Top 5 SAP S/4HANA Features for Finance Management

(MENAFN- Scott Sderosa)

Introduction

SAP SE, the world's leading ERP software vendor, made the biggest update to its ERP strategy and platform in over two decades with SAP S/4HANA. In this blog post, we will be taking a look at what SAP S/4HANA is, why companies are planning a transformation to it, and how it can be used for finance management.

What is SAP S/4HANA?

Launched in 2015, S/4HANA stands for Suite for HANA. 

It is a next-generation ERP system that has been designed to run solely on SAP HANA. A few improvements over its predecessor, SAP ECC, that make it modern, fast and easy-to-use are:

• Simplified data model

• Lean functional architecture

• Improved user experience (using FIORI)

• Employment of advanced technologies (AI / ML / BC)

Why companies are planning a transformation to SAP S/4HANA?

Understanding the differences between SAP releases makes it clear why migration to SAP S/4HANA is beneficial:

• Database: ECC supports databases from other providers such as Db2, Oracle, or Informix, however, S/4HANA only runs on SAP HANA, which means it has much faster reaction times thanks to its in-memory database.

• A merger of controlling (CO) and finance (FI): S/4HANA’s structure of the Universal Journal stores both the GL account and the cost element, whereas ECC maps FI GL accounts to CO primary cost elements.

• New general ledger: S/4HANA only uses the new general ledger (GI), whereas ECC ran both "new" and "classic" versions.

• Customer vs. Vendor to Business Partner: In ECC, customer and vendor files were separate, while S/4HANA combines the common data structure elements of both into a Business Partner record.

      • Necessity: SAP is planning to end all support for older versions of their product by 2027.

How to use SAP S/4HANA for Finance?

Management SAP S/4HANA Finance

According to SAP, it rewrote 400 million lines of code to build S/4HANA.

S/4HANA reorganized ECC modules into Lines of Business (LOBs), which comprised of functions for specific business processes, and, the first LOB produced was for finance, i.e., SAP S/4HANA Finance.

Features of SAP S/4HANA Finance

Single Source of Financial Truth.

SAP S/4HANA Finance introduces the financial world to a single source of financial truth. That means an aggregated total of all the financial data across departments, ledgers and even continents. 

This is enabled by SAP S/4HANA’s unique ability to store large amounts of data in-memory and to produce analytics reports at a moment’s notice for anyone with access who wants them. 

Such a source provides immediate value to:

• Accountants looking at current and past activity

• Project managers running complex projects on tight budgets

• Planners looking to utilize past and present numbers to forecast future expectations

No Data Redundancy and No Reconciliation

With the concept of “Single Source of Financial Truth”, data redundancy is eliminated. 

Think of the different data models found for General Ledger, Material Ledger, Profitability, etc. If we were to perform reconciliation between these sub-processes, it would be difficult on the system. With the Universal Journal, the data is stored only once and, therefore, reconciliation is not needed.

Multidimensional Income Statement

If we take into consideration the strength of the Universal Journal as a Single Source of Financial Truth, we could say that the Universal Journal is (in itself) a direct report because it is able to store more characteristics.

This means that if you take a look at your Profit and Loss statement (P&L Statement) by account, it is possible to have drill down options to the highest granularity.

New Accounting Concepts: Predictive Accounting

Predictive accounting enables you to take the most up-to-date data from areas in S/4HANA outside of Finance, such as Sales; other integrated products, such as SAP Concur; or external systems, and use it to predict future results at any time. 

You then have a better understanding of what your accounting results, at the end of the current period or quarter, might look like, and why.

Option to Utilize Machine Learning for Finance Operations

SAP S/4HANA gives us an option to utilize Machine Learning for finance operations such as Accounts Payable, Allocations, and Tax Solutioning. This, in turn, helps free up the analyst to focus on decision making.

In Conclusion

All in all, SAP S/4HANA is, undeniably, a complete overhaul of ERP systems as we have known them. And, in that effect, the benefits you can derive with transformation to it are too many to be ignored. So, when do you want to get started?

MENAFN12042023007268015587ID1105987971