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Author's profile photo Venkata Nagendra Kumar Varaganti

Understanding SAP S/4HANA Central Finance – Part1

This blog post is a  series of 3-part information on a high level overview about Understanding SAP S/4HANA Central Finance – its objective, purpose and a flavor of its architecture. This blog post series  does not include deep dive technical information – but will give a flavor around it.

I tried to keep it simple.

Hope this blog post meets its objective.

Business Data involves transactional processing and reporting.

To optimize the operational efficiencies – Customers/Businesses have varied System Landscapes depending on the volume and size of its operations. This will also bring with it the complexities and challenges of data processing, reporting, analysis and use.

Finance becomes more complex when it is not digitally connected in real time. And is very relevant and sometime challenging for Organizations of Size, Volume and Operations.

Many Customers/Businesses are having the challenges about real time reporting with out much efforts on reconciliations and data validations. Let us see what is the need for a SAP S/4HANA Central Finance and what are the business reasons for it.

Before we discuss on SAP S/4HANA Central Finance, let us see

  1. What is the need for a Central SAP S/4HANA Instance
    1. Complexities in the existing System Landscape:
      1. Extraction and Transformations
      2. Mappings and Data harmonization
      3. Long delays, anomalies, data inconsistencies between the systems
      4. Data Reconciliation and Data Validation issues
      5. Unified data


2.  What are the few Business Reasons

1. Transparency is limited

                                   2. Productivity is effected

3. Delayed execution/output


The above illustrative images indicates the complexities involved for data reporting and extracting. Depending on the System Landscape, it would involve OLTP and OLAP – in most of the scenarios there will always be a time lag between OLAP and OLTP – resulting in delays, data consistencies and data reconciliation.

OLTP – Online Transactional Processing (the data gets generated)

OLAP – Online Analytical Processing (reporting/analysis)

3. How to get to SAP S/4HANA as the Future Landscape:

Customers may be on:

  1. SAP Landscape with different ERP versions
  2. Fragmented Customer System Landscape – having SAP and non-SAP Systems

The following illustrative diagram provide the options, this blog post will focus on Understanding  of Central Finance in SAP S/4HANA.

4. SAP S/4HANA Central Finance

  1. It is a replication-based path also called as  ‘Side-Car’ Approach
  2. It is carved out with specific capability together with its posting and master data from existing  ERP landscape – keeping ERP unchanged. (SAP non-SAP Systems)
  3. It allows for more gradual Move towards SAP S/4HANA system landscape.

Based on the above illustrative diagram, we need to remember that the term ‘Central Finance’ to be comes into two contexts:

  1. Central Finance is a deployment approach that enables the replication of posting data. As a result, it shortens the path to Innovations provided by SAP S/4HANA and SAP S/4HANA Finance
  2. From the landscape perspective, the Central Finance is a Target Instance running SAP S/4HANA or SAP S/4HANA Finance, on which selected finance, accounting, and business planning scenarios are operated.

Some of the advantages that SAP S/4HANA Central Finance Offers are:

  1. Single Source of Truth providing Highest Granularity
  2. Real time processes  with a closing on the fly
  3. Instant Insight with  Real time Analytics
  4. Intuitive user experience with Easy to use Fiori Apps
  5. Process Centralization (example: cross-organization, shared service);
  6. Transformation platform for the Digital enterprise.
  7. Existing Systems remain untouched
  8. Benefits from harmonized master data for processing, planning, consolidating and reporting
  9. A new finance architecture, HANA-optimized transactions, and unified FI/CO with the Universal Journal
  10. Fast closing – SAP S/4HANA Central Finance coupled with Financial Closing Cockpit (FCC)
  11. Process Optimizations and Productivity Improvements (UI), through, for example, SAP FIORI, SAP Lumira, and Smart Business Cockpits.
  • Requires respective SAP Products and Licenses (for example, SAP BPC, BOBJ, SAP FCC etc)

In the next blog post  – we will further see the benefits of Central Finance and will touch upon some flavor around its architecture. And also will provide pointers for SAP resources available.

Thank you for reading this blog post..

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      Author's profile photo Nicolas Berthier
      Nicolas Berthier

      Thank you, Venkata. Good intro!

      Author's profile photo Venkata Nagendra Kumar Varaganti
      Venkata Nagendra Kumar Varaganti
      Blog Post Author

      Thank you Nicolas.

      Author's profile photo SURYA SUBRAHMANYAM VEDANTAM

      Very good and simple explaination Naag

      Author's profile photo CA Paresh Bhagwat
      CA Paresh Bhagwat

      Very informative article. Thank you.

      Author's profile photo Ashish Sarkhel
      Ashish Sarkhel

      Nice Document Naag