SAP S/4 HANA – “The dos” and “The don’ts” when planning your move.
There are lots of things to be aware of when you are thinking about moving to the new SAP S/4 HANA. You should be aware that it’s not an upgrade, we are talking about a suite transformation.
One of the most important innovations in the new SAP Business Suite, is the simplified data model, which has particular impact on the financials area of your existing suite.
If you are not using SAP Process Orchestration for this task I recommend taking a look at the features available
Don’t be daunted, but be aware that there are some “to dos” before your SAP S/4H go-live
1. Universal Journal, this massive simplification completes the circle that started with the initial simple finance add-on.
The classic R/3 structure could be represented as one single link, at a header level between FI and CO. That constraint created more complexity for reconciliation purposes in the first instance and secondly for interrogation of the information. The result being the creation of summarization and index tables.
The Simple Finance add-on was merely an intermediate step, including POSNR (Position Number) and AWKEY field for reconciliation purposes between the different financial tables and analytical areas.
With the Universal Journal, the simplification has gone much further. We are now in front one of the major simplifications thanks to HANADB and its in-memory capabilities.
Major impacts of this innovation are, from my perspective, at a change management and data governance level. Because the data model is different, the approach to some of the classic problems should be different:
Secondary elements are now G/L accounts.
Accounting principles are now at a company code level.
If the fiscal year differs, you will need to use ledgers to represent parallel accountings.
2. Only customers with customer/vendor integration in place can move to SAP S/4HANA.
To ensure a successful conversion to the new SAP S/4HANA, all customers and vendors should be first converted into business partners. This is also true for the business partners that are already in use. When the customer/vendor transformation process is triggered, the system posts all required fields into the business partner.
SAP OSS Notes that will help you through the process:
Major impact on the master data governance area.
3. The account based CO-PA switch should be turned on.
Don’t be afraid, but be aware that SAP allows to have both switches on. Therefore, you will only need to activate the account to start using SAP S/4HANA.
- Costing- based: groups costs and revenues using value fields
- Account-based: it’s organised in general ledger accounts and is always reconciled with Finance.
- Combinations: Costing- Based + Account based
Custom fields (equivalent to CE1XXX old tables) are still allowed, they need to be handled in the new universal journal table ACDOCA, which will give you instant insights and easy extensibility. Derivation rules are still available.
“The don’ts”, no option to include calculated fields as per example freight insurances.
4. Material ledger is mandatory for classic material valuation.
I’m aware or at least my experience tells me that the use of material ledger is not massively extended to Europe. For the new SAP S/4HANA this will be mandatory. This feature will give you the ability to carry material prices in multiple currencies/valuations, and the actual costings to your organization.
How will this impact my organization, once we activate material ledger?
- New net customers can activate Material Ledger during migration/Go-Live.
- Existing customers without ML can activate Material Leger during migration/Go-Live as well.
- For existing customers with active ML but not using transfer prices, migration program transfers data to the new S/4HANA tables.
Do I need to change material valuation strategy approach?
This is clearly a don’t. SAP still recommends the classic approach.
Another don’t: transfer prices are not yet supported in SAP S/4HANA.
(S- price) Standard price still recommended for manufactured goods. The major innovation is that parallel updates are supported and application logs removed.
(V- price) Moving average price will be used for purchased materials and services. Application locks are still in place to ensure continuous consistency.
(PU-price) Actual costing based on Material ledger
- Balances per material and inventory account in up to 3 FI currency types: company code, Group, a third FI currency type.
- All balances are updated in the new ACDOCA table.
- Currencies defined for the leading ledger in Financial Accounting will be used.
- No separate currency customizing in Material Ledger
Material Price Analysis will work as expected. However, displayed data from aggregated data sets (MLCD) and then drilled down to the document level (MLIT, MLPP) will be now read from the universal journal (ACDOCA).
5. Revenue recognition with SAP Revenue accounting
The existing SD-RR solution cannot be used for new IFRS15 accounting standards. This new solution includes enhancement in account determination to be compliant with IFRS15/ ASVC606.
- 2225170 – S/4 HANA SD-Revenue Recognition
- 2227824 – S4/HANA Pre-check for SD-Revenue Recognition
Custom code will no longer work in S/4HANA
Revenue Accounting determines the G/L accounts to be posted for order items using an extended account determination (OKB9)
Below is a useful link to review all the pre-checks necessary for your next step to digitalization.
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