Digital Finance SeriesThe CFO guide to SAP S/4HANA

What SAP says:“With the looming deadline endingsupport for the traditional SAP ERP,customers are actively exploring theiroptions for making the move to SAPS/4HANA and its core finance andaccounting capabilities.” 1Customer translation:Here we go again.2

What’s inside01First things035SAP S/4HANAdeployment options051002Are you readyfor this?804Making SAPS/4HANA realThings youcan do now1506Final thoughts16143

A short quiz to get you started.What are you currently thinking about SAP S/4HANA?AS/4 what?DGBMy people and SAP are telling mewe need it. But nobody’s madean effective case for why.We need it. We’re strugglingto integrate acquisitions andopen new businesses.Our last big implementationhurt a lot. We’re not readyto go through that again.EWe need it. We’re making toomany decisions on the flyHWe’ll wait. SAP works fine justlike it is. And we don’t thinkCWe need it because we can’ttrust our current systems, data,and processes. Something’s gotto give.with limited facts.FWe need it. Current solutionsare holding us back. We haveto adopt new business modelsand move faster.SAP’s 2027 deadline will stick.IWhat 2027 deadline?No matter what you’re thinking today, it’s asafe bet you and your finance organizationwill eventually be up to your elbows in SAPS/4HANA. This is a good thing.4

01FirstthingsA quick overview of the SAPS/4HANA Finance solution.Make sure your financeleadership team—and yourIT leadership team—knowwhat’s what.021What isSAP HANA ?SAP HANA is SAP’s brand of in-memorycomputing, a technology that handlesmassive data sets without breaking asweat. SAP built its latest next-generationintelligent ERP (SAP S/4HANA) around thistechnology. SAP launched SAP S/4HANA in2015 and plans to stop supporting olderERP versions on December 31, 2027. SAPreports that more than 12,000 customershave committed to SAP S/4HANA.203Why is SAPS/4HANA betterthan “old” SAP?2Traditional ERP systems are optimizedfor transaction processing, with datastored in many different tables. SAPS/4HANA uses its Universal Journal tostore all financial transaction details inone table. Availability and access to allthat data can happen with near-zerolatency. The new system also brings asimplified data model that lets yourecord once, use many times, and createa single source of truth. So analyticsand insights that were historicallyunfeasible or very time consuming cannow process quickly.0405065

What can you do with SAP S/4HANAthat would be hard to do without it?3SAP S/4HANA enables more speed andbetter insights in almost every area ofFinance. It’s also a platform for realtime analytics—with no more waitingfor separate reporting systems, batchjobs, and long processing times. WithSAP S/4HANA Group Reporting, legalconsolidations and financial reportingare executed within the core, leveragingdata from the general ledger, soconsolidations and financial reportingare faster, transparent, and moreefficient. Yes, it can be expensive, andyes, there may be implementationrisks, but defining a digitaltransformation roadmap upfront, drivenby prioritized capabilities that drivevalue for the business, can help addressboth cost and risk in a positive way.01Here are some things to consider: Do you have a reconciliation process thatseems to go forever at the end of eachmonth? SAP S/4HANA provides an additionallevel of detail through its Universal Journalcapabilities, allowing complete transparencyto a reconciled ledger that enablesaccountingand corporate shared services to managean“anytime” close and possibly eradicate the needfor a month-end close altogether. Can you look at true product costwithout the noise of messy intercompanytransactions and markups? SAP S/4HANA’svaluation process allows you to “see through”your cost to the underlying components. Does your team struggle with timeconsuming forecasting that is out of touchwith actuals—and which leaves little time foranalysis? SAP S/4HANA’s embedded planningoffers a unified information model with prebuiltforecasting methods. Do you have one source of record to supportconsolidated, management, and statutoryreporting? SAP S/4HANA lets you drill downfrom your consolidated financial statements tothe business transaction.0203How arecompanies usingSAP S/4HANA?4In-memory processing makes itpossible to store and access ahigher volume and broaderspectrum of data—supply chain,personnel, sales, distribution,procurement, you name it. Butbecause financial data isfoundational to so many businesscapabilities, many organizationstake a finance-first approach, withSAP S/4HANA leveraging CentralFinance as a tool for creating theirfinancial system of record. That’swhy CFOs are often driving thecase for change.0405066

How to speak SAP0102SAP HANAWith traditional systems, datawas placed in storage andaccessed upon request. Thattakes time. With SAP HANA,data is stored “in-memory”and can be accessedinstantaneously.UniversalJournalProvides the basis of an integratedaccounting system where financialaccounting and managementaccounting data are recorded in asingle chart of accounts. SAP’sUniversal Journal conceptfacilitates synchronization of allfinancial data and storesit in one place, automatingreconciliation between financialand management accounting.SAP Fiori Delivers an intuitive, role-baseduser experience across all linesof business, tasks, and devices.SAP Fiori technology presentsfinancial information that islogical, accessible, andvisualized in a manner thatsupports improved jobperformance, allowing users totransact and report all from oneapplication, simplifying the userexperience. It’s consumer-gradetechnology—like an app on yoursmart phone—and is fully bakedinto SAP S/4HANA. SAP Fiorilets people transact and executeanalytics within a singlescreen—the perfect blend ofinsight and action.SAP CentralFinance03Also known as CFIN, this partof SAP S/4HANA bringsfinancial transactions fromlegacy ERPs—SAP or non-SAPsystems—into the SAPS/4HANA table with a commondata format. Harmonizing thefinance data set is often a firststep in digital financetransformation journeys.0405067

Are you ready for this?0102Will every company using SAP today stepup to SAP S/4HANA? Probably not everycompany, but this is a watershed momentfor SAP customers. Among organizationssticking with SAP, four factors seem to beshaping their decisions.The first factor is competitive risk.Companies already moving to SAPS/4HANA will get the benefits sooner, andthose benefits can be substantial. Therealso are some risks in waiting. SAP willend support of legacy versions at the endA third factor is the quality of yourcurrent SAP installation and otherenterprise systems. Companies thathave their SAP house in order and theirsystems fully integrated may not feelimmediate pressure to get on board theof 2027. As that date approaches, expectgrowing competition for implementationtalent.SAP S/4HANA train.A second factor is the degree ofgrowth and business complexitycompanies foresee. If your futureA fourth factor is data quality. Manycompanies are still struggling to get theirdata acts together. For those with multipleinstances of SAP or other ERP systems,SAP S/4HANA is an opportunity to pull theincludes more acquisitions, divestitures,and evolving business models, SAPS/4HANA can help make life easier.entire enterprise into financial alignmentaround a tested set of simplifiedprocesses.0304050688

Who’s doing what?In a recent survey of nearly 150 companies using SAP,SAPinsider asked about their plans to migrate to SAP S/4HANA.45%Evaluatingor piloting020329%04Implemented orin process of migrating0506Priorities among those moving ahead are:Modernizing reportingand businessintelligence01Providing a singleview of finance andaccounting dataAutomating accountingand reconciliationactivitiesSource: SAPinsider Benchmark Report, SAP S/4HANA Finance: State of the Market, 2019.27%No plans toimplement9

SAP S/4HANA deployment options0102SAPinsider says that a little more than half of SAP customers planning SAP S/4HANA investments are opting for eithernew implementation or system conversion.3New implementationSystem conversionSAP Central FinanceThose choosing a new implementationtypically want to eliminate customThose choosing system conversion usuallywant to preserve some of their customFor many SAP customers, a newimplementation or system conversionprograms, shed ineffective practices,and drive more standardization aroundbest practices. Organizations thatimplemented SAP when they hadsimpler business models, differentcompetitors, and a less-demandingcustomer base find this approach allowsenvironments and have business modelsthat have not evolved. They see this as alower-cost path, one that could require lesschange management. This approach isoften used by companies that completed anSAP implementation within the last five toseven years. These companies don’t needmigration can be combined with a thirdimplementation option: leveraging SAPCentral Finance. SAP Central Finance allowscompanies to deploy a single instance ofSAP S/4HANA Finance and then integratesome or all their financial and operationalprocesses back through that instance. Afor remodeling to support productivityand growth. It also lets them startafresh and keep their ERP transform, but they want to takeadvantage of the SAP S/4HANA’s current SAP or non-SAP financialsystems don’t need to be converted andcan remain in their existing environments.0304050610

SAP Central FinanceDeloitte has more than 110 SAP S/4HANA implementations currently underway, with a significant portion of clients leveragingCentral Finance as a low-risk, high-value path forward. With more than 30,000 hours of co-innovation partnering with SAP onSAP S/4HANA, here’s what we know from our experience:010203Data bridgeAcceleratorCentral Finance is frequentlyCentralizedservicesCentral Finance is frequently thoughtused as a first step—an efficientmechanism for beginning broaderCentral Finance enables centralizedservice delivery models to report, model,of as the least invasive hub to bringdata together in a commonCentral Finance acts as a hubto accelerate merger integrationStepping stoneERP deployments. It allowsbusiness units to transact in legacysystems uninterrupted duringimplementation.and analyze data within a single systemand across a common information model,information model across multipleERPs. This gives companies visibilityfurther driving value from the sharedservice center.into transaction data that wouldotherwise be masked in aggregatedCentral Finance also provides aplatform for innovation, with new SAPaltogether.S/4HANA capabilities built aroundmachine learning and cognitivesummary data tables or be in acompletely different formator separation by allowingcompanies to continue to0405transact in legacy systems.06analytics. These enhancements canenable organizations to achieve a true“Lights-out Finance” shared servicesoffering, driven by a new data model,greater transparency, and freshinnovations. Finance is no longer inthe dark!11

SAP Central Finance lessons learned01Aligning masterdata is still necessaryDefine and communicatethe path forwardFiguring out the appropriate data relationshipsand building agreement can take time, butClarity about which processes will continuein legacy systems versus performed init’s a critical step to successfulimplementation. Don’t wait to startprofiling, cleansing, and transforming data;it’s a prerequisite for effectiveCentral Finance is critical. Identify nuancesin legacy processes early so you can definethe transformation roadmap and prioritizethe roll out of key business priorities.transformation.Executive buy-inis criticalNo surprise here. Visible executiveleadership helps navigate roadblocks andmaintain momentum throughout the project.Check compatibilityof legacy systems withSAP S/4HANAConfirm which versions (including latestpatches) are being used across ERPs toprevent surprises with the ability totransfer data.Central Financeisn’t a silver bullet for allfinance dataThere are limitations on what dataCentral Finance can support, so performdiligence on what is critical to ensure fit.02030405Focus on valueand outcomes06Understand the opportunity that CentralFinance and SAP S/4HANA will bring for yourorganization and track throughout thetransformation journey.12

Implementation scenariosHere are the three main implementation scenarios we’ve observed. They vary by the degree of financial processes being centralized.0102Reportingand planningCentral processorchestrationTransactionprocessing Deployed for financial reporting,planning, and analytics with allactuals replicated from sourcesystems Deployed for central managementof all financial processes Deployed for central payments,cash application, and coreaccounting Enterprise-wide financialreporting Central reconciliation ofintercompany transfers Harmonized data with line itemdrill down Embedded planning andconsolidation capability Central orchestration ofcollections, credit, and disputes Source systems perform alltransactional processing Perform central payment, cashapplication, or period-end close One source of truth, for vendorsand customers03040506 Financial transactions processingperformed in SAP Central Finance SAP S/4HANA becomes financialsystem of record13

Making SAP S/4HANA realOne way to get a feel for the benefits of SAP S/4HANA implementation is to look at what early adoptershave done and why. Here are four examples of SAP S/4HANA in action.Objective:Relieve pain andimprove visibilityA global oil and gas companyhad multiple ERP platforms,each with a different chart ofaccounts and data structures. Gettingeven a simple enterprise metric requiredtime-consuming and error-prone manualcalculations.SAP S/4HANA in actionThe project team implemented SAPS/4HANA with a priority focus on gettingaccurate, flexible, and real-time financialreports. Central