The expectations of modern finance organizations are to be more transparent, forward-looking, and decision-centric. The vast majority of SAP enterprise customers are on older versions; these systems include one-size-fits-all user interfaces and applications that cannot deliver the agility required by the business. There exists a failure to take advantage of innovations including big data, mobility, and cloud computing. With the increasing demand of stakeholders for instant access to the right information at the right time to make accurate decisions, SAP’s Central Finance is the key enabler for digitizing the core area of an organization, i.e., finance and these on-demand trends accentuate the need for agile information technologies and solutions. SAP Central Finance is an intelligent approach to implement S/4HANA Finance without disrupting your existing source SAP ERP and non-SAP systems.
SAP Central Finance creates a unified reporting framework by mapping accounting entities in upstream systems to a standard master data set in the Central Finance system (for example, general ledger account, profit center or cost center). The centralized (or global) postings of financial data into the Central Finance system as universal journal postings allow the financial stakeholders to run a broad range of harmonized financial business processes and reports efficiently. This provides a strong foundation for the organization’s strategic decision-making capabilities and business strategies. Many times users in accounts payable, accounts receivable and the payroll departments have to use multiple systems in a multi-enterprise applications landscape to perform their duties. Central Finance solves this gap.
Centralizing financial data into one global instance with Central Finance creates a robust platform for financial planning resulting in real-time reporting, processing, and planning that aides predictive and proactive financial reporting capabilities. The platform also helps improve the productivity and efficiency of shared services operations. One global instance of finance and accounting data in Central Finance can improve the efficiency and effectiveness of the finance department in an enterprise.
The single Central Finance instance contains all universal journal postings from upstream ERP systems thus making Central Finance useful in managing:
- Financial closing
- Cost assessments and Cash flow management
- Revenue Recognition
- Rebate Calculations
A Central Finance instance also enables the financial decision maker to be more proactive in managing the financial decision-making and to reduce the time to close.
Central Finance also improves process efficiency, lowers the total cost of ownership (TCO) and orchestrates data to assist the finance team in meeting their stakeholders’ objectives. A Central Finance implementation can be done on-premise, in the cloud or as a software-as-a-service solution. Each of these implementations is accessible on any device, and the Fiori Interface gives instant insights, and a task-based, action-oriented user experience. In addition to the benefits mentioned above, Central Finance has the following advantages:
Central Finance provides real-time integrated enterprise level financial reporting at a granular level allowing the leveraging of some of the S/4HANA Finance innovations like Universal Journal, Account-Based COPA, etc.
Central Finance also provides enterprises (especially ones in the process of mergers and acquisitions and are facing integration challenges) with a solution for rapid integration of the financial reporting of the acquired/merged entities. This helps to quickly analyze both the top line and the bottom-line impact thus reducing time and effort spent in system consolidation and process harmonization of these entities.
Since there are real time replications of all the financial documents to the Central Finance instance, it can be easily leveraged in the short term for implementing some of the group wide centralized reporting and monitoring functions.
Large enterprises with heterogeneous system landscapes should look at Central Finance as primarily a short-term solution in their S/4HANA Finance adoption roadmap. In the Long-term, such businesses can consider consolidating multiple systems into a single S/4HANA instance based on a harmonized process template. Central Finance provides these businesses with a risk mitigated approach for S/4HANA adoption for Finance in a shorter time. The Central Finance implementation reduces the change management efforts by giving business users from finance department a ‘look and feel’ of S/4HANA for reporting before its adoption for centralized transaction processing and critical closing activities.
Contact YASH today and discover how we can help you get more than what you think out of your SAP S/4HANA Finance investment.
Justin P Gurski, SAP Financials Practice Lead @YASH Technologies