How Practitioners leverage SAP S/4 Hana to enable the Finance of the future

This article explains how SAP S/4 Hana empowers the financial work and helps enable the Finance of the Future. The document provides numerous use cases and examples. Companies that consider transformation of their finance functions gain helpful insights.

SAP S/4 Hana addresses many/ most needs of the CFO

ERP systems have enabled companies to manage their business for decades. ERP systems vendors incorporate latest technologies & concepts to expand scope, functionalities and service offerings to their clients.

The SAP S/4Hana offers a suite of integrated solutions that specifically support the needs of the key business functions of a typical organization. This article focus on how SAP S/4 empowers the Finance function.

SAP S/4Hana Finance supports organizations in all financial areas:

SAP S/4Hana supports companies in their efforts of building Finance of the Future

The intent is to handle/ automate much of the traditional finance operations through the ERP system and its extended functionalities enabled by RPA, AI, Advanced Analytics, BI & Visualizations, dashboards, chatbots, Machine learning, Cloud, APIs and other advanced technologies. System & technologies take over repetitive, rule based and transactional work. They will also increasingly take on more "intelligent" work and support humans with insights & decision making. Humans shift their focus increasingly on the most value adding tasks (analytics, insights, decision supports).

Please read this guidance article the explains Finance of the Future in detail

SAP S/4Hana offers many valuable services & features related to the Finance Function.

Here some examples:

Assisted User Interface: Proactive business contextual assistance. Business situation support and alerts. Speech controlled assistance.

Intelligent Finance applications: Redesigned, simplified & automated processes. Embedded anytime Analytics with prediction. Cross-company integration

Advanced Technologies: RPA, AI/ Machine Learning, Predictive Analytics

One Single Financial Truth: 1) Universal Journal: Single journal entry with no redundancy. Actual plan, simulation data. Reconciled and consistent by design. 2) Integrated data platform: Transactional and analytical data. Real-time speed. Unlimited drill down.

SAP S/4Hana supports all main key financial processes

There are several key processes in Finance including Financial Planning & Analysis (FP&A), Record-to-report (R2R), Order-to-Cash (O2C). These processes are very large and involve much work.

Both FP&A and R2R processes run through the same 4 stages: Plan & Prepare, Accounting, Close, Report & Steer. The FP&A process covers 1) Plan & predict 2) Management Accounting 3) Margin Analysis and 4) Simulate & Optimize.?The R2R process covers 1) Record 2) Financial accounting 3) Financial Close and 4) Financial Reporting.

Read more insights on Financial Transformation

Use cases and examples of how SAP S/4 Hana key processes

SAP Accruals Management: Group and accrue purchase orders through automation and prediction. It improves cash flow planning by faster and more accurate calculating the accruals and deferrals. It reduces 1) days to close annual books 2) PO error rate and 3) finance costs. Machine learning (ML) reviews and proposes amounts that are not reliable based on similar decisions made in the past. ML recommends unreliable items for human investigation & decision.

Goods Receive & Invoice Receipt (GR/ IR) conciliation: The system empowered by ML will process GR/ IR postings to a purchase order. Apply standard clearing rules. Analyze uncleared postings. Clear postings within predefined thresholds. Recommend next steps for FI postings on purchase order item. Result: It reduces write-offs for better cost and inventory valuation and better Profit & Loss result. It increases efficiency, accuracy of financial statements, speeds up decision process and accelerates end period closing. It avoids potential fraud and errors of suppliers.

Time-Dependent Tax Codes: One tax code for all tax rage changes helps fast adoption of new legal requirements and enhances audit work.

Advanced Financial Closing: Process automation handles regular accounting and closing tasks. The SAP/4Hana cloud brings together data from different sources (SAP/ non-SAP). iRPA, SAP's Robotic Process Automation functionality automates and streamlines the closing process (Financial Accounting, Entity Close, Group Close, Financial Reporting).The human only monitors the progress, handles exceptions & errors. The human work can focus on more value adding analysis.

Traditionally closing process has been cumbersome. It requires consolidating data from varous sources together through CSV files, ETL tools and data warehousing efforts. Now, all information can be brought into one Universal Journal of SAP/4Hana to handle Accounting/Local close and Consolidation/ Group close.

Now, closing evolves from Fast Close (Universal Journal – One platform for the entire process), to Continuous Close to, Predictive Close.

Integrated FP&A: SAP Analytics Cloud Planning and Group Reporting

The Universal Journal feeds the data for Accounting/ local close and Consolidation/ Group close. Financial planning enables then numerous plans across business functions: Operations, Marketing, Sales, Workforce, and Supply Chain Plan. The Collaborative Enterprise Planning (SAP Analytics Cloud) offers 1) flexible/ consistent modeling of planning & simulation processes across the organization 2) end-uuser-driven processes, enabling closed-loop performance management 3) Aumentation of financial analysis with AI to create a more accurate forecast 4) Re-usablility of allocation logic for actuals and plans.

SAP S/4 Hana Group reportings achieves that 1) local/ group close share same master & transactional data with no data duplication. Tasks such as intercompany matching and currency translation can be run before period-end (supporting continuous close). 2) End to end transparency with full audit trail from Group reporting through to the underlying accounting journals.

Advanced Intercompany Reconciliation: Automated document matching. Reconciliation and adjustment positions. Data Validation. Integration into Advanced Financial closing.

Risk, Compliance and Security solutions to safeguard the Intelligent Enterprise

SAP Hana enables and transforms governance, risk, compliance and security of organizations. 1) It provides cybersecurity and data protection: a) It manages digital rights to protect applications and data. b) It enhances application level threat monitoring and analysis. 2) It provides Identity and access governance: a) manage users and identifies across landscapes. b) Improves user experience with single sign-on. 3) Empowers global trade: a) Screens related parties and manages trade compliance b) leverages free trade agreements and optimizes duty rates.

iRPA an interesting alternative to other RPA vendor tools

For numerous years automation practitioners have leveraged various third party RPA vendor tools to enhance the functionalities of ERP systems and to automate manual work of users working with ERP systems. Recently, SAP has (finally) stepped up to address such RPA work with their own tool. While SAP has come late to the game, SAP brings a number of interesting advantages: 1) traditional RPA + intelligent capabilities enhanced from ML 2) native APIs that are robust and stable 3) Natural interaction through conversational AI

Example of how iRPA brings value in the closing process

Traditional human way: During the close the accountant manually enters data from an Excel file into the SAP system.?iRPA: The iRPA bot scans Excel files with data positings stored shared drives and logs inot SAP and creates journal entries. iRPA flags any items with errors (e.g. depreciation run with errors due to a cost center closed for primary costs). A human can review such items first and/ or trigger again iRPA to collect/ classify errors and distribute resolution tasks to relevant owners.

ERP systems and RPA

ERP and RPA go very well together. ERP systems provide great support across an organization, but never can meet all use case and special requirements of each individual company. RPA offers a quick/ cheap alternative to lengthy ERP customizations. RPA can automate ERP functionality and human user tasks working on the system.

Read articles on RPA and approaches for intelligent automation

Read this article to select the best RPA tool for your company

Conclusion

SAP S/4 Hana is much more than a traditional ERP product, it leverages latest data, technology and visionary thinking that helps transform organizations.

If you are interested in data, systems or advanced technologies for your company, you can reach out to me directly at [email protected] or WeChat (ID: alexwsteinberg2 ).

About the Author Alex Steinberg 方泽昂: Alex has directed and/ or supported digital transformation, intelligent automation & augmentation projects for top client brands for individual business functions, across front/ middle/ back office and entire organizations end-to-end.?He has been a key contributor to develop/ build a world-leading RPA & intelligent automation practice. Several of his projects/ programs have won industry awards or other client/ CEO recognitions. He is and expert and leverages the full spectrum of advanced technologies, systems and tools. Alex combines deep, hands-on project experience with industry best practices. He is in close exchange with other experts across the industries to incorporate other best practices, project learnings and innovative approaches. He has been in China for over 10 years and is very familiar with Chinese culture, history, philosophy and language.

Special credits: This article leverages graphics, content and text of SAP. Special thanks for their great products and helping companies operate in a more effective way.

Legal disclaimer: This article represents my personal opinion and does not reflect that of my current/ previous employer(s) or clients. The article intends to increase awareness, understanding and dialog about Health Care and Life Science issues. It does not present any offer or advice in a legal sense. Markets and technology change quickly and information gets out-of-date. The reader is advised to always seek individual analysis & consultation.