Harnessing your S/4HANA FI Winds?

“No winds is a good wind if the captain knoweth not their destination”

According to reports over 82% of net new customers use only ECC functionalities in their HANA; over 70% of customer's migrate to SAP HANA simply to remain in support compliance without leveraging the new functionalities left sitting on their tables; 85% of ECC customer planning to migrate to HANA are stuck in a ‘Cloud of indecision’ unable to define a clear strategic path to all their SAP Applications- thus landing in paralysis due to too much analysis and conflicting POV's from their various triad partners

I have managed 12 S/4HANA projects, led 5 net new S/4 HANA implementations and one that we upgraded from 1511 to 1909. In all but three the customer stakeholders were more than simply running standard ECC transactions on a modern HANA digital core engine. This is like buying a manual 7-shift Lamborghini and then never going above shift 4 because you never knew. Technically one can start on shift 4 and end on shift 4 if you don't know any better. It will burn your clutch in under three thousand miles. Conversely, you can get a 7-shift automatic transmission and leverge all the custom configurations- this is the experts option. The main problem leading to this systemic under utilization of available assets is driven by your SI's and their resources. A S/4HANA implementation undertaken by traditional ECC resources will predictably enable only traditional functionalities as they do not know, understand nor know how to activate/configure standard new digital functionalities. I'll leave it at that.

So, if you’re a S/4 HANA customer or planning to move to S/4HANA here are a few things you want to leverage as most of it comes almost out of the box.

1.      Digital Transformation Foundation: The two greatest existential threat to every enterprise out there are Digital Customer Experience and the Customer itself. Both requirements have one center of the universe – the customer. While everybody is toting that digital transformation is your greatest competition is all about the customer experience. Today customers carry more technology in their pockets than most companies have in their computer rooms. Customer are now used to ordering on Amazon, calling cabs by Uber and booking rooms on Airbnb. They expect the same experience from all their suppliers. No matter what business you are in, to every customer out there you’re simply just another supplier. Carve that onto your corporate strategy or plan to die of thirst in the financial desert as customers leave because they did not get the experience they expected. Legacy: Companies started by manufacturing what they pleased and passed it on the customers for decades. Customer loyalties lasted decades and generations. Then by the middle of 1980s competition became normal and customer loyalties were about one product long. The big change happened around 2004-5. New: Digitization Happened. Enter a small bookseller who started in 1994, who was positioned just right to gobble global enterprises, by 2008 Airbnb and by 2012 Uber and then the world changed for every – Digital shock had arrived. The digital transformation has begun and retail and malls changes for ever. Why: to exceed Customer expectations so that you don’t go bankrupt the next time while your competition does.   

2.     On Demand Financial Close: This includes your half year and annual. Legacy: Traditionally key stakeholders held their breath, often turning blue, as month-end close was a batch job. New: With S/4HANA you can eliminate all the shock and awe of monthly closing by performing real-time close as often as you please. Why: Eliminate shocks after month close and run a pseudo close prior to month end so you can rectify end-results

3.      SPOT Reporting: My first SAP project was initiated when our CEO asked the VP of Sales, Logistics and Finance for their month end sales and got three very different numbers by each region. It was then decided to implement SAP for SPOT (Single Point of Truth’ reporting. S/4 not only allows you to merge Metrics and KPI’s in a single system but also to merge global ECC systems into a single S/4 landscape. Legacy: Multiple definition of a KPI/Metric leading to multiple version of truth. New: Get to a single version of truth. Why: No matter who or where when anyone asks a question they all get the exact same answer

4.      Singularity of Data Elements: or No Multiple Copies of Critical Data: In 2009 when Hasso announced HANA in Teched he said there were around 16-32 copies of of each FI field in G/L across the ECC and BW landscapes. It was true. Legacy: Critical reports were driven from the 16th or 18th layer of critical data copies. According to Ralf Kimball each time you replicate a data field you increase the probability of data contamination by 50%. Legacy: Each copy of critical data may be subject to a small bit of personalized tuning by stakeholders and developers to meet specific needs. This was further exasperated by data-aggregations and pre-cached data for enhancing report performance. For years executives have been taking decisions on not so right data. New: In S/4 all the analytics are driven from non-aggregated, raw and original operational data. Why: Elimination of duplication and aggregations eliminates transformation and redundant copy errors. Companies go bankrupt not because of one massive mistake, but the accumulation of small decisions made from erroneous reports that ultimately lead to catastrophic failure.

5.      DW/BW and OLAP: Sometime in the mid 1980’s the concept of data warehouse created the concept of copying reporting data elements into a separate application layer. Operational data was separated from Analytical data. This created all the problems pointed out in #3. Legacy: The first error was in separating the analytical data from operational data. In order to keep busy developers did a little bit of fixing, or tuning, or filtering, or aggregations by selective data in layers – thus corrupting the integrity of the data. New: By extracting every analytical data element from raw operational data we single-handedly eliminated the probability of data corruption at the data layer. Why: From a financial point of view this not only provides a solid foundation to get extreme truth from raw operational data but also the ability to review trends, patterns and the ability to predict from atomic data at a single transaction level.

6.      Digital Smartness: One of the biggest tears in the enterprise fabric is digital disrupters like Amazon, Uber and the like. Though overused these companies represent the future of business and define UI (User Interface), UX (User Experience) and CX (Customer Experience) benchmarks. With a S/4 digital core it is now possible to seamlessly match orders, with invoices and payments and catch errors in real-time as they are being generated. Add to this ML (Machine Learning) and AI (Artificial/ Augmented Intelligence) and we get into a new order of efficiency, predictability and issue resolution as never before. Legacy: Analog companies normally found weak spots in their process’s months after the event. New: with a real-time digital core driven by ML and AI it is now possible to find deviance's and errors in real-time, often before the business process has even completed. Why: Customer expect real-time infrmatics with ‘Zero-Latency + Error’ experience. This is now only possible with real-time, mobile apps, driven by a digital core that can analyze multiple areas of potential errors, from high velocity streaming data, in order to maximize the customer experience to a point of ‘Zero-Error’ like the exact date and time of delivery to a specified address often with a 2 day commitment while they are still deciding whether to order the product or service or not.

7.      Zero Financial Decision Downtime: Companies today require on-demand full view of global financials. Global excellence requires companies to provide real-time informatics of financial health, move to the new G/L, implement SOX compliance that CFO’s need to sign, new compliance reporting by industry or company type, etc. Legacy: In the analog environment implementing each of these initiatives was normally multi-year, multi-million-dollar projects for many large companies. This caused a lot of disruption with little guarantee of meeting business expectations at the end of the delivery tunnels. New compliance and regulatory requirements needed months or years of investments. New: With a digital platform these new changes can be a simple software upgrade or a patch upgrade that deploys new functionalities seamlessly and without any business disruption; Why: New regulations are becoming more frequent and stringent and deploying them efficiently is not only necessary but getting it right the first time becoming still more critical. Replacements and migrations are today quite effortless from the old world to the new.

8.      Centralized Financial Consolidations: For global companies’ Financial consolidations have always been a challenge due to the different ways each nation defines, measures, reports and maps their financial transactions. A globally reliable consolidated report that was true often took years to design and deliver and quite often by then 10 new rules had been mandated in 6 countries. Legacy: After a multi-year project each change required complex fine-tuning at the country of change and how the data integrated into a consolidated truth. These projects have mostly been a continues effort of accommodating global changes and enterprise requirements. New: In the new digital core each new change is tagged at the core database level and it then automatically rolls out to its respective regions without disrupting the overall consolidated truth. Now with a little effort and software upgrades or patches these changes can be accommodated at the country level in a single global S/4 landscape. Why: Getting real-time global financial exposure is critical for every enterprise. In a lot of cases this is now becoming mandatory and part of financial compliance. For example, with S/4 executives can get a real-time compliance breaches as they happen and executives do not have to wait to the end of the month or quarter to resolve unauthorized transactions or financial discrepancies. In 2010 I introduced the FEDW architecture that is now used by over fifteen very large enterprises for consolidated BI reporting.

9.      Centralized System Consolidations: Very similar to Financial consolidations is systems consolidations. It was not uncommon for global companies to run as many as 14 ECC environments and 12 BW production instances across the planet. We helped one company merge 5 global ECC systems into 2 S/4 HANA, 8 BW instances into 2 BW and 9 BOBJ instances into 2 BOBJ. The number 2 is critical for in each case there was an HQ instance that contained critical ‘Black-Out’ data that could not be compromised under any circumstances. So this resulted in a very secure corporate server with all the sensitive data and another for all the global subsidiaries. Legacy: Multiple ECC systems need multiple teams, result in multiple process flows, which result in multiple definitions of KPI's and metrics and so on a so forth. Multiple BW’s are worse as their multiplicity in definitions of critical KPI’s sometimes cannot be consolidated for global HQ reports. New: With the new digital core each new change is tagged at the core database level and it then automatically rolls out to its respective regions without disrupting the overall consolidated truth. Now with very little effort and software patches these changes can be accommodated at the country level in a single global S/4 landscape.

10.  Plan to Succeed: If you don’t plan the details for success then you may be inevitably planning for failure. Success is getting more and more elusive to companies and executives that do not listen to radio VOC (Voice of the Customer). The larger the companies the bigger mistakes they continue to make because they think they can afford the luxury of failing. But, remember no company can. Big and small companies that are not exceeding their customer expectations are falling like flies. Legacy: Is now history. Executives must choose if they want to be part of history or become the disrupter. New: Is all about the customer experience. Why: Try not to ever find out what happens if there are no more customers.

Now that we have covered what you are leaving on your desktop, i.e. what you get literally out of the box with S/4 Finance. Lets take a brief view of truly transformational finance:

A. Real-Time FI: Internal: [1] P&L & Financial Close: executives are used to Financial close & P&L by month, quarter, half yearly or annual. Transformational is on-demand true P&L and close so you can plan accordingly. I know of a European company that lost $4.2 billion because they missed their annual numbers by a measly 42 million. Something they could have covered with a few sales calls. This actually resulted in their acquiring one of their US investments where they held majority shares. The point is how this would have impacted them if they could know this 2 weeks or even 1 week before their annual close. This is now doable. External: Customer are now used to real-time final prices, applicable Discounts, Statement of accounts, etc. this has been possible for many years but now can be enabled on a very fast micro-second response on mobile devices.

B. Real-Time Security: It is now possible to conduct real-time AI and ML driven financial status checks on first-time customers- something that used to take days if not weeks at your finance departments. There is no need to create sales customers and then have finance approve their financial reliability. All this can now be done in real-time with more accuracy than our FI approvers could traditionally approve. Time to approve can now go down to 'Zero' with the right toolsets.

Digital Transformation (executive brief) : Finance is the backbone for all Business Units in any enterprise, be they a manufacturing or a services company. There are a bunch of digital transformation opportunities in each business area and a larger opportunity in areas that no one has yet thought of. At a executive decision level there are the [A] 'Human Centrist' transformations and the [B] 'Smart Centrist' initiatives.

On the 'Human Centrist' side there is employees and then customers. I'll focus on external and just 'customers' in this article. Opportunities are abound in [1] Hyper-automation- where the goal is to make the customer experience super easy and logically intuitive via leveraging ML and AI. This can include discovering the true need of the customer, helping with their final design considerations, Shifting their scope with better alternatives that deliver higher quality at lower price for example, and using RPA's (robotic process automation) effectively. [2] Multi-selection: There can be a hundred ways you can order your Tesla or Harley Davidson and a million ways you can order you Pizza. Individual selection options enhance the 'Personalized-experience' which creates a more sticky experience for the customer. [3] Self Learning: When your AI finds that abnormally high fatalities are happening with a particular airbag it will self learn and raise red-flags about that products across partners. When AI finds common breakdown points in products it can assist with auto redesign of components in real-time and generate consistently improved designs that evolve with each fault-line. Over time products and designs will become better to a point of 'zero unplanned breakdown' capabilities. [4] Human Adaptive Augmentation: Divers no longer have to go 2 miles underwater to see what is on the ocean floor or what the temperatures of the vent flows are. Augmented robots can do that more safely. Finding water or analyzing soil samples on Mars no longer needs a human because out augmented robotics can accomplish most of these tasks. We helped a famous O&G company that was required to monitor their deep-sea capped oil-wells 24x7 and helped replace 18 very focused humans working three shifts with a single ML/AI solution that worked 48% better than their human counterparts. Think replacing humans with adaptive robots in situations where injuries or fatalities are dis-proportionally high. These developments can go further and augment hearing, sight, senses, limbs or accident victims. Taking this still further it can lead to brain and genetic augmentations. [5] Extreme Transparency: Not totally there yet but we have all the tools for extreme transparency. Customers can view their product state and location as easily today as they can track their Uber, the color and make of the car and even talk to the driver in real-time. For democracy states and nations there an open opportunity to opt for total transparency in government spending something that citizens are least aware about. So the federal government announces that they are allocating $25 billion for a 'XYZ' disaster should 'we the people' be enabled with transparency as to where every cent of that funds went. For enterprises there is security breaches, ethics, accountability of customer data and assets.

On the 'Smart Centrist' side there is Sensors, Programs, algorithms, ML- Machine Learning and AI- Artificial Intelligence. I'll touch some of the low hanging fruits and current capabilities. [1] Edge computing: traditionally we have been collecting petabytes of data from various peripheral sensors and devices into a data lake and then using that for BI analytics or informatics. The new solution, for volatility and volume of peripheral data is to pre-compute it at the edge itself. An example is a 4 engine plane flying from SFO to NY generating 4 TB of data per hour/engine. This is 16TB of data per hour. 99.99% of this data simply states 'No-Problem'. 0.001% of this data is what we need to analyze and review. So instead of collecting 64TB of data per flight we simply receive the 64kb of data that is relevant. Edge solutions is the only way forward as we can no longer even conceptualize collecting raw data as its value is close to zero. [2] Cloudy Future: Tesla today has cars all across the planet with real-time monitoring and fixes. Doing this from a single 'On-Premise' data-center in Fremont CA can never be the solution. This is where clouds like AWS, Azure and Google come into play. It is projected that by 2030 100% (I say 80%) of all SAP customers will be in the cloud. finance needs to redefine is Cloud is a CAPEX or OPEX as there are taxation liabilities depending on how we define this service. [3] Automated robotics: Since 2005 I have been guiding companies on automation on a very simple rule. "If any process is rule based then it can be automated. If any process is not rule based we should look into quantifying it so rules can be applied". Autonomous can be represented by drones, robotic surgeons, self driving cars / truck / or ships. They can be robotic pickers and placers in a warehouse ( I worked in one in Norway way back in 1998 where humans stepped in once a year for maintenance only). Hub based communications which are currently IoT enabled (where Tesla or Honda only talks to Tesla or Honda servers) will be replaced by IoE communications when every vehicle on the road will communicate with every other vehicle on the road and take microsecond decisions. [4] Blockchain: this N:N immutable distributed ledger communications of blockchain provide exceptional security and transparency at the same time. In banking it can provide highly secured instantaneous monetary transfers between two individuals across nations without a bank taking a cut as a mediator. this will become the new paperless, digital ledger based secure tracking system for cities, logistics and banks in the very near future. [5] AI Security: "Hi John. Sharing some of the photographs we took from our recent trip to Costa Rica. Mom". this may look harmless but open this mail and you have let a scammer into your system with a phishing spider and the start of a very complex, unwanted and illegal hack. By leveraging ML, AI and customer alerts networks will become hyper alert to phishing based on repetitive pattern. right now most providers are on a defensive mode, however some new players are coming soon that will be on an offensive mode where they will go back to the hackers systems and burn their drives. So phishers beware for not only will you be caught but your location, Photo and ID will be instantaneously blacklisted and put on a wanted list.

This is just the tip of the digital iceberg so stay safe and don't open doors your doors to unknown persons or events.

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TAKEAWAY:

1.   The only limitation to strategic Digital success is your imagination.

2. 70% of your BI, IoT, Digitization and Big Data projects will not meet business expectations. So...

3. Remember that if you dont plan for Business Success then you are actually planning for failure (probability you are doing tht right now = 0.7)

4. Digital Transformation is not a technical installation nor an IT upgrade. Neither is it installing a new S/4HANA or migrating to one.

5. Your biggest Digital Distupter is your customer. Keep you eyes and design strategy focused on them and rethink digital-transformation from a Customer UI and UX POV.

6. Step one for your -Road-to-Digital success' conduct a short Design Strategy workshop. Participants 80% Business / 20% IT.

                                              .....--ooOoo--.....

 ABOUT HARI GULERIA :: VP SAP HANA Business Success :: PrideVel

Working as a client partner in internal and external Business excellence initiatives.

Hari has been assisting customers meet BI, IoT and digitization business expectations before they became IoT and Digitization. In our new digitized world of information and decisions Hari is a globally renowned thought leader in the SAP HANA world, an author and a voracious publisher of blogs and white papers. He is best known for permanently living in the future, readers say his book is more relevant today than when it was written seven years ago. His designs are consistently business value focused and future compliant. The one word that customers and team-members use to describe his is 'Trust', the second is 'transformative'

Hari is the author of ‘BI Valuenomics- The story of meeting business expectations in BI’ a book far more relevant today than it was in 2010 when it was published. He is currently working on another book called ‘Digital Shock’ as an eye opener to the digital future and its impact on every single human on the planet.

Prior to this Hari worked at three leading IT services companies, first as the Director for SAP HANA Solutions at HP Enterprise Services for the Americas where 50% of his work was internal SAP Business excellence and the balance getting it right with external customers. Before that at HCL Axon as the Director for HANA Analytics for North America, and prior to that with SAP America in their Value Realization/Engineering group. In all assignments Hari provided business focused design solutions for IT projects as the right-hand adviser to the IT project owners like the CFO’s and the CIO’s. Hari worked closely with the ‘C’ suite, Program directors, Project Team leaders, External Partners and customer business leads with clear dual focuses. The first being business benefits and the second was optimized TCO deliverables, i.e. “Highest Quality at Lowest Cost”. Hari may be contacted at [email protected]