The successful implementation of a new SAP S/4HANA system is a challenging task that requires careful preparation. One of the most important aspects of this process is the conversion of financial data from the old system to the new one. During this conversion, it is essential to take into account the different ways in which data is stored and processed in the two systems.
In addition, special attention must be paid to ensure that all business processes are running smoothly and that any disruptions are minimized. In this blog post, we will explore the essential changes that need to be made in SAP S/4HANA Finance during system conversion. We will also provide some tips on how to make sure that the process goes as smoothly as possible.
Table of Contents
- What is SAP S/4HANA?
- What is SAP ECC?
- The transition from SAP ERP to SAP S/4HANA
- General Ledger Accounting
- Management Accounting
- New asset accounting
- The transition from Universal Journal Entry to the New General Ledger
- Major Changes in the Accounting Data Model
- Major Changes in Document Types and Number Ranges
- Major Changes in the Asset Accounting Module
- Major Changes in the Fixed Assets and Capital Expenditures Module
- Major Changes in Treasury, Risk Management, and Financial Supply Chain Management (FSCM)
- Perks of S/4HANA in finance
- Challenges in S/4HANA Transformation
- Where do you start?
What is SAP S/4HANA?
SAP S/4HANA is the next generation of the SAP Business Suite, designed to provide real-time insights and simplify business processes. It is powered by the SAP HANA in-memory database and offers a new user experience with the SAP Fiori user interface. The move to SAP S/4HANA can be enabled through a system conversion or a new installation.
During a system conversion, customers can choose to retain their existing business processes and data models, or they can opt for a simplified data model that is optimized for SAP HANA. If opting for the latter, customers can take advantage of new features such as embedded analytics, advanced warehouse management, and material ledger accounting. The simplified data model is also better suited for running on cloud infrastructure.
System conversions can be complex projects, so customers should carefully consider their options and consult with an experienced partner before proceeding.
What is SAP ECC?
SAP ECC is an enterprise resource planning software that helps organizations manage their business processes. It includes modules for financial accounting, controlling, and human resources. SAP ECC is compatible with other SAP software applications and can be integrated with third-party applications.
System conversion from SAP ERP to SAP S/HANA Finance can be complex and time-consuming, but it is essential for organizations that want to take advantage of the new features and benefits of the latter. Some of the key changes that need to be made during system conversion include:
- replacement of traditional databases with HANA databases
- redesign of business processes to take advantage of real-time data processing
- implementation of new security measures
- migration of data from legacy systems
The transition from SAP ERP to SAP S/4HANA
The transition from SAP ERP to SAP S/4HANA is a major change for any organization. This section will provide an overview of the most essential changes that need to be made in order to convert your system.
One of the most important changes is the switch from the traditional database to the new HANA database. This requires a complete re-architecture of how data is stored and accessed. Furthermore, all customizations and configurations must be ported over to the new system.
In addition, there are significant changes to the user interface and navigation. The goal is to simplify and streamline processes so that users can work more efficiently. Newer versions of SAP S/4HANA also offer mobile-enabled functionality for greater flexibility.
Finally, you'll need to consider how you will migrate your existing data into the new system. This includes both master data and transactional data. Depending on the size and complexity of your organization, this can be a challenging process. However, there are tools and services available to help make it as smooth as possible.
General Ledger Accounting
During a system conversion to SAP S/HANA Finance, there are several changes that need to be made to the General Ledger Accounting process. First, all Chart of Accounts must be migrated over to the new system. Second, all account balances and transaction data must be transferred into SAP S/HANA Finance. Lastly, all Customizing settings related to General Ledger Accounting must be configured in the new system.
The first step in migrating to SAP S/HANA Finance is to transfer all Chart of Accounts from the old system into the new one. This can be done using the migration tool provided by SAP. Once all Chart of Accounts have been transferred, you will need to migrate all account balances and transaction data into the new system. This data can be exported from the old system and imported into SAP S/HANA Finance.
The last step in migrating to SAP S/HANA Finance is to configure all Customizing settings related to General Ledger Accounting. This includes setting up account groups, posting period variants, and more. All of these settings can be found in the Customizing menu under Financial Accounting -> General Ledger -> Migrate GL Settings.
When converting to SAP S/HANA Finance, there are several important changes to consider in your management accounting processes.
- First, all transactions must be converted to the new system. This includes posting transactions, creating Journals, and configuring the new system.
- Second, all account balances must be converted to the new system. This includes running balance reports and ensuring that all account balances are accurate in the new system.
- Third, all financial reports must be converted to the new system. This includes generating reports in the new system and exporting them to Excel or PDF format.
- Finally, you will need to train your staff on how to use the new system. This includes providing training materials and conducting training sessions.
New asset accounting
The new asset accounting functionality in SAP S/HANA Finance helps organizations to manage and keep track of their assets more effectively. This includes features such as the ability to create asset classes, subclasses, and individual assets; the ability to assign depreciation terms and calculate depreciation values; and the ability to track and report on asset movements.
The transition from Universal Journal Entry to the New General Ledger
The new General Ledger in SAP S/HANA Finance represents a fundamental change in the way that financial data is stored and processed. In the past, all financial data was stored in a single, universal journal entry table. This made it difficult to generate accurate financial reports and created a significant performance bottleneck.
With the new General Ledger, each journal entry is stored in its own dedicated table. This makes it much easier to generate accurate financial reports and significantly improve system performance. The transition from the old Universal Journal Entry to the new General Ledger will require some careful planning and execution, but the benefits are well worth the effort.
Major Changes in the Accounting Data Model
The accounting data model in SAP S/HANA Finance is different from the accounting data model in traditional SAP ERP Financials. The main difference is that in SAP S/HANA Finance, all ledgers are created and managed centrally in one place. This centralization makes it easier to maintain consistent data across ledgers and to create new ledgers when needed.
In addition, the account determination process has been simplified in SAP S/HANA Finance. In traditional SAP ERP Financials, account determination was done using a complex set of rules that had to be configured manually. In SAP S/HANA Finance, account determination is done automatically based on the business transactions that are entered.
Finally, the financial reporting capabilities of SAP S/HANA Finance are significantly enhanced compared to traditional SAP ERP Financials. In particular, the new reporting tools allow for real-time reporting on financial data.
Major Changes in Document Types and Number Ranges
SAP S/HANA Finance comes with a number of new document types and number ranges. The most significant change is the introduction of the new General Ledger (FI-GL) document type. This is a key part of the new accounting structure in SAP S/HANA Finance and will be used for all general ledger postings.
Other notable changes include the introduction of the new Asset Accounting (FI-AA) document type and the renaming of the Controlling (CO) document type to Profitability Analysis (PA).
Document Type Changes:
- FI-GL: New General Ledger Document Type
- FI-AA: New Asset Accounting Document Type
- CO: Renamed to Profitability Analysis
Major Changes in the Asset Accounting Module
The asset accounting module in SAP S/HANA Finance is undergoing some major changes. One of the most significant changes is the introduction of the new General Ledger Accounting (GAA) framework. This new framework will replace the current Asset Accounting (AA) and Controlling (CO) modules and will provide a single, unified platform for managing financial data.
Another key change is the introduction of a new asset management tool called "SAP Fiori for Asset Management". This tool will allow users to manage their assets more effectively and efficiently. It will also provide a more user-friendly interface for managing asset data.
Lastly, the depreciation engine in SAP S/HANA Finance is being completely redesigned. The new depreciation engine will be more robust and flexible, providing users with greater control over their depreciation settings.
Major Changes in the Fixed Assets and Capital Expenditures Module
The Fixed Assets and Capital Expenditures Module in SAP S/HANA Finance is undergoing some major changes. These changes are designed to improve the user experience and make the module more efficient.
One of the most significant changes is the way that assets are now classified. In the past, assets were classified according to their depreciationreatment. Now, they will be classified according to their function within the business. This change will make it easier for users to find and manage their assets.
Another significant change is the way that capital expenditures are now managed. In the past, capital expenditures were managed separately from fixed assets. Now, they will be integrated into the Fixed Assets and Capital Expenditures Module. This change will make it easier for users to track and manage their capital expenditures.
These are just some of the major changes that are happening in the Fixed Assets and Capital Expenditures Module in SAP S/HANA Finance. These changes are designed to improve the user experience and make the module more efficient.
Major Changes in Treasury, Risk Management, and Financial Supply Chain Management (FSCM)
The SAP S/4HANA Finance module provides a comprehensive and integrated view of the financial management processes across all departments. This application is designed to enable users to effectively manage their internal financial flows and resources, partner with external suppliers, and optimize internal processes.
The SAP S/4HANA Finance module is based on a modular architecture that allows you to easily add or adapt existing modules without affecting other modules in your system. The release version of SAP S/4HANA Finance includes the following modules:
- Treasury—Manages all financial transactions within the enterprise; optimizes cash flow by reducing cost and increasing effectiveness; supports treasury risk management; enables cash management activities such as cash receipts and payments; manages treasury tax processing; manages treasury operations support activities such as payables clearing and bank reconciliation.
- Risk Management—Provides risk management capabilities for credit risk, market risk, operational risk, liquidity risk, legal entity type risk (LETR), off balance sheet items (OBSE), portfolio optimization (PO), portfolio optimization with cash allocation (POCA), program portfolio optimization (PPO) and marketing portfolio optimization (MPO).
- Financial Supply Chain Management (FSCM)—Provides FSCM functionality for material procurement planning and supplier managed inventory (SMI).
Perks of S/4HANA in finance
SAP S/4HANA for Finance can be a game changer for your business. The new platform offers a comprehensive approach to enterprise resource planning (ERP) and financial management, increasing agility and efficiency.
The new SAP S/4HANA-based Finance platform is designed to help you better manage your business processes and improve your overall financial performance. It features a broad range of features that allow you to process transactions faster, while also maximizing your business value by optimizing processes across the enterprise.
Here are some of the key benefits of SAP S/4HANA in finance:
- Faster data entry – You can save time by reducing the number of steps required to enter transactions into the system. This frees up more time for other tasks and can result in a reduction in processing times.
- More visibility – The new platform allows you to identify trends quickly and make better-informed decisions about future plans based on data from previous periods.
- Reduced errors – The new platform provides enhanced error detection technology that helps prevent costly mistakes, such as double entries or duplicate transactions. This can result in significant savings for your organization, especially if you’re processing millions of transactions per year.
Challenges in S/4HANA Transformation
The SAP S/4HANA Finance transformation process is designed to be a smooth, seamless and cost-effective process that provides an opportunity to transform the way you do business. The new system architecture allows you to leverage your existing investments in business processes and data, while allowing you to add new capabilities quickly through new modules.
Understanding the content needs of your organization. This includes understanding what types of transactions are required by your users, which can help you prioritize which transactions need to be migrated first. It also involves understanding their business processes and how they fit within the overall customer experience that you want to deliver.
Identifying gaps in your current solution set. This will help identify areas for improvement or additional functionality that may not have been realized during standardization or platform upgrades. It will also help determine whether there is room for additional customizations within the system or whether this would require an entirely new solution from another vendor.
Aligning with organizational priorities and objectives (OPIs). An OPI is a set of goals that define what the organization wants to accomplish with its financials over time (financial goals), as well as how it intends to achieve.
Where do you start?
KTern.AI is a ready-to-use automated Digital Workspace with a focus on SAP S/4HANA transformations that contains automation tools for project execution and business operations. It runs on S4HANAPEDIA, the engine that automatically learns knowledge. Through the SAP Activate Methodology's Discover, Prepare, Explore, Realize, Deploy, and Run phases, KTern.AI provides stakeholders with insightful information.
To aid with your digital transformation process, KTern.AI offers the following 5 modules.
Digital Maps, Digital Projects, Digital Process, Digital Labs and Digital Mines.
KTern's 5 modules:
Digital Maps - Analysis of business processes, landscapes, and custom process with implications of S/4HANA's modifications and simplifications and optimization insights
Digital Projects - With intelligent insights, SAP can provide project governance, simulation, and stakeholder collaboration.
Digital Process - Activation, implementation, and orchestration of business processes inside the corporation are tracked and monitored more efficiently.
Digital Labs - Continuous testing for SAP product upgrades is intended for quick, organized testing throughout the SAP digital transformation process.
Digital Mines - Data mining and validation at the business layer before, during, and after the transition taking into account S/4HANA's simplifications.
Are you in the lookout for a platform to carry out your transformation to S/4HANA to seek the benefits of SAP S/4HANA Finance?