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What is SAP Simple Finance?
SAP S/4HANA Finance, popularly known as SAP Simple Finance is the new generation Finance module on HANA Platform. It is one of the most important modules of the SAP Business Suite. It includes Finance, Management Accounting, Cash Management (Bank Ledger), New Asset Accounting, Material Ledger, Product Costing & Profitability Analysis.
Top Features of SAP Simple Finance
HANA is not only a Database, but it is also an Appliance, which means it is a combination of Hardware & Software innovation.
SAP has replaced the traditional Disk-based Database with In-memory Database, which has Multi-Core processing with many blades. Likewise, it has replaced Software innovations like Row-based Table with Columnar Table. Consequently, you no kore require separate Index Tables, Aggregate Table etc.
OLTP and OLAP
In SAP S/4HANA Finance, you don’t need to maintain the OLTP & OLAP system separately. Since the HANA Appliance is a combination of both OLTP & OLAP system together. Hence, you can get HANA Reports on the fly .
SAP ACDOCA – Universal Journal
S4 HANA Finance has introduced a Table ACDOCA (Universal Journal) which has replaced lots of Tables from existing ERP (ECC). This includes Finance, Controlling, Asset Accounting, COPA etc.
Furthermore, it has all transaction line Items of FI ( BSEG), CO (COEP), CO Object External Posting (COSP), Secondary Cost Element (COSS). Additionally, it has Open Items like BSID & BSIK and Clear Items like (BSAD & BSAK).
Leading and Non-Leading Ledger
S4 HANA Finance Ledgers combines the latest Leading Ledger and Non-Leading Ledger. Additionally, it has launched new features like Extension (Appendix) Ledger & more in its portfolio.
SAP Central Finance
With SAP Central Finance, you can run SAP S4 HANA Finance in a shared service model. It centralises all transactions into a consolidated instance.
SAP Fiori Design
SAP S4 HANA Finance adopts SAP Fiori design in order to deliver a beautiful and user-friendly finance application for best consumer experience.
What makes SAP Simple Finance simpler?
SAP Simple Finance provides the following advantages:
- It enables simpler user experience that provides instant access to any financial insight on any device
- It simplifies process execution for real-time financials that are always reconciled
- Further, it makes the decision making simpler using prediction and simulation, always on the fly.
- SAP Simple Finance provides simple solution architecture without aggregates and data redundancies
- Likewise, the IT strategy also is easier with cloud, on-premise or hybrid deployment options
- It offers simpler pricing with pricing bundles, including subscription-based pricing for the cloud.
- Lastly, Simple Finance makes the simpler business justification of a real-time view of the state of the business across all entities and continuous soft close.
Features vs. Functionality in Simple Finance
| Key Performance Indicator | SAP S/4 HANA Simple Finance Functionality |
|---|---|
| SAP Simple Finance drives Integration of information across enterprise effectively with Single source of truth. | – Universal Journal’s virtual single operating model – Seamless FI-CO Integration – Real-time data across all financial dimensions. |
| It makes the enterprise’s cost reductions possible. | – Improved automation capabilities in nearly all areas – Real-time insight into global sources – Uses of cash – Elimination of batch jobs |
| S/4HANA Finance helps better Measure and monitor business performance. | – Consistent business insight and prediction capabilities – Elements discovery across all FI value map – Visualization tools to easily understand your data |
| It optimizes planning, budgeting and forecasting process. | – SAP BPC for SAP S/4 HANA Finance – Deployment options-on premise cloud – Hybrid-integrate planning – Consolidation functionality in real-time |
| It executes continuous finance process improvements. | – Financial close, planning, forecasting and budgeting process – Streamline communication with banks – Automate payment workflows – Integrate collaborative finance operations – Fraud and audit management. |
| SAP S/4HANA Finance provide inputs to enterprise strategy. | – Extended simulation flexibility and speed – On the fly calculation capabilities – Better business advice with more relevant and timely insight |
| It helps developing talent in the finance organization. | – Use of modern UX and SAP Fiori apps – Improved automation capabilities to get rid of transactional activities – Free up resources for value-added tasks |
Business Scenarios in SAP Simple Finance
To illustrate the business value of SAP Simple Finance, I have put various business scenarios which would help you understand the functionalities more precisely.
1- Accounting Financial Close
SAP S/4 HANA Finance’s Central Finance deployment option addresses the challenge of multiple SAP ERP systems. An example of this is the complexity during merger and acquisition. Likewise, SAP S/4 HANA Finance’s month-end close business scenario addresses the current long closing cycles. Additionally, it accomplishes the desire to have a reliable finance data at any time.
2- Treasury and risk management or collaborative finance operations
SAP S/4 HANA Finance’s working capital and receivables management business scenario address the organisation’s pain points. This includes the high days of sales outstanding and cash flow challenges.
3- Enterprise risk and compliance management
The process oversight functions of SAP S/4 HANA Finance help to identify the areas with a high-risk fraud. Thus, it makes the system more secure.
4- Financial planning and analysis
SAP BPC for SAP S/4 HANA Finance addresses the need for dynamic planning and ambition for enterprise-wide integrated planning at the same level. Consequently, it simplifies the planning and analysis process and integrates the control at the central level.
Functional Changes with SAP S/4 HANA Finance
Universal Journal – ACDOCA
Universal Journal in SAP S/4HANA is the single source of truth for financial information. It carries a new data model that combines Controlling (CO), SAP ERP Financials (FI), Asset Accounting (AA), SAP Material Ledger (ML), Profitability Analysis (CO-PA), and other financial data into one Universal Journal entry. Furthermore, these all are represented in the table ACDOCA, with full details for all components. Since the system provides all data in real-time from this single journal. Thus, it reduces the period-end reconciliations and financial reporting preparation efforts considerably.
On the Fly calculation process
The new Universal Journal allows ad hoc, on-the-fly computations for converting periodic transactions from batch to real-time. It does not need the data to be replicated first to other systems such as SAP Business Objects Business Intelligence (SAP Business Objects BI). Further, the reporting is simple, fast, and multidimensional. Hence it makes the drill-down reports almost redundant.
Smooth Month-end and Year-end closing process
The ability to move away from batch-based and towards event-based processing enables period-end processes to run daily or weekly. Thus, it allows organisations to get a real-time view of their profit and loss (P&L). Even more, it provides the business with early visibility into emerging trends.
This functionality facilitates prompt remedial action where necessary, rather than to wait till the month-end. Consequently, it helps accelerate month-end activities by reducing dependency on scheduled and periodic batch jobs and tedious reconciliation efforts.
SAP BPC for SAP S/4 HANA Finance for real-time integrated business planning
This is a new planning functionality in which you can upload planning data using Microsoft Excel, which in turn loads real-time data back to SAP ERP for reporting. It also contains templates for cost centre, internal order, project, profit centre, cost of sales, and P&L planning.
New Asset Accounting in SAP Simple Finance
New Asset Accounting in SAP S/4HANA Finance replaces the classic FI-AA functionality. It simplifies posting logic which in-turn allows seamless integration with the Universal Journal. Due to the real-time postings, there is no need to wait for the month-end depreciation run.
SAP Cash Management
S/4HANA Finance allows an optional replacement for SAP Cash and Liquidity Management. This also adds bank account management, short-term cash position and forecast reports. furthermore, it enables real-time liquidity planning which allows for working capital optimisation.
Noteworthy, SAP Cash Management provides on-the-fly reporting capabilities for cash position and liquidity forecasts.
SAP Smart reporting with Fiori
We already know, Fiori enables the best user experience and friendlier usage of the finance application. To clarify, these are optional replacements for many of SAP’s traditional drill-down reports. While the code framework used by the old reports can’t be accelerated much with SAP HANA. SAP Smart Financials reporting uses the SAP Smart Business mobile UI with online KPIs and essential financial information.
This not only saves time but also enhances the performance of the finance application.
Data Ageing
This technical change replaces SAP data archiving. The new method builds data-ageing objects, creates partitions, and executes data-ageing runs. Thus, it reduces the SAP HANA memory footprint. Noteworthy, while only operational relevant data (hot data) is loaded in the main memory, historical data (cold data) is stored on disk.
New General Ledger in SAP Simple Finance
Now the classic G/L functionality is completely replaced by the new G/L. The classic G/L is only supported before the introduction of SAP S/4HANA Finance.
SAP Credit Management
SAP Credit Management is now completely covered under collaborative finance operations and receivables management.
System Architecture with SAP S/4 HANA Finance
SAP S/4HANA Finance’s Universal Journal architecture is comprised of a single source of truth for all accounting components. Hence, it makes reconciliation a topic of the past.
The new architecture consists of the following elements:
Universal Journal – One Single Source of Truth
Universal Journal provides us One single source for data in FI in the form of line-item table ACDOCA with full details for all components.
The following are some of the Universal Journal features:
- It provides a link on line-item level ( 1:1) between FI and CO
- It also creates a link from CO line items to a dimension table in CO-PA
- Further, it Enhances account-based CO-PA (detailed postings for the cost of goods sold)
- It provides a logical document (SAP HANA View) for analyzing the converged data
- Above all, Universal Journal does entry as the reporting database with:
- A Universal Journal entry (table ACDOCA) is used for all accounting-relevant data. However, all previously used tables are still supported via compatibility views.
- All fields are persisted in the Universal Journal entry, such as asset data, CO-PA attributes, and so on. Also, they can be reported from this single table.
Accounts and Cost elements – Merged
Secondary cost elements are created and depicted as G/L accounts with the following activities:
- G/L accounts and cost elements are merged.
- Secondary cost elements and cost element attributes are merged with G/L accounts.
- Surely, you need to maintain the Primary and secondary cost elements at the company code level.
Simplification of reporting in SAP Simple Finance
Now reporting is based on a single source of truth (e.g., replacement of SAP Business Objects BI reporting). Certainly, it allows fast multidimensional reporting on the Universal Journal. This is possible without replicating data to a separate system.
This simplification process does the following:
- It allows cross-area reporting within FI on all possible dimensions for all reporting objects (cost centres, orders, projects, etc.).
- It also Drilldown to all dimensions—for example, from the balance sheet and P&L to a single line item.
- Furthermore, the reporting allows profitability attributes for every P&L line item in real-time.
Reduction of the memory footprint
S4 HANA has reduced the memory footprint by eliminating redundancy.
Capable Finance Structure
Technical preparations have enhanced important structural capabilities of the financial solution (e.g., multi-GAAP, additional currencies, etc.).
CDS Views in SAP Simple Finance
When you activate the SAP S/4HANA Finance, the system replaces following aggregate tables of classic FI-AA with SAP HANA views:
- General Ledger Accounting’s totals tables and secondary index tables, such as tables GLT0, BSIS, and BSAS, and tables FAGLFLEXT, FAGLBSIS, and FAGLBSAS, respectively
- The totals tables and application tables of Accounts Receivable (AR) and Accounts Payable (AP), such as tables KNC1, KNC3, LFC1, LFC3, BSID, BSIK, BSAD, and BSAK
- The totals tables of CO, such as table COSP and COSS
Deployment Options in S/4HANA
Implementation of SAP S/4HANA Finance is undoubtedly a significant strategic decision both for IT and the business. You may use several deployment scenarios based on the situation and the requirements of the organization.
Greenfield implementation
This scenario features a fresh implementation of business processes on the SAP S/4HANA platform. Maybe because it is a new implementation. Otherwise, the reason could be that migrating the existing implementation to SAP S/4HANA provides little benefit.
For any greenfield SAP implementation, brand-new customers might take the view since they’re already implementing SAP. Hence, they should go and get complete new SAP S/4HANA. However, you need to carefully analyse the organization’s specific financial requirements also. This is to determine the components of SAP S/4HANA Finance that require activation. This includes assessing nonfunctional requirements too.
Likewise, you need to expect pre-migration validation checks and data fixes that require patience and persistence.
SAP HANA database migration
In this scenario, an organization is already on SAP ERP 6.0 EHP 7 or above (on a traditional RDBMS). Organizations on mature SAP ERP 6.0 implementations can analyze the impact of what a real-time analytical environment may bring them. Also, to know how they can monetize the value of real-time information which are fast available. Consequently, they can create good value for their organizations.
Technically, this commits the organization to SAP’s proprietary in-memory platform. Organizations need to spend time assessing the business case. This includes the risk of adopting the SAP HANA platform versus running the SAP Business Suite on other platforms, particularly in industries that use many other connected applications.
Related: SAP HANA Migration Guide
Replicate to Central Finance
This scenario replicates all systems, both SAP and non-SAP, into a Central Finance instance before deploying SAP S/4HANA Finance into the company’s environment.
There are organizations which are either not yet ready to upgrade their legacy systems or such an upgrade will be complex and time-consuming. Those organizations should go for the Central Finance deployment option. In this way, they can get benefit from SAP S/4HANA Finance without touching the existing system landscape. In short, by using Central Journal facilities, they can connect legacy SAP and non-SAP systems to an environment based on SAP S/4HANA Finance.
Conclusion
Features and benefits of S/4HANA Finance are enormous. As you dig into the subject you would find amazing facts that why this subject is the most popular module in SAP. For this very reason , it is in high demand. So, if you have an interest in this field of career, step ahead soon and explore more on it.
