SAP CENTRAL FINANCE- Introduction

1. Evolution of SAP:

Before understanding SAP Central Finance, we need to understand the history & evolution of SAP over the 30/40 years of period. SAP has evolved itself from R/1à R/2à R/3à ECC to S/4 Hana.

SAP S/4 Hana is the new Business Suite launched by SAP in 2015.

2. Comparison Between SAP ECC Vs. SAP S/4 HANA:

The points of significant differences have been highlighted below:

2.1 Database:

• ECC: Uses 3rd Party database (Like: Oracle, DB2, SQL) resulting into Slower Processing of Data because of older Technology.

• S/4 HANA: SAP S/4 uses HANA DB (Proprietary DB of SAP) which has emerging technologies built into it like: Parallel Processing, In-Memory Computing etc. resulting into Faster Processing of Data.

2.2 Presentation/GUI:

• ECC: Uses only Classic GUI. It is available only in Desktops/Laptops. Because of unavailability of features like: Analytics & Fact Sheets there was a lot dependency upon SAP BI. For using SAP BI, one must move data from Transactional System to Separate analytical System for Reporting.

• S/4 HANA: In addition to Classic GUI, it has come up with SAP Fiori UI. This is a new user interface through which we can generate Reports, Fact Sheets, Analytics etc. In addition to Desktops/Laptops Fiori is also available in Mobiles/Tablets also. Because of the embedded Analytics feature in Fiori, not only Transactional Apps but also the Analytical Apps helps prepare report Graphically. This has made Zero dependency on SAP BI.

2.3 Business Processes:

• ECC: Period end Business Processes like: MRP from the Logistics Point of View, or Reconciliation Between FI & CO from the Finance Point of View are very Complex. A lot of effort is needed to perform these Activities.

• S/4 HANA: S/4 Hana has not only made the Business Processes simpler but also has brought in some advance features also. Some of the advanced features available in S/4 Hana are ATP Functionality from Logistics Point of View, Flexible Work Flows from MM & SD point of view & BI Tool & Embedded Consolidation & Planning Tool from FI point of view.

2.4 Deployment Option:

• ECC: Only On-Premise deployment Option is available. In this deployment option Client must purchase their own Hardwares & Softwares.

• S/4 HANA: It has following Deployment Options:

o On-Premise: Client must Procure their own Hardwares & Softwares.

o Cloud: Both Hardwares & Softwares can be obtained on subscription Basis. Further, Cloud deployment is divided as:

§ Private Cloud: The On-Premise System Provided by SAP will be fully available to the Customer. It means, the Customer can do the Modifications / Customizations they want.

§ Public Cloud: It means Multiple Customers will share the Same SAP Server. So, no free hand is given to the Customers as regards Modifications / Customizations of the Software.

o Hybrid: If an Organization has multiple SAP Systems like: SAP S/4 Hana, SAP Ariba,

SAP Hybris then some of them may be On-Premise & Some other may be on Cloud. In such a scenario the SAP Landscape of the Organization becomes Hybrid Structure.

2.5 Because of the above Superiority of S/4 Hana (mentioned in Points 2.1 to 2.4), many of the Existing Customers are migrating to S/4 Hana.

3. Migration From ECC to SAP S/4 HANA- Different Adoption Options & Need of Central Finance Tool

SAP S/4 Hana Adoption Option has 3 adoption Options as follows:

3.1 New Implementation:

New implementation happens when:

• A Non-SAP Customer adopts S/4 Hana afresh or

• An Existing SAP Customer of Older version implements S/4 Hana fresh without migrating from the Older System.

Here, both On-Premise & Cloud Versions (both Private & Public Cloud) are available to the Customers

3.2 System Conversion:

• This happens when the Existing SAP Customer Converts their Older System to S/4 Hana.

• In this case, On-Premise & Only Private Cloud Option is available for implementation.

Note:

In both the above cases (New Implementation & System Conversion) the Ultimate Transactional & Analytical System is S/4 Hana. So, there is no use of Central Finance as a Conversion Tool.

3.3 Selective Data Transition & Need of Central Finance:

If the Customer Chooses Selective Data Transition, then there arises the need of Central Finance.

Let us Understand the Scenario with an Example:

A Customer having a Complex System Landscape having Both SAP & Non-SAP Systems for different Regions, Lines of Business, Products etc. Some of the existing systems could be R/3, ECC, Oracle etc.

In case of above scenario, if the customer wants to take Reporting & Analytics benefit of S/4 Hana but continue to do transactions in the Existing System, then CFIN comes into picture.

Prerequisite:

All source Data in the multiple Existing Systems (SAP or Non-SAP System) must be replicated into SAP S/4 Hana System through SAP Central Finance tool to perform reporting from SAP S/4 Hana.

4. SAP Central Finance Landscape:

How the Replication, Accounting, Mapping & Error Handling happens in Central Finance can be understood with following Picture.

There are some important Components such as: Source Systems, SAP SLT, SAP MDG & Error Handling Tool through which the Replication & Reporting Happens in Central Finance

4.1 Steps Involved in CFIN:

• Identify the Source Systems: These are the Transactional Systems which may be SAP & Non-SAP Systems.

• Connectivity: Each such source System will be Connected to SAP S/4 Hana System via SAP SLT Tool.

• Replication: SAP SLT is a tool Provided by SAP to replicate Financial Data from the Source System to SAP S/4 Hana System on real time basis where the Central Finance Component has been activated.

• Central Finance Accounting Interface: The Replicated Data from Source System gets stored in the Central Finance Accounting Interface.

• Business Mapping: Business Mapping has 2 steps called: Value Mapping & Object Mapping. Business Mapping is a Step where the Financial Data of different Source Systems are assigned to a Common Format in Central · Finance Tool for Reporting Purpose. Such Mapping Activity is performed by MDG Tool.

• Generation of Accounting Document: After Successful Mapping of Data, the system will try to generate Accounting Documents in SAP S/4 Hana System & SAP CFIN System.

• Error Handling: In this step system accumulates the disparity between Source & Target system called as Error Handling. There is an AIF layer (Application Interface Framework Layer) which takes care of such errors by deep diving into the cause.

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