SAP S/4 Central Finance for Dummies <Series Part 2>
I have provided an introduction to SAP S/4 HANA in my Series Part 1 . When SAP first rolled out S/4, the focus was on finance which was termed “Simple Finance”. With 1610 and higher, SAP S/4 HANA solution includes logistics. The digital core – Enterprise Management as it is popularly referred to translate to what we use to know as SAP ECC.
Enterprise management contains the core HR and Finance in addition to logistics. By extending the core, SAP introduced new line of business.
With ERP 5, the solution was on a Classic GL or New GL but now with SAP S/4 HANA only the New GL is supported.
S/4 HANA Finance now utilizes the concept of universal journal entries where FI (Finance) + CO (Controlling) reside in one table – ACDOCA Table. The ACDOCA table permits aggregation processing and HANA views. In the finance solution, every journal entry triggers posting.
Introduction to SAP Finance
Organizational Level for FICO
- Operating concern: The highest org unit for COPA (controlling and profitability analysis)
- Controlling area: The basic org unit in management accounting. One or more controlling areas are assigned to an operating concern when organizational structures are defined. Same Controlling area can be defined for multiple company codes only if they share similar FY variant and charts of account (COA)
- Company Code: Central org unit for external accounting. The controlling area to company code relationship can be 1:1 or 1:N
- Chart of Accounts: Contains a group of GL to form an account group. Every company code is assigned a chart of account. There are 3 types: Group, Operational and Country
Reconciliation accounts link sub-ledger (SL) to ledger accounts in real time. If GL is set up as recon act then direct posting is not allowed. Reconciliation account is updated when SL posting happen
Summarization of sub-module
Finance: Accounts Payable
Popularly referred to as FI-AP (Accounts Payable) is related to Material Management (MM).
Finance: Accounts Receivable:
Link to credit and cash management
Asset Accounting- Key area is the asset explorer
- Asset classes are the most important means of structuring fixed assets. You can define an unlimited number of asset classes in the system. You use the asset classes to structure your assets according to the requirements of your enterprise. Asset classes apply in all company codes.
- You use depreciation areas to calculate different values in parallel for each fixed asset for different purposes. For example, you may require different types of values for the balance sheet than for cost accounting or tax purposes.
- Between Acquisition and retirement the system deals with the calculation of depreciation
- GL comprises of only collective postings.
- Posting data is represented in Sub-ledger (SL). Recon account link SL to GL in real time
- When a posting is made in SL the corresponding posting in reconciliation accounts in GL accounting is made.
- Only after the periodic depreciation run do asset transactions get changed in financial statements (Financial accounting), forecasted and planned depreciation however receives posting. The system post a separate line for each asset and depreciation areas, however the document group depreciation posting for multiple assets
- 70 – Debit, 75- credit. SAP provides country specific asset history sheet due to legal requirement
- Transaction type is used to control the display of the asset history sheet
GL of type cost are example of master data.
Secondary cost are used to identify internal cost flows while primary cost are used to identify external cost flows. Trial balance displays both primary and secondary cost
Cost centers based on geographic location, functions etc.
Profit Center Accounting
Embedded in the general ledger for all accounts and can be used for internal (CO) and external reporting (FI- legal).
Profit centers can be used as investment centers by calculating the fix capital.
Case for Central Finance
Historically, Finance is complex and not digital connected.
The drivers in S/4 HANA central finance adoption include:
- Lowering cost by centralizing processes and reducing source system maintenance
- Outsourcing individual processes to shared services centers, which ensures one version of the truth
- Re-engineered closing process for fast closing
- Provide financial transactions in real time without any disruptions
- Leverage centrally staged data for consolidation activities
- Advanced segment, entity and group reporting
- Business model, user front end agnostic
- Process centralization (cross-org, shared services) leading to economies of scale
- Embedded planning and real-time consolidation
- Scalable local and central process execution
- No need for reconciliation between CO and FI
3 migration options for multiple finance systems
- Upgrade and migrate all instances to SAP S/4 HANA
- Upgrade, Migrate and consolidate to reduce number of instance
- Convert one system to S/4 HANA and replicate data from various sources- central finance option
To minimize the risk of migrating to an SAP S/4 HANA solution, the central finance deployment approach has been introduced. CFIN as it is popularly called allows SAP customers to run on S/4 HANA while keeping or planning roadmap for the legacy SAP/NON-SAP system.
- ERP 6.0 (requires implementation of notes and SP upgrade)
- Older releases have to be integrated as a separate customer project, SAP provides consulting solution called “Down porting”- Open ticket FI-CF
- Other SAP solution e.g. SAP Business one and
SAP Landscape Transformation (SLT)
SLT Replication Server (on premise or enterprise cloud) facilitates the move to Central Finance
SLT contains Master Data Governance (MDG), Error Handling, and Central finance interface.
Master data is mapped using SAP MDG or other solutions. Master data mapping is performed before posting. See section on MDG
- FI/CO Posting
- CO Posting e.g. secondary cost elements such as production orders mostly for reconciliation purpose. It is stored in the universal journal
- Cost Object Mapping
You can double click from central finance to get back to the FI document in the source document
SLT is positioned for real-time data replication from an ABAP and Non-ABAP sources (only on SAP NetWeaver supported databases). Replication can be real time or scheduled. SLT can be managed with SAP Solution manager 7.1SP5 onwards. The replication can be table-based or application-based. Central finance uses the application-based replication.
- SAP CO-PA accelerator – Due to long runtimes, send ERP data to HANA. Their profitability analysis can occur and result transferred back to ERP
- SAP HANA live- SideCar. Data replicated from SAP ERP and reports are built on top of HANA
- SAP HANA live- SideCar. Data replicated from SAP source and customer activity repository is built on top
- SAP source system to Apache Hadoop
SAP SLT is part of the Data Migration Server (DMIS) – Most recent and recommended version is DMIS 2011. DMIS 2011 is not available for SAP S/4 HANA, the retrofitted part has been release for recent central finance scenario
Landscape strategy and sizing
You can replicate data from one ABAP system into different target systems (1:4 (max))
The ABAP source system for 1: N allows one set of triggers (insert, update, delete), however the NON-ABAP supports the creation of several triggers which may affect performance. So make sure the applications running on source DB are still running with maximum performance.
SAP LT can run on any SAP system with SAP NetWeaver 7.02 ABAP Stack or higher
Replication to Central Finance (FI, CO and Cost Object)
CFIN allows a common reporting structure. SLT collects postings from the local system and routes them to the central system. FICO documents uses the mass data framework (MDF) via RFC function. Initial load uses a direct RFC into a staging table (CFIN_ACC**) then to the central finance system. Due to legal restrictions, SAP cannot provide preconfigured content in order to extract the data from non-SAP systems, so this step must be done manually during the project.
- FICO – uses application- based replication and not table (BSEG/BKPF) so it read from CFIN_ACCHD
- Cost objects are read from AUFK
- CO internal objects is read from COBK and COEP
There are 2 parts to the replication
- Initial load or “LOAD” in SLT terms. The following object has to be replicated in the order below
- Initial load of cost object- AUFK
The 2 tools for simulation in central finance include:
- Smoke Test of Cost Object: Use smoke test to verify the replication of the cost object from the source system via ABAP report (RFC). It does not commit data and is limited to a maximum of 999 records
- Simulation: To simulate and replicate via SLT and Application Interface Framework (AIF) without commit. It accommodates a higher volume of data.
- Initial load of FI/CO posting. Initial load happens from central finance system (like the table structure) which should not be confused with initial load by SLT. Initial load does not use SLT but MDF. The process is trigged from the CFIN system
- Extract data for initial load: This step reads the historical FI/CO posting from source systems, and persists them in the staging table of the central finance system. After this step, all required data for the initial load of FI/CO posting is in the central finance system.
- Simulate posting: Simulate from staging table and post if it is correct
- Initial load of CO internal posting
- Smoke Test of Cost Object: Use smoke test to verify the replication of the internal posting from the source system via ABAP report (RFC). It does not commit data and is limited to a maximum of 999 records
- Simulation: To simulate and replicate via SLT and AIF without commit. It accommodates a higher volume of data.
- Real-time replication or “REPLICATION” in SLT terms
Database triggers are written into log tables in real-time
3 central finance interfaces
Migration object read data from the source system and call central finance interfaces to replicate the data. The following are interface utility program implemented as function modules for document handling:
Replication of FI/CO posting: FINS_CFIN_AC_DOC-GENERATE
Replication of CO- Internal posting: FINS_CFIN-CO-CENTRAL_POSTING
Replication of cost objects: FINS_CFIN_CO_OBJECT_ASSIGN
SAP Application Interface Framework enables monitoring and error handling of replicated data
- Source: SAP
Database: SAP/NON-SAP (full use)
Scenario: Database Replication
When creating the configuration, CFIN application must be used
- Source: SAP,
Database: NON-SAP (runtime)
Scenario: Business Integration
When creating the configuration, CFIN_PI application must be used
- Source : NON-SAP
Database: NON-SAP (full time, runtime). No Pre-redelivered contents for non-SAP ERP source
SAP is not allowed to provide any function to extract data from non-SAP system (competitors). Therefore, SAP works together with SAP partner to integrate non-SAP system to central finance.
- SLT as separate Instance (Recommended)
Systems can be integrated to SLT. SLT can be utilized for other scenarios apart from CFIN, not impacted by source or CFIN activities. However, it requires additional replication if logic is applied to source or CFIN
- SLT in source system
No connectivity issues, direct access to data. However, activities on source can impact SLT
- SLT in central finance – From S/4HANA 1610 (same issues as 2), bad performance on the CFIN system
Set up of CFIN
- Config between source and target. In SLT using transaction code LTR/LTRC
- Executing program IUUC_REPL_PREDEF_OBJECTS to copy pre-delivered SAP objects
- Start load and replication of tables and applications: AUFK, CFIN_ACCHD, COBK
- Apply SAP Notes (to enable SAP source system for central finance integration) – SN 2323494.
- Assign authorizations for SLT user in the role SAP_IUUC_REPL_REMOTE.
- Source system configuration. Transaction SM30 with VCFIN_SOURCE_SET.
- Prepare for the initial load.
- Lock all periods
- Carry out consistency check
- Business reconciliation before the initial load
- Activate the CFIN business function in the switch framework in SFW5
- Set up RFC destination for source systems
- Define a logical system for source system client and receiving system client. (name must be same in source and target –Format: <SYSTEMID><CLIENT NUMBER>
- Assign an RFC destination to the logical system of source
- Check logical system assignment for central finance client
- Configure decimal places for the currencies. Check notes 2318183, 2325587, 2217711
SAP MDG for Central Finance
- SAP Master Data Governance (MDG) provides domain-specific master data governance to centrally create, change, and distribute master data for your complete enterprise system landscape.
- It can be deployed in the central finance system or as a master hub.
- It provides consolidation standard processes for business partner (customer or vendor), material, and custom object in MDG 9.0.
- Central finance uses SAP MDG foundation function to maintain and perform business mapping
MDG deployment options
Options 1: Deployed as separate instance. Facilitated by using a dedicated ERP system as a hub for MDG (process and governance is managed here). Master data is replicated to the CFIN
Options: Deployed on same instance as CFIN instance. No replication is required. Master data is still expected to be replicated to the source systems
Central finance mapping
- Central finance provides mapping capabilities to harmonize the replicated data.
- There are 3 mapping capabilities:
- MDG mapping- For master data and customizing data
- Cost object mapping-For mapping scenarios and rules for cost objects
- Complex mapping-For enhanced mapping. Done by BADI and has enhanced flexibility since it is ABAP coding
- The CFIN system includes a tool for mass handling of mappings. Key mapping exist for master data. Supports the MDG upload mapping tool for mass upload and deletion
Types of mapping
- Value mapping exist for customizing
- SAP MDG: For long – life master data such as company code, plant, material
- Cost object mapping framework: For short-life cost object such as production order, service order etc. these objects are created in the source systems cause it would not make sense to create in central system and then wait for data to be distributed to the source system
- The cost object replication process is as follows:
- It checks whether any cost object mapping scenario is defined — this is the cost object to be replicated (i.e. mapping scenario from IO to IO).
- The cost object is passed through the mapping rule, if there is no matched mapping rule defined, the replication fails.
- If there is a matched mapping rule, it will apply the mapping rule (i.e. clear or derived from local characteristic) and apply the MDG mapping.
- The cost object and the cost object assignment (mapping of cost object from source-to-target) will be created.
- The FI/CO replication reads the cost object assignment, so as to replace the cost object in the posting document.
SAP Application Interface Framework (AIF)
The SAP Application Interface Framework is an alerting systems, which provides a framework for interface implementation, error monitoring and error handling with a focus on business users.
- It provides selection screen, based on different parameters (interface name, document number, error message number, replication date, etc.).
- Central finance uses AIF to define 3 main interfaces for cost object replication, FI/CO posting replication and CO internal posting replication
Phases of central finance projects
SAP recommends a 4 step pilot approach which includes:
Central finance continues to be developed as a deployment approach and I expect more capabilities to be introduced soon