main objective of SAP FICO (Blount et al.
2016). This module is implemented and is very important for a wide number of organization.
This module can cover almost all the business processes that an organization can encounter and
thus is a very robust module (Heinzelmann 2017).
Difference between SAP S/4HANA and SAP ERP FICO
SAP S/4HANA Finance SAP ERP FICO
1. Former name for SAP S/4HANA
Finance was SAP Simple Finance and the
term is no longer an official term. The part
of S/4 HANA suite that deals specifically
with Financial Management and their
solutions is well-known as SAP S/4HANA
Finance (Rudolf et al. 2013).
2. SAP S/4HANA enable a common view
of the financial data and this data is
consistent throughout the organization and
SAP S/4HANA minimizes reconciliation
efforts (Maheshwari 2017).
1. SAP FICO is basically a component of SAP
ERP that deals with Finance and Cost controlling
functions (Dhungana 2013). Here, FI stands for
Financial Accounting, CO stands for Controlling.
It is one of the most applied modules with SAP.
2. SAP FI is made up of sub modules and the
most common sub modules that are used are
account payables, general ledger accounting,
bank accounting, asset accounting and account
receivables (Gaikwad and Bharathi 2018).
Everything is interlinked and integrated in real
time.

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3. SAP S/4HANA provides a universal
journal for financial or controlling of the
data.
4. Provides central finance in order to
develop several back end data sources.
5. The Financial add-ons used with SAP
business suite powered by SAP HANA are
SAP accounting, SAP Cash Management,
SAP Integrated Business Planning used for
finance (Lee et al. 2013).
3. FICO is a part of SAP ERP so it also provides
a universal journal feature.
4. This is a module and does not provide central
finance to combine multiple back end data
sources.
5. SAP FI consultants are responsible for the
implementation of Financial Accounting with the
Cost accounting using SAP ERP financials
(Perovic et al. 2013).
Advantages of using SAP S/4HANA Finance
Main benefit of SAP S/4HANA Finance is that, the processing pace is extremely smooth
plus fast. This processing ability is linked with other features used for countless financial
functions, for example accounting of finance and controlling (Eilers 2016). S/4HANA allows
quicker settlement of finance processes like the quarterly conclusion it also provides one single
source of financial truth and transparency designed for an institute, according to SAP.
Another benefit from using SAP S/4HANA, it empowers the organization to use actual-
time data and analysis that helps in modeling and predicting the impact of changes the
organization may want to work upon (Plattner and Leukert 2015). Few examples for that are
acquisitions, enabling financial professionals that play a crucial role in business decisions. The

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implementation of SAP S/4HANA Finance could be done in the cloud, or on premise, or it could
be implemented in a hybrid environment. Implementation of SAP S/4HANA Finance can be
applied as standalone or bundled together (Missbach et al. 2016).
SAP S/4HANA Finance offers a consolidated sight aimed at the entire operation along
with finance related statistics in turn that offers flexible and easily consumable reporting and
provides automation of process. It also provides great user experience because of the Fiori 2.0
and enables the users with ease of access to the overview page, work list and list report (Gül
2017). The design of the UI is made to deliver highly personalized, with great responsiveness yet
very simple user access. The UI offers the users to ask a question and get the required details,
regardless of the device and deployment (Mathew 2015). This will help the organization to drive
revenues and new customer database and the organization can connect to their customer at higher
level. SAP S/4HANA Finance also allows access into IoT and Big Data which can in turn
provide deeper insights of the customer data and by means of real time analysis the decision
making process will be much more efficient (Missbach et al. 2016).
It provides a comprehensive batch of financial accounting as well as management
solution and helps in the extended process for the study of the finance and the planning along
with the risks for the enterprise also in the management. SAP S/4HANA also includes financial
risk management and accounting (Nica et al. 2017).
SAP S/4HANA facilitate centralization of hardware together with network resources.
Using this software economic planning process and reasoning can be boosted, the planning cycle
plus the profit also increases. Planning process will be easy and real time using SAP ERP
(Akhtar 2016). Optimization of SAP BusinessObjects Planning and Consolidation (SAP BPC)
helps in data accumulation without the issue of data replication.

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In case of accounting the organization can close a book faster and minimize cost and
workloads. SAP S/4HANA Finance provides businesses the power to maintain only one
universal journal for the accounting (Burns 2018). Redundancy in data is reduced and provides
parallel processing and evaluation.
The financial risk management function as also mentioned earlier can help in accurate
forecasting of cash flows along with evaluation related to risks and management regarding
liquidity. SAP Cash management offers real time global cash position (Fanning 2015). Detailed
analysis and prediction of cash flow are offered by SAP S/4HANA Finance that will support an
organization in achieving greater levels of flexibility regarding cash needs. Fraud management
provides a deeper insights to detect and investigate fraud cases (Varma and Khan 2014). SAP
uses complex and advanced algorithms on the Big Data to identify and forecast fraud behaviors,
gives alerts for the identified fraud behavior and blocks those fraudulent transactions. One very
big advantage of using SAP S/4HANA Finance is the updates remain optional so a user have a
choice to upgrade or not and access the data even without upgrading.
Case Studies of companies and the issues they faced migrating to SAP S/4HANA
Finance
Case Study 1:
This case study is about a company called Bluefin a Mindtree company. This case study
will review the pros and cons of implementing SAP S/4HANA in the Bluefin a Mindtree
company. There are mainly three types of migration that can be implemented in an organization
namely Brownfield, Greenfield and Hybrid. The right migration path can be evaluated by the
current landscape of the organization and technical requirements. Bluefin mentioned that moving

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to the latest version of SAP ERP is not like any other normal upgrade of the enterprise system
but with the new database, the new user experience and the latest technology, adoption of
S/4HANA is a full system conversion. The migration processes that are available has their pros
and cons. Brownfield migration path enables an organization already on an older version of SAP
ERP to transform their data which includes master data and transactional data and migrate them
to the new version. Greenfield migration is meant for the new companies who are new to SAP
ERP and wants to change their old traditional ERP. In Greenfield migration most of the master
data is converted but most of the transactional data will be discarded. However, Bluefin
recommends a Hybrid migration as that will provide a lot of flexibility and there is less chances
of data loss. The idea is that, instead of migrating the whole system, a new environment should
be implemented gradually, using this migration path the master data will get converted first and
there will be a gradual transfer of the transactional data to the new system.
The advantages of Greenfield migration are:
 The new customers are smaller and have a smaller scope.
 As the scope is small so the projects are also short and this means quicker returns on
investments.
 Process transformation is easy.
Disadvantages of Greenfield migration are:
 As the organization will implement new SAP ERP in their system the workforce will
need proper education to use the ERP.
 An evaluation of the current architecture of the organization is needed so as to determine
if they need to implement the software or not.

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Advantages of Brownfield migration are:
 The workforce need no education as the organization is upgrading to a new version only
and the workforce is already aware of the SAP language and objects.
 The architecture needs no evaluation.
 The new upgraded version will provide a better user interface.
Disadvantages of Brownfield migration are:
 S/4HANA does not cover every industry specific functions or features.
 The downtime for the up gradation process will impact the business process and
operations.
 There will be an impact on the pre configuration and the customization of the software.
The Bluefin experts have identified the important criteria for the S/4HANA conversion.
These criteria include start release, technical prerequisites, the different edition option and
business care.
Start release: If the current organization is not using the SAP ERP then the only option is
Greenfield migration. If the enterprise is already using an ERP provided by SAP then the process
would be Brownfield as the system will be upgraded only.
Technical prerequisites: The migration into SAP HANA database requires one Unicode
encoding system. Assuming that the enterprise system is not Unicode compliant then there is a
need for Unicode conversion procedure for the organization in order to migrate using brownfield
path. In addition to that, the SAP platform will require HANA database, Release 6 and
Enhancement Package 7 or higher. If these criteria are not met then there is an alternative one
step conversion to brownfield system.

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Edition option: After the evaluation of the architecture of the institute, edition of SAP
S/4HANA is selected. There are mainly two versions, one is the on premise version and the other
is cloud version. On premise version has a traditional licensing method on the contrary the cloud
version has a subscription type of licencing. In the on premise version the customer has a full
control on the speed of innovation and changes that are taking place within the system.
Moreover, the cloud version provides the cloud customers the access to participate on quarterly
innovation upgrades. The implementation of cloud version is much easier than the on premise
version because it comes with pre-defined configuration which needs limited specialization. On
premise require an individual with high understanding of the system for customization. Both the
versions include all SAP S/4HANA applications. The S/4HANA on premise version can be used
in a brownfield migration path and SAP S/4HANA cloud edition may only stand true in a
Greenfield migration.
Business case: For the conversion to S/4HANA, there are multiple criteria that should be
considered, firstly the data migration, the unique customization code of the organization will be
hampered, there are architectural complexity, the implementation of S/4HANA will change the
business model, and there should be an effort for the conversion of the system.
In conclusion, the Bluefin suggests a hybrid approach of conversion which convert the
code of the company or the modules or the system gradually in parts. This scenario will make the
whole process more manageable but it will require more time as the process will be executed in
parts and might require a temporary setup of the parallel landscape.
Case study 2: