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Author's profile photo Bert Schulze

#S4HANA 1709 use case series: 2b – Finance (tech view)

Welcome back to our well-known use case series. It is designed to offer a closer look at business value acceleration – driven by the design principles of SAP S/4HANA. The technology-induced implications of the digital economy are huge, though the technology itself is only a catalyst to achieve a fundamentally different business outcome.

The selected use cases, related to SAP S/4HANA Release 1709 are designed to emphasize and visualize the value behind this technological shift, that can be activated by you.

After taking a look at the business aspects in finance with the SAP S/4HANA 1709 release in the last blog, we will dive into the technical aspects of finance in the 1709 release.

SAP S/4HANA 1709 financial planning and analysis

In financial planning and analysis we see a lot of innovations further harvesting the benefits from the Universal Journal of SAP S/4HANA 1709 with HANA 2.0.

  • New SAP Fiori apps: reporting on realigned profitability characteristics, project profitability reporting, event based revenue recognition reporting, plan cost allocation and many more.
  • Profitability analysis in the Universal Journal: Enhanced functionality enables to split costs of goods sold during more processes such as third party or other processes with account assignment to internal orders or projects.
  • Planning content: new workbook to plan costs of goods manufactured.
  • Material ledger: new value flow monitor, valuated quantity structure.
  • SAP Financial Statement Insights: integration of further finance data sources, notification based on alerts and thresholds.

In the following, I would like to consider two very interesting additional innovations of SAP S/4HANA 1709 financial planning and analytics: the semantic tagging and flexible hierarchies.

Semantic tagging

Up to now a challenge is that you need to do double, sometimes triple maintenance of account groups and Financial Statement Versions (FSV) for reporting. This could lead to data inconsistencies regarding G/L account adding and deletion. And there is a lack of multi-dimensional drill down reports for different areas. Key users did not have enough tools to enable finance users to lead the change process.

The solution to meet these challenges is the new semantic tag based reporting framework with the key user tool “Custom Analytical Query”. You can tag master data to classify objects and derive hierarchies as well as operating business units from profit centers. Master data can be linked to assist the derivation of CO-PA characteristics.

After assigning a semantic tag to the financial statement version, the semantic tag can be re-used in reports and to build your KPI’s.

As you can see in the figures a number of financial reports is leveraging this new technology. For example the new cash flow statement report (indirect method) can support multi dimension drill down, e.g. to G/L account, cost center, profit center, fixed asset transaction type, etc. Drill down dimension can be displayed in flat list or in a hierarchical way (e.g. G/L account shown in FSV). In addition, as the report is also based on semantic tag infrastructure, the user can change the report figures by changing FSV or semantic tag assignment to FSV. The report format and formula can also be changed with key user tools – custom analytical query. Here is a drill down example to a G/L Account in FSV style.

Flexible hierarchies

Hierarchies are used to group profit centers or cost centers on multiple levels. Maintaining hierarchies can be a time consuming and complex task. For example, a customer has ~12.000 profit centers with ~7.000 structuring nodes. All org. units need to be included and ongoing organizational changes make it hard to maintain this hierarchy. Customers use workarounds, such as spreadsheets to list all nodes and profit center tags with strong naming conventions to cross-check correctness.

With SAP S/4HANA 1709, flexible hierarchies help you to overcome these challenges. They are based on master data attributes and tags. It supports tag mass changes, e. g. selecting a list of profit centers based on existing tags and then change a tag, e. g. line of business or segment. Based on the assigned tags you can easily build a new hierarchy. So instead of assigning single profit center to a new hierarchy, you simply define the order of tags. For example, the hierarchy definition based on the order segment->line of business->country just requires this sequence definition whereas with the old hierarchy concept, you would need to define the hierarchy and then assign profit center in the correct level. This also provides a fast and efficient way to setup different hierarchies in parallel just by using a different sequence of attributes. For example: sometimes you start reporting with the segment, sometimes with the line of business depending on the business needs.

At first glance both semantic tagging as well as flexible hierarchies seem to have their biggest impact on the value levers agility and flexibility. But if – for example – we add the fact that the values from the Universal Journal are aggregated in real-time along the flexible hierarchies and the hierarchies are maintained just by setting a sequence of characteristics this meets effectiveness criteria as well, as this can be maintained by the key users in the LoB Finance instead of an army of people in central IT team.

I hope you liked today´s insights, watch out for the next use case soon.

All blog posts of this series can be found here


For more information on SAP S/4HANA, check out the following links:

SAP S/4HANA release info:

And follow us via @SAP and #S4HANA or myself via @BeSchulze 

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      Author's profile photo Gaurav Agarwal
      Gaurav Agarwal

      Hello Bert,


      Thanks for this information and using this app the flexible hierarchy can be generated.


      I have a question that in which reports such generated flexible hierarchies can be used. I could not find any standard report having this as a filter.




      Author's profile photo Manfred Crumbach
      Manfred Crumbach

      Hi Gaurav,

      these hierarchies are available in multi-dimensional Reports (grid reports) on the respective attribute. E.g. once you created a ProfitCenter Hierarchy, you can select the hierarchy in the multi-dimensional report from the context menu on ProfitCenter via "hierarchy->Select hierarchy".

      Hope this helps,

      Author's profile photo Gaurav Agarwal
      Gaurav Agarwal


      Author's profile photo Jitin Khanna
      Jitin Khanna

      Hi Bret,

      Can we create Company Code flexible hierarchy using this app.

      Our client has given us a requirement to provide company code hierarchy for all multidimensional reports grid reports.

      Any suggestions/recommendation will be helpful.

      We have already enabled Cost Center and Profit Center hierarchies using flexible hierarchy app for these reports.

      Appreciate your quick response.




      Author's profile photo Alexander Schneider
      Alexander Schneider

      Hi all,

      I do not exactly understand what the added value of the semantic tags is.

      Maybe someone can clearify it in another words.


      We have e.g. an usecase where we need to create a hierarchy e.g. like this :


      Node A

      --> Subnode A.1

      ------->WBS Element 123

      ------->Order 123


      We want to create two custom nodes on different levels and one more node to combine WBS Elements and orders on the same level.

      Is this usecase possible with semantic tags?

      However, I cant recorgnize that this is another solution to create flexible hierarchies. Maybe I might be worng...


      Thx in advance,