Key Highlights
- Companies choose to implement Central Finance as part of their phased approach to implementing the full S4/HANA application. Central Finance provides the architecture foundation to transition to S4 with minimal disruption.
- Choosing to deploy Central Finance first is typically a sign to the complex and multiple SAP and non-SAP systems used by the company. Central Finance replicates (& harmonize) all the transactional and master data to create a centralized & a single source of truth system; this helps streamlining the full suite S4 implementation in future phases.
- Implementing Central Finance usually disrupt the organization’s Enterprise Architecture pillars, including business processes, transactional & master data, underlying infrastructure, supporting information systems and the design of organization’s security and controls.
SAP Central Finance - Introduction
Before we go in details discussing how SAP Central Finance changes your Business and IT control environments, let us discuss first what is Central Finance and how this SAP product helps the phased approach to adopt the SAP S4/HANA.
There are different transition ways to S/4HANA (e.g. Greenfield, Conversion to S4 or Tech-phased approach). Implementing Central Finance is one of the deployment approaches, tech-phased approach, to help companies simplify their finance and reporting process by managing their multiple SAP and Non-SAP systems in one location.
If done right, Central Finance can help greatly in laying a strong foundation of deploying S4 with a positive momentum. Central Finance works on absorbing all the financial transactions from different SAP & non-SAP systems into one centralized system. This helps companies to slowly but surely retire different systems in the future while adopting a centralized intelligent Finance function (e.g. streamlining/automating the reporting process or developing insightful reports at the transactional level across the organization).
That said, Central Finance implementation would usually, actually in almost all the cases, would include implementing one or more of these other supplemental solutions, for example, deploying SAP Landscape Transformation (SLT), installing Application Interface Management Framework (AIF) add-on, upgrading SAP GRC 10.1 to 12.0, implementing Fiori application, integrating SAP Master Data Governance (MDG) solution and introducing SAP’s new consolidation functionality Group Reporting. Additionally, Central Finance will typically be the company’s first journey in deploying an SAP product via the SAP Agile Activate methodology.
SAP Central Finance – Impact on the IT and Business Environment
I like to think that there are 5 main areas impacted by Central Finance: Business Process Design, Data Governance & Data Flow, Security & Application Configuration, Supporting Information Systems & Infrastructure, and Agile deployment & Program Management.
The below are the key changes and control objectives needs to be addressed by management as part of the Central Finance implementation project. These are the top illustrative points and their importance varies per the scope of Central Finance implementation.
Please remember that I would recommend considering each point below to note its relevance first, but most importantly, I strongly recommend evaluating each area overall using the area of impact details as a general guidance.
Bringing it all together,
Central Finance is only a first step in a 3-5 years plan transformation journey for SAP customers. Planning and executing the implementation in the right way are key to the organization’s success. Building out an effective and efficient on-going risk mitigation strategy for the new changes introduced by Central Finance will guarantee achieving the organization long term goals.
In future series, we will explore more the technical aspects of these changes and we will also explore how to effectively build an ERP strategy through my other Strategy+ series.
The views, information or opinions expressed in this short article are views of my own. All information in this article is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information.
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