Moving Finance to S/4HANA - What to consider for consolidation
SAP S/4HANA Finance for Group Reporting is SAP’s new strategic product for financial consolidation and management reporting.?Available for both SAP S/4HANA and SAP S/4HANA Cloud, SAP’s new consolidation software unifies companies’ entity close and group close processes on a single system, facilitating drill down directly to the document level for fast analysis, better decision-making and accelerated financial close process.
Many organisations plan to upgrade their Finance systems to S/4HANA, but not all functions at the same time.??Many are adopting a phased approach moving to S/4HANA across the business to reduce the risks and upheaval these changes can cause. ?But by doing this, there will be issues to deal with associated with integrating the different solutions that have been implemented at branch/subsidiary and Head Quarter levels.
This is called?a Two-Tier ERP strategy. Finance is the most popular function adopted in newer S/4HANA systems, followed by logistics.?Most of the companies live today on S/4HANA chose to upgrade their finance applications as their first priority.
Organisations moving to S/4HANA that are adopting a two-tier ERP model could well be facing a landscape that includes multiple elements: SAP ECC, SAP BPC, S/4HANA Finance and S/4HANA Group Reporting.
Enterprises that use SAP BPC today will likely carry on using this consolidation system until they changeover to S/4HANA Group Reporting.
Many large companies, especially global enterprises with multiple subsidiaries or those that operate in multiple countries, regions or markets, will be considering Group Reporting to consolidate their data from these various entities. ?If the company has grown through several mergers or acquisitions, they will likely be trying to consolidate financial data that is from a multitude of different source ERP or finance systems.
Any elements of the group that have already moved to the newer S/4HANA platform, can seamlessly integrate with Group Reporting. ?However, what is more likely to be the case is that many parts of the organisation have not yet moved to S/4HANA and will still be operating with predecessors, like ECC6. ?There may also be non-SAP systems in the mix, especially if the business has grown through acquisition rather than from organic growth.
Until all parts of the business have moved from their legacy transactional systems to a single unified system on S/4HANA, the only way to allow S/4HANA Group Reporting to provide summarised information, extracted from multiple transactional data sources, is through individual interfaces with each source.
If the business needs a consolidation solution before all parts have gone S/4HANA , they will need these individual interfaces built. ?Enterprises can build these interfaces from their non-S/4HANA transactional systems whether they are ECC 6 or even non-SAP systems. ?However , building interfaces are expensive, time consuming to implement and will require new templates that need managing.?Considerable effort will be required from the Finance team during the process of applying, testing, revising and finally implementing for production.
Existing SAP BPC users should carry on consolidating their data sources with this system until that time when there is a unified S/4HANA environment to switch over to a newer S/4HANA Group Reporting system. ?Implementing Group Reporting before this time, will require the costs of developing these individual interfaces mentioned earlier, only to be discarded when the rest of the organisation does move over to S/4HANA.
It makes more sense to use SAP BPC until that time when the entire company has rolled out S/4HANA to not only easily integrate all of your data sources but also to protect your investment already made in your older solution.
Any concerns about running the system reliably for longer than originally intended can be eliminated by running the SAP BPC in a managed cloud service.?SAP Partner Managed Cloud (PMC) providers will also let users bring their own application licenses on a platform service, which allows users to protect their previous investment made on their BPC perpetual licenses already purchased.
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Third party SAP Platforms also provide an excellent way to host or manage applications for variable periods during the Two-Tier ERP roll out.?Not only will the complexity of the SAP landscape be simplified (by outsourcing either the hosting of the newer S/4HANA systems, or the older NetWeaver systems). Platforms can run any technologies, including those that are not so prevalent elsewhere (eg BW/4HANA) in the business that would suit an outsource model as they cannot easily be managed internally.? SAP Platforms provide users with reliable solutions for accessing their old and/or new SAP finance applications; along with the expertise needed, for as long as required.?
SAP Platforms support both BYO License and Software as a Service models, so will suit users that prefer to purchase perpetual licenses as well as those looking to move to a newer recurring subscription model.
Consider moving your existing SAP BPC system or taking on your newer S/4HANA Group Reporting system as a Managed Service from a SAP provider that specialises in these finance applications.? This is an ideal way to roll out a Two-tier ERP as your company moves to a S/4HANA future.? This will provide the assurance of reliability to use these applications as part of your finance consolidation needs.
It will also reduce the burden on your IT department that may be short on resources or lack skills on all the technologies involved.? SAP MSPs not only come with the technical expertise needed to ensure these systems run efficiently, but also offer the applications and experience needed to use them effectively.? Most SAP Platform providers also offer application helpdesks to help staff get the most out of their new and old applications as well as have experts on hand during your busy close periods.
Further Reading??
SAP Whitepaper: Two-Tier ERP with SAP S/4HANA Cloud and deployment possibilities
History of SAP BPC, how it fits in with SAP’s future cloud strategy and ways it could align, overlap or play a part in the journey towards an organisation’s own future financial reporting and planning needs.
Long term Planning Analysis and Financial Reporting Consolidation may consider SAP Analytics Cloud (SAC) and S/4HANA Group Reporting.?How will your SAP BPC transition plan deal with refresh/EOL challenges and not waste time/costs or sign up to any long-term commitments. BPC choices: on-prem, private / public cloud or offered as SaaS and PaaS services.