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SAP Central Finance – Measuring business benefits

In any S/4HANA Transformation, there have been a huge investment being done by each organization and it is always expected that the implementation will reap business benefits at certain point of time. Important to know here is how to measure those benefits and when the expected realization can be?

This blog is focused on the SAP Central Finance deployment method as presently that’s the easiest and preferred way to kick stat the transformation without business disruption. Before I start with business benefits I would like to give a brief about what central finance is in business language. If you want to read technical details, I have already written 50+ blogs on various aspects of CFIN so do not forget to browse that.

Introduction

The IT landscape of most large organizations is made of several ERPs (SAP & Non-SAP) and in general its complex and distributed. It may be different systems for different business functions, geographies or lines of business. This is the main reason and challenge to minimize business disruption when transformation the Finance organization accompanied by the Shared Service Model.

The Solution

To manage such complex and diversified architecture SAP has a solution called SAP S/4HANA Central Finance. Please don’t get confused whether it’s a different solution, product or a deployment method of SAP S/4HANA. In summary its  part of SAP S/4HANA and read here to get more details about how it relates to SAP S/4HANA.

This is just the foundation and if you ask what it gives to the business in terms of value, the answer is nothing. Then question comes why are we investing?

Do you get benefit of constructing a house when you lay the foundation? No then if you see the title of the architecture it just says “foundation” which may not give benefits directly but it assures future benefits that the house which you are going to build is going to be strong.

What is the foundation here? Data replication is the foundation and below are the components of strong foundation which will help in making processes simpler, smoother and faster for providing operational efficiency.

     

Now once this foundation is set then you start implementing Finance processes on top of this foundation. Now I will cover each process area along with the core benefits. It is also important to note that this value benefit is multiplied if the organization is working on a shared service model.

Processes we mainly cover are:

  • Procure to Pay
  • Order to Cash
  • Record to Report
  • Reporting

Processes like below are not covered for now for the sake of simplification

  • Hire to Retire
  • Lust to Dust (Asset Accounting)

After Finance focus can be wider based on SAP S/4HANA building blocks

All below processes should be part of finance transformation and should start as soon as foundation is ready. All process changes will need huge amount of change management as its not just technology rather a wider (more that technology) transformation. Read this blog to understand the impact of change management and CFIN is not just technology.

Lets see how we can shape up the Finance Organization by implementing the finance processes in SAP S/4HANA on top of CFIN leveraging the foundation we have built.

In summary, foundation of CFIN will be used for future transformation and it has to stat with finance processes. More value can be realized if the share service environment is available or enabled as a part of strategic transformation.

After changing the mentioned processes the indicative business benefit is described

Abbreviations:

  • FCC – Financial Closing Cockpit
  • CFIN – Central Finance
  • BI  -Business Intelligence

This is all based on how CFIN implementations have realized value based on the current product design. As the product is enhanced with more features the business value will also be enhanced.

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