SAP S/4HANA

SAP S/4HANA has had a long journey. Starting in 2011. SAP transitioned more and
more SAP transactions from the SAP ERP system to be based on the SAP HANA
database. This led to the SAP Business Suite powered by SAP HANA, available from
2013. This means that the traditional SAP ERP system could work entirely on the
SAP HANA database. instead of another database provided by a third-party
provider. That bene-fited SAP customers, could take advantage of the faster
in-memory column-based database. However, from a functionality point of view
there was not much change visible to the end users.
Then in 2014 SAP released the first completely rewritten application for the SAP HANA
database: SAP Simple Finance. Finance had always been the backbone of the SAP ERP
solution, so not surprisingly SAP chose finance to be the first area to be completely
redesigned to benefit fully from the new SAP HANA database. SAP Simple Finance
was an add-on that could be installed on an existing SAP ERP system, which provided
a redesigned table structure and integration at the general ledger level of the various
financial components.

Logically, this trend continued: in 2015 SAP, released SAP S/4HANA, a fully functional,
fully integrated product entirely based on the SAP HANA database. SAP S/4HANA is
the replacement for SAP ERP. With SAP S/4HANA, the use of the SAP HANA database
is mandatory. All components are redesigned and rewritten to take fu ll advantage of
the enormous capabilities of SAP HANA

Another tremendous improvement in the SAP S/4HANA system is the new SAP Fiori
user experience. SAP Fiori provides a web-based interface to users that makes working
\Vith the SAP transactions and reports more approachable.
SAP S/4HANA comes with two product offerings: SAP S/4HANA (by default, this
refers to the on-premise version) and SAP S/4HANA Cloud. SAP S/4HANA is the main
product, which covers all functionalities provided previously by SAP Business Suite/
SAP ERP. SAP S/4HANA Cloud is a software-as-a-service (Saas) offering, which has
somewhat limited functionalities and is suitable for customers looking for a solution
that is easier, quicker, and cheaper to deploy, benefiting from standardized provided
processes. It is important to note, however, that SAP S/4HANA also can be hosted in
the cloud by another provider. So companies can benefit fully from the on-premise
version and develop the very complex business processes they need without having
to physically host the system themselves.
The release strategy for SAP S/4HANA involves annual updates, which use a naming
convention that includes the name and year of the release. As of the printing of this
book, the following releases are available for SAP S/4HANA:

• SAP S/4HANA Finance 1503: March 2015

• SAP S/4HANA 1511: November 2015
• SAP S/4HANA Finance 1605: May 2016
• SAP S/4HANA 1610: October 2016
• SAP S/4HANA 1709: September 2017
• SAP S/4HANA 1809: September 2018

Your New Finance Solution

SAP S/4HANA Finance is the most mature solution in SAP S/4HANA. Originally it wa
released as the SAP Simple Finance add-on back in 2014, which means that it alrea
has five years of continuous improvements, along with a solid customer base. \Vhic
keeps increasing very fast. Every new SAP S/4HANA release brings new fundament
improvements

In this section, we'll discuss the most important advancements in SAP S/4HANA
in the finance area, including the new SAP Fiori user interface, which provides a
beautiful and streamlined user experience

Advances in Finance
Let's look at the key advancements in the finance area in SAP S/4
many, but the most fundamental are as follows:
• Universal Journal
• Material ledger
• Account-based profitability analysis
• New asset accounting
• Group reporting

Universal Journal
The Universal Journal is the most fundamental advancement in SAP S/4HANA
Finance. It combines all finance relevant data in one single table, table ACDOCA, which
is often referred to as the single source of truth. People working for a long time with
finance applications can fully appreciate what an amazing, revolutionary improvement
t hat is. No~v all financial and controlling fields, such fixed assets, cost centers,
or internal orders, are available together in the same table with pure general ledger
information such as the general ledger account, company code, and amount.
SAP's financial solutions traveled a long way to get to this point. Another major
improvement in the past was the new general ledger, available from 2005. Before that
in the classic general ledger, it was possible to have only one general ledger, but from
accounting point of view companies often had to report based on different accounting
frameworks. The early solution for that involved the so-called account approach, in
which all accounts were duplicated in another range (often starting with the letter Z
followed by the same account number) to portray another accounting principle's postings.
This was a cumbersome solution, both to maintain the additional master data
and for the users to make all these redundant postings. A more advanced solution for
the time was to use a component called the special purpose ledger, which provided
additional ledgers, which could be used to make postings for additional accounting
frameworks using the same general ledger accounts. However, these ledgers were not
integrated with the general ledger, and the solution involved a lot of reconciliation and
custom developments.
Based on the special purpose ledger fundamentals, SAP delivered the new general ledger,
which provided multiple ledgers integrated into the general ledger component.
This was a huge step forward, but still not perfect; more often than not the postings to
the nonleading ledgers were not happening in real time. Also, additional reconciliation
between financial accounting and controlling often was required, using the socalled
reconciliation ledger.
With the Universal Journal in SAP S/4HANA Finance, SAP delivered the perfect solution,
fully integrated across all the modules and fully in real time. No\v every ledger
can post in real time in the Universal Journal, and all controlling, fixed asset, and
other financial fields are available in the same table ACDOCA. Let's look at the structure
of table ACDOCA, as shown in Figure 4.
In Figure 4, you can see the structure of table ACDOCA, the Universal Journal entry line
items table, as seen in the data dictionary. This table contains all finance-related lineitem
data, and this makes many index and summarization tables obsolete. They are
not removed altogether, for compatibility reasons, but continue to exist as core data
services (CDS) views.
The Universal Journal includes several includes, which contain the fields from controlling,
fixed assets, and so on. For example, include ACOOC _SI_ GL _ ACCAS contains
additional account assignments, as shown in Figure 5.

Now >vith the Universal Journal, there is only one financial document. There are no
more separate controlling, asset accounting, and material ledger documents posted
by the system. Figure 6 shows the content of the Universal Journal, with the cost center
and a financial document number, in the DocumentNo column.
New Asset Accounting
Asset accounting (commonly referred to as fixed assets) is another finance area that
is completely redesigned to take full advantage of the SAP HANA database. Available
as an add-on in SAP ERP, now in SAP S/4HANA the new asset accounting is mandatory.
It offers real-time integration with the Universal Journal, as shown in Figure 7.

Include ACDOC_SI _FAA provides the fields for fixed assets. Every asset posting is fully
integrated \¥ith the Universal Journal, and there is no separate asset document generated.
A key benefit of the new asset accounting is that now valuations according to different
valuation frameworks, such as IFRS and US GAAP, for example, are fully integrated
and can post in real time to the general ledger. In classic asset accounting, this
was done using periodic programs and delta postings with the leading ledger, but
now separate documents can be posted in real time to the leading and nonleading
ledgers.
Group Reporting
Group reporting is an area in which SAP changed its solution a few times. Among the
more recent solutions are SAP Business Planning and Consolidation (SAP BPC) and
SAP Strategic Enterprise Management Business Consolidation (SEMC-BCS). Now with
SAP S/4HANA 1809, SAP provides the new SAP S/4HANA Finance for group reporting.
It's fully based on SAP HANA and provides the following benefits:

• Complete package of consolidation functions, such as interunit elimina

intercompany profit elimination
• Integrated planning, budgeting, and data analysis within the cloud
• SAP Fiori user experience
• Full integration with Microsoft Excel through an Excel add-in
• Open architecture for cloud and on-premise systems
• Single application for local closing and group closing procedures
Thus with the latest SAP S/4HANA release, group reporting in SAP also is fundamentally
redesigned and offers many key benefits.

SAP Fiori User Experience

From a user's point of view, one of the main benefits of SAP S/4HANA is the SAP Fiori
user experience (UX). In a world of connected devices in which users would like to
access their ERP systems increasingly using mobile devices such as tablets and mobile
phones, SAP provides the new SAP Fiori UX, which can be used in addition to the classical
SAP GUI

SAP Fiori is entirely web-based and very intuitive and easy to use. It continues to
evolve as more and more SAP transactions become available as SAP Fiori apps. The
focus is now on the user transactions, as user reports especially are quite convenient
to run using SAP Fiori. However, many configuration transactions also are becoming
available on SAP Fiori, and some are now even only possible to run as SAP Fiori apps,
with the old SAP GUI transaction codes made obsolete. For example, Figure 8 shows
the Maintain Banks SAP Fiori app, which replaces Transaction Fl12
You can access SAP Fiori apps using the SAP Fiori launchpad. You can start the
launchpad from SAP GUI by entering Transaction /UI2/FLP from your SAP S/4HANA
system (normally there is a dedicated system in your SAP GUI in which SAP Fiori is
enabled because it needs the SAP Fiori server). You can also use a web link provided
by your system administrator, which you can enter in a web browser.
If you enter the link directly in a web browser, you'll see a beautiful logon screen, as
shown in Figure 9. Enter your User name and Password (matching those from your
SAP S/4HANA system) and click the Log On button
PROJECT SCOPE
Defining the project scope is vital because it determines how much value the implementation
of SAP S/4HANA will bring to the customer. SAP S/4HANA delivers cutting-
edge technology, but it's how you employ the technology to streamline your
business and enhance its processes that could make the implementation a tremendous
success. It's a >veil-defined project scope that will help you utilize SAP S/4HANA
for the best benefit to your company.

To define the scope properly, it will help to answer some questions:

• How will the new system help to optimize business processes?
• How will it increase the efficiency of the operations?
• How will it decrease operation costs?
• How will it increase the return on investment (ROI)?
 • How will it motivate our business users?

If you can't find reasonable answers to some of these questions, perhaps you have to
rethink the scope and what the system will be used for. The implementation should
not be a goal in itself. The business case for implementing SAP S/4HANA should
answer these questions, and then it will be easier to define the project scope because
you'll select functionalities that will increase the ROI, decrease the operation costs,
optimize the business processes, and overall add value to the business.
Regardless of when the current ERP system was implemented, any existing SAP customer
will inevitably need to have a big discussion and go through a decision-making
process to determine whether to undertake a greenfield or brownfield approach to
SAP S/4HANA implementation.

1.2 Comparing Greenfield versus Brownfield Implementations

A greenfield SAP S/4HANA implementation is implementing a completely nevv system
from scratch, similar to implementation at a new SAP customer. In this case, the
existing SAP system is treated as a legacy system and used as a source for legacy data
migration.
A brov1nfield SAP S/4HANA implementation, on the other hand, is conversion of an
existing SAP system to SAP S/4HANA without reimplementation. It does require
checking and modifying some of the existing customizing and existing custom programs.

Companies that are already running SAP Business Suite face a difficult dilemma. As
already mentioned, the migration to SAP S/4HANA can't be compared with previous
SAP upgrades from one SAP ERP enhancement pack to another, or even from the old
SAP R/3 system to SAP ERP. This is because SAP S/4HANA is fundamentally different.
It comes with a new database and a much enhanced and simplified data model.
Therefore, upgrading an existing SAP ERP system to SAP S/4HANA is a huge effort,
especially for heavily customized systems with a lot of custom developments. A lot of
custom programs have to be changed. All the replaced tables still exist as core data
services (CDS) views, and in general programs that only read from them should work
without modification because the SE LECT statement shouldn't be impacted. However,
programs that write to those tables have to be modified.
Therefore, it's compelling to choose the greenfield approach: in this case companies
don't have to worry about modifying their old custom code programs and can benefit
from a system designed for the new SAP HANA simplified data architecture. But
another element to consider is the cost factor. Companies have already invested a
huge amount of money, time, and effort into their existing SAP systems, and implementing
a new system may seem too much, especially if the current system is relatively
new.
There is no clear recommendation for 1.vhich option in better. It needs to be assessed
very carefully on a case-by-case basis, comparing the costs and benefits of both the
greenfield and brownfield approaches. Some key factors to consider are as follows:
 • Data volume
SAP S/4HANA enormously increases speed and performance. Therefore companies
that have huge data volumes can benefit dramatically from conversion of an
existing system to SAP S/4HANA.
• Business processes
If the company is satisfied with how the business processes are portrayed in the
current system, this is a major reason to consider the brownfield approach. If, on
the contrary, there is a lot of room for improvement and there are a lot of obsolete
business processes in the current system, the greenfield approach should be considered.
• Custom code

A system with fewer modifications and custom enhancements is a better candidate

for bro'Arnfield system conversion. If you're running a highly customized SAP
system, at the end it may turn out that implementing SAP S/4HANA greenfield is
more cost-effective.

• Technical readiness
For an existing system to be converted to SAP S/4HANA, it needs to fulfill several
technical prerequisites. SAP S/4HANA supports only Unicode. If the existing system
is on multiple code pages, it has to be converted to Unicode first. Also, the
existing system should be running a minimum of SAP ERP 6.0 EHP 7, so older systems
will have to be upgraded first. All these factors will add time, effort, and cost
to the conversion and may be a good reason to go for a greenfield approach.
To summarize, Table 1.1 shows the pros and cons of the greenfield and brownfield
approaches.
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