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Make your finance processes ‘Intelligent’ with SAP S/4HANA

In order to realize the true potential of Intelligent ERP, this blog post gives you an overview of different innovation use cases available in the finance domain in SAP S/4HANA to make your finance processes ‘Intelligent’.

It doesn’t dwell into the details of license, installation, technical requirement and configuration/customization of different scenarios. However, links are provided at appropriate places to direct you to relevant information and guides.

This blog post has the following sections:

  1. Introduction
  2. Machine Learning Applications
  3. SAP Intelligent Robotics Process Automation
  4. Insights
  5. Situation Handling
  6. Governance, Risk and Compliance (GRC)
  7. Recommendations
  8. Conclusion

 

Introduction

Lately, you might have come across multiple videos, blogs, whitepapers, magazines etc. depicting the advancements in the area of artificial intelligence over the past decade.

One might be oblivious to the underlying algorithms and complexities, but the emerging technologies make our life so much more efficient by powering many products and services around us. With smart maps providing real time traffic and weather conditions, autonomous home devices and bots, web searches and online recommendations, digital voice assistants and chatbots, even unlocking the phone with facial recognition etc. these technologies are now deeply integrated in the day-to-day life.

Just imagine, how wonderful it will be to port some of these technologies and blend it into your daily work at office? Delegate some of the tasks to these technologies and focus more on productive and value add activities? And transform your organization into an intelligent enterprise by leveraging the power of these technologies and embedding them into your business processes?

Well, in this blog post we will look at how SAP S/4HANA enables you and your organization by providing answers to the above questions. The focus will be on the finance business processes by highlighting some of the use cases which leverage intelligent technologies rather than the basics or fundamentals of the technologies.

But before we proceed, I shall like to highlight the 3 key benefits of SAP S/4HANA from finance perspective:

  1. Consistent, Intuitive and Efficient User Experience delivering a positive experience with both Analytics and Transactions
  2. An Integrated Data Platform providing a single version of financial truth
  3. Fundamental Enhancements to Core Finance Processes that will make end-user’s life easier

However, to reap in the maximum benefits from the system, it is important not only to adapt your existing business functions to the enhanced features/offerings in SAP S/4HANA but also adopt the latest innovations once you have transitioned.

In order to do that let’s look at some of the innovations in SAP S/4HANA which will assist you in making your finance processes ‘Intelligent’.

 

Machine Learning Applications

Machine Learning identifies hidden patterns in knowledge intensive processes and learns from the data without being explicitly programmed.

Financial Account Reconciliation – Clear Goods Receipt and invoice Receipt Accounts

The GR/IR account reconciliation process is an exception handling process for all purchase order items with differences between goods receipts and invoice receipts.

The root cause for the difference needs to be solved usually through collaboration of accounting office, buying center, logistics department and supplier or the difference is written off.

There is high manual effort required in accumulating the information, collaborating with different parties, generating reports and investigating the root cause.

 

 

With the automated processing using machine learning the machine is trained with the collected data set and once the training is complete it can provide recommendations to the end user.

This expedites the decision-making process, reduces manual efforts required and avoids potential errors. As a result, assisting in faster financial close by reducing the number of open items.

Click here for more information.

Review of Periodic Accrual Amounts – Accruals Automation and Prediction

As part of accrual accounting, there is high manual effort involved in accumulating the required data, calculating the accrual amount and posting/reversing of the accrual documents. Due to the manual effort the entire process is also prone to high error rate.

The goal for the machine learning algorithm is to learn from the decisions taken in the past and the historical business data, apply the learned knowledge to the new business situation and make recommendations for reliable accruals or the reasonable adjusted value for each purchase order accruals.

 

 

In the process shown above, the purchase order accrual amount is proposed based on rules and accepted based on the threshold limits. Items above threshold are reviewed based on the recommendations provided by the machine learning algorithm.

The recommendations are accompanied with a confidence level giving end user the option to review all the reliable accruals or only the reliable accruals that are above a certain confidence level in one go by using the mass review function. This reduces the error rate, improves the efficiency and reduces days to close annual books.

Click here for more information.

SAP Cash Application

Despite of automatic matching of incoming bank statements with the open customer invoices based on the rules, the accounts receivable accountant spends a lot time and effort in processing the significant volume of payments manually.

For example, if payment contains no or incomplete invoice references, master data is not up-to-date, customers pay multiple invoice at once etc. In many cases, accounts receivable accountant needs to investigate such issues resulting in cumbersome manual processing.

 

 

Using machine learning, SAP Cash Application learns from accounts receivable accountant’s past actions along with historical data, capturing much richer detail of customer- and country-specific behavior, without the costs of manually defining detailed rules.

With S/4HANA, new incoming payments & open invoice information are passed to the SAP Cloud Platform-based matching engine and proposed matches are either automatically cleared or suggested for review by the account receivable accountant.

 

 

SAP Cash Application helps in reduction of DSO, increase of liquidity and improvement in customer service by faster processing of incoming payments and reduction of TCO through historical data analysis and continuous adaption.

Click here for more information.

 

SAP Intelligent Robotic Process Automation

Robotic Process Automation improves the efficiency of business processes by automating the repetitive tasks that have no added value.

SAP Intelligent Robotic Process Automation is a complete automation suite where software robots are designed to mimic humans by replacing manual clicks, interpreting text-heavy communications, or making process suggestions to end users for definable and repeatable business processes.

With SAP Intelligent Robotic Process Automation, you can automate your workflows and bring together data from disparate systems in real time.

There are multiple standard bots available in the SAP Intelligent RPA Store which can be used to simplify the finance processes by automating the mundane tasks like uploading GL entries, manage payment advice, supplier invoice status check, smart accruals collector etc.

SAP Intelligent Robotic Process Automation not only allows the business users to automate laborious task but focus on activities which add more value to the business.

Click here for more information.

 

Insights

In current times, there is a need to adapt to ever changing market conditions, identify opportunities and take concrete strategic decisions. While you might be having tons and tons of data, what is important is to derive insights from your data.

SAP RealSpend

Business users with budget responsibility perform spend analysis and require real time aggregations on cost accounts and cost objects. In addition, they need to compare their cost situation against budgets or set budgets manually on any cost object or cost account.

The process becomes a daunting task in case of huge volumes of bookings. Analyzing the data becomes cumbersome and requires a lot of time and effort.

SAP RealSpend is a web-based cloud solution which pulls the data from core financial reporting system and gives you an insight into your budget and spending information. It empowers the business users by providing augmented financial data with future expense, analyzing spending at any level of aggregation and spend performance visibility. It supports budget monitoring in every moment with real-time spend analysis and management.

With the help of a machine learning algorithm, SAP RealSpend anomaly detection feature allows you to detect and investigate any fraudulent or unusual expense bookings.

 

 

The above image is a screenshot of SAP RealSpend solution.

Click here for more information.

 

SAP Fiori Analytical Apps in Finance

SAP Fiori Analytical Apps gives you role-based real time insights of your business operations and delivering the key performance indicators (KPIs) directly in your browser. SAP Fiori Analytical Apps consume large volume of transactional data available in the system and use the analytical power of SAP HANA to provide relevant information in a simplified frontend for enterprise control.

You can use the pre-delivered KPIs and insight-to-action scenarios or define your own ones based on the KPI modeling framework. Following are the analytical apps in finance:

  1. SAP Fiori Analytical Apps for Asset Accounting in Finance (2QY)
  2. SAP Fiori Analytical Apps for Financial Accounting (2JB)
  3. SAP Fiori Analytical Apps for G/L Accounting in Finance (BGC)
  4. SAP Fiori Analytical Apps for Treasury and Risk Management (1MN)

For more information regarding analytical apps – Asset Accounting Overview (App ID F3096), Accounts Payable Overview (App ID F2917), Accounts Receivable Overview (App ID F3242), General Ledger Overview (App ID F2445) and Foreign Exchange Overview (App ID F2331)

 

 

The above image is a screenshot of SAP Fiori Overview Apps.

Refer to the blog post for more details about Overview Pages in SAP S/4HANA.

 

Situation Handling

Situation Handling is a feature of SAP S/4HANA which allows you to notify a set of end users regarding a specific issue (situation). The situation can be an approaching deadline, delays, exceeding threshold, pending tasks such as approvals and confirmations etc.

Business users receive an automatic notification and are directed to relevant tasks to take necessary preventive measures with regards to the situation. This helps the business to proactively manage issues.

In finance, situation handling can be used to notify if invoice is skipped in payment advice, errors and warnings in allocation runs, bank account revisions to be activated and GR/IR processor was changed. To better understand the features and capabilities of situation handling click here to view short videos of different use cases in finance.

 

 

The above image is a screenshot of a notification received by accounts receivable accountant about missing outstanding invoice from the payment advice which isn’t covered in the incoming payment. The accountant clicks on the notification for details and can reach out to the customer for a follow-up.

Click here for more information.

 

Governance, Risk and Compliance (GRC)

A robust Governance, Risk and Compliance strategy can safeguard your business from potential threats and minimize the risks that a company is exposed to on a daily basis. A combination of principles, processes, people and policies along with IT systems helps you in adhering to the three pillars of GRC i.e. Governance, Risk and Compliance. SAP provides intelligent finance and risk solutions under GRC that assist you to achieve your business objectives with responsibility.

SAP Business Integrity Screening 

SAP Business Integrity Screening lets you scan high volume of transactional data in real time to improve detection and prevention of anomalies to mitigate fraud risk and reduce losses. It uses behavioral analytics to identify suspicious patterns and increases productivity by using powerful analytics capabilities that reduce false positives.

There are several SAP Fiori apps available which allows you to detect, investigate and report.

Click here for a short video providing an overview of SAP Business Integrity Screening.

Click here for more information.

 

SAP Tax Compliance 

It is a major challenge, especially in larger organizations with multi-country operations, for the tax department to look at the tax related compliance issues. SAP Tax compliance helps you in simplifying tax management by integrating transactional data across numerous systems and leveraging the right tools to ensure the accuracy of your tax data.

It is a centralized tax compliance through which you can manage compliance checks on SAP and non-SAP sources across your company. It lets you identify compliance issues and mitigate using machine learning for decision making.

Task processing is based on a workflow and is semi-automated by the system using task list templates and task templates. For reporting, use reporting queries to analyze the number of hits over time for various checks and scenarios in their different statuses, and relate the number of hits with the underlying VAT amount so you can take the necessary actions.

There are several SAP Fiori apps available which allows you to detect and investigate compliance issues.

 

 

The above image is a screenshot from SAP Tax Compliance showcasing the number of Compliance Check Hits for a scenario: Postings without Tax Codes. The tax accountant/processor can take appropriate actions based on the results.

A tax manager can use the Compliance Results Overview app to display information about hits and tasks that need following-up. The cards on the screen inform you to act and provide navigation to tasks, hits, and checks.

 

 

Click here for more information.

 

Recommendations

1. A good starting point to adopt the innovations in SAP S/4HANA is to analyze your existing processes in finance namely:

    • Invoice-to-Cash
    • Invoice-to-Pay
    • Record-to-Report
    • Governance, Risk and Compliance
    • Financial Planning and Analysis

Identify the pain-points along the end-to-end business processes and determine the right set of tools and technologies that caters to your business requirements rather than looking at different technologies in silos. In fact, this point is applicable to any business process or function and not just the finance domain.

Here are a couple of examples that showcase how different intelligent technologies can augment your existing finance business processes:

Accounts Receivable – Click here for a detailed video describing the process.

 

 

Accounts Payable – Click here for a detailed video describing the process.

 

 

2. At times, due to multiple factors like time, budget, availability of key stakeholders, business readiness etc., it is not feasible and viable to transition and adopt all the features and innovations offered by SAP S/4HANA in a big bang approach.

In such a situation, it is crucial to understand transition as not an isolated event but as a stepping-stone to your digital transformation journey. Since, it is a journey, it is essential to plan your innovation adoption in SAP S/4HANA.

Below is a sample innovation adoption map (not all use cases are shown in the map) which can be tailored as per your requirements. It is imperative for any business to take up this exercise along with their process experts, partners, stakeholders etc. and device a strategy to move towards the goal of an Intelligent Enterprise.

 

 

Conclusion

In this blog post, we looked at some of the innovations available in SAP S/4HANA to make your finance processes ‘Intelligent’ by using technologies like machine learning, robotics process automation etc.

The list of use cases mentioned above is not an exhaustive list of innovations in SAP S/4HANA from finance perspective, however, it can give you a head start while defining your innovation strategy.

Some of the innovative technologies and scenarios mentioned above might require a separate license. For the latest information, request you to reach out to your account executive for more details.

 

Brought to you by SAP S/4HANA RIG

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