SAP S/4HANA: Finance Capability and Frequently Asked Questions

1. SAP S/4HANA: Finance Capability and Frequently Asked Questions Nutan Deshpande Capgemini Session ID5239

2. Introduc)on SAP S/4HANA, short for SAP Business Suite 4 SAP HANA, is SAP’s next-generaDon business suite. It is a new product fully built on the most advanced in-memory plaLorm today – SAP HANA – and modern design principles with the SAP Fiori user experience (UX). SAP S/4HANA delivers massive simpliﬁcaDons (customer adopDon, data model, user experience, decision making, business processes, and models) and innovaDons (Internet of Things, Big Data, business networks, and mobile-ﬁrst) to help businesses run simple in a digital and networked economy. SAP S/4HANA: FINANCE CAPABILITY

3. What are the key business benefits of SAP Accoun)ng empowered by S/4HANA? As there is no limitaDon from pre-calculated aggregates and due to the built-in harmonizaDon of Financial and managerial accounDng, below are the key benefits: –  Personalized reports on Finance and OperaDons –  Drill-down to line item level for root cause analysis –  SegmentaDon on the fly across mulDple dimensions –  Extensibility of data model –  Immediate link between internal and external reporDng –  Reduced manual effort SAP S/4HANA : FINANCE CAPABILITY

4. How does SAP S/4HANA relate to SAP Simple Finance powered by SAP HANA? •  The SAP Simple Finance soluDon marked the first step in our SAP S/ 4HANA road map for customers. The soluDon has demonstrated the value of simplificaDon (for example, no indexes, no aggregates, and no redundancies) and instant insight in Finance. SAP S/4HANA, on premise ediDon leverages the full scope of SAP AccounDng powered by SAP HANA included in SAP Simple Finance. •  SAP S/4HANA, managed cloud ediDon is intended to leverage the same scope. SAP S/4HANA, public cloud ediDon is planned to focus on a selected scope of SAP Simple Finance in alignment with the key requirements in finance. SAP S/4HANA: FINANCE CAPABILITY

5. SAP S/4HANA: FINANCE CAPABILITY SAP HANA PlaLorm Aligned Single Source of Truth Agile Real Dme processes Predic)ve Dynamic Planning and Analysis SAP AccounDng powered by SAP HANA AlternaDve in-memory funcDonality for ERP customers SAP Cash Management powered by SAP HANA New product for Group Cash Management What is a Simple Finance Add-on ? Business Suite on HANA Integrated Business Planning for Finance New capabiliDes and enhanced integraDon for ERP and BPC

6. Do you have examples of business use cases for Finance ? SAP S/4HANA: FINANCE CAPABILITY Today Before A single source of truth with superior granularity for all transacDons and analyDcs to streamline and eliminate cycle Dmes and reconciliaDons of the data. ReconciliaDon becomes inherent. Separate systems and documents driving complexity across finance and a lot of manual reconciliaDon efforts Central journal to get a consolidated, real-Dme view of the state of the business across all enDDes; this was simply not possible before Separate entries in each process. IntegraDon via reports 71% faster batch input processing in financial close 40% less posDng correcDons in financial close 400 hours less processing Dme at quarter-end close Only extensive transacDons and batch processing, no real-Dme simulaDon Intercompany reconciliaDon on the fly for acceleraDng financial close. Unlimited simulaDons –apply historic data to conDnuously changing business context 70% less intercompany reconciliaDon Dme Lengthy iteraDons eliminated in intercompany reconciliaDon Intercompany reconciliaDon process involving mulDple steps

7. What are key improvements in Finance? •  Improved Close Efficiency and Quality •  Improved Profit Margin •  Improved Daily Financial ReporDng and Analysis •  Simplified Asset AccounDng •  OpDmized Receivables – Reduce Days Sales Outstanding (DSO) •  Improved Cash Management •  OpDmized Days Payable Outstanding, DPO •  Improved Accuracy and Agility of planning •  Reduced the risk of Fraud •  Improved visibility and ReporDng across mulD-system landscapes •  HolisDcally managed risk, and compliance to add business value SAP S/4HANA: KEY IMPROVEMENTS

8. SAP S/4HANA FINANCE VALUE DRIVERS Process Area Value Drivers SAP AccounDng SAP AccounDng combines financial and management accounDng as well as profitability data into one universal journal. It abolishes totals, indices, and other pre-defined aggregates, and relies on line items as a single source of truth to provide an intuiDve user experience, reduce operaDonal reporDng efforts and accelerate financial processes. SAP Asset AccounDng New Fixed Asset AccounDng in SAP S/4HANA Finance is integrated based on the Universal Journal architecture and records data non- redundantly in one unique persistency. MulDple parallel documents for all valuaDons are posted in real-Dme to ensure correct values from the beginning SAP Receivables Management SAP Receivables Management improves working capital and financial health through real-Dme receivables data to enable proacDve assessment of customer credit risk, streamlines billing, and prioriDzes customer collecDons. SAP Cash Management SAP Cash Management provides global cash posiDons in real Dme even in the presence of heterogeneous backend systems. New analyDcal capabiliDes provide detailed analysis on forecasted cash flows to bring greater levels of consistency to cash balances, cash requirements, and liquidity strategies. Please state the main value drivers of each process area

9. What are the design improvements in Finance? Mo#o: “Take the best of all worlds” (e.g. ledger, market segment, coding block etc.) •  Secondary cost elements are G/L accounts •  One line item table with full detail for all components •  Data stored only once: no reconciliaDon needed by architecture •  ReducDon of memory footprint through eliminaDon of redundancy. •  Fast mulD-dimensional reporDng on the Universal Journal possible without replicaDng data to BI. •  If BI is in place anyway, only one single BI extractor needed (instead of many today) •  Technical preparaDon done to enhance important structural capabiliDes of the Financials soluDon (e.g. mulD-GAAP , addiDonal currencies) SAP S/4HANA: FINANCE DESIGN IMPROVEMENTS

10. What is a universal Journal? –  Universal journal is single repository of journal entries across mulDple applicaDons without redundancy –  This enables deeper instant insight across all dimensions, easier extensibility and process opDmizaDons for an accelerated ﬁnancial close SAP S/4HANA: UNIVERSAL JOURNAL AP GL AR FA ML CO JV Custom CO- PA Universal Journal

11. Please explain Simple Finance architecture SAP S/4HANA: FINANCE CAPABILITY •  The new journal entry consists of a header (table BKPF) and the respecDve items (table ACDOCA) •  There are rare cases, where entries in ACDOCA are wrilen without a document header (e.g. carry forward, correcDons in migraDon). These entries do not represent standard business processes. •  Table ACDOCA contains all fields needed for G/L, CO, AA, ML, PA •  MulD-GAAP capability through “RLDNR” dimension •  6 digit field for line item numbering •  23 digits for currency fields

12. SAP S/4HANA: UNIVERSAL JOURNAL Architecture !  Concept: “Take the best of all worlds” (e.g. ledger, market segment, coding block, etc.) !  ONE line item table with full detail for all applicaDons - for instant insight & extensibility !  This replaces the “logical document” of release 1.0. !  Secondary cost elements are G/L accounts. !  Data stored only once: no reconciliaDon needed by design !  ReducDon of memory footprint through eliminaDon of redundancy. !  Fast mulD-dimensional reporDng possible without replicaDng data to business warehouse (BW). !  If BW is in place anyway, only one single BI extractor needed (instead of many today). Please provide the architecture of Universal Journal

13. What are the key benefits in Asset accoun)ng? •  Flexibility concerning “Leading Valua)on” •  No more hard coupling of depreciaDon area 01 •  Only one Deprecia)on Area per Valua)on necessary •  No further depreciaDon areas (Delta areas) necessary to portray a parallel valuaDon •  No restric)ons to set up different account determina)ons in different valua)ons •  Real-)me pos)ngs per accoun)ng principle/valua)on •  Common understanding of posted document •  PosDng to different periods possible (restricDon: beginning/end of FY needs to be equal) •  New transac)ons for accoun)ng principle (deprecia)on area) specific documents •  Always separate documents per accoun)ng principle (FI-AA) •  Post the values correctly right from the beginning, using mulDple parallel documents •  Smooth integra)on with Parallel Valua)on of Cost of Goods Manufactured (COGM) •  Parallel valuaDon of acquisiDon values immediately with the acDvaDon of an Asset under ConstrucDon (AuC) SAP S/4HANA: NEW ASSET ACCOUNTING

14. What are the New features in Asset accoun)ng? •  Removal of redundancies: •  ReconciliaDon between G/L and AA is ensured by design! •  No reconciliaDon-step in ﬁnancial close needed anymore. •  All non-staDsDcal items are updated as Universal Journal Entries. •  ReporDng based on line items – removal of totals •  Deprecia)on in full detail •  DepreciaDon posDng per single asset •  ReporDng on any CO-object by single asset enabled •  Fast close and So close •  Plan values at real-Dme – updated with every master data change and every asset transacDon •  Speed up of depreciaDon run by a factor of 4,7 •  PosDng run fully obsolete: real-Dme update of assets in all cases. SAP S/4HANA: NEW ASSET ACCOUNTING

15. What are the New features in Cash Management? Classic Cash Management is replaced by the new SAP Cash Management powered by SAP HANA. Following areas have improved usability , new Fiori apps are available •  Bank Account Management : –  Bank master data transacDon codes are replaced by new Fiori app "Manage Banks" –  (BAM) Bank hierarchy based on bank, business partners Free-style bank, account groups allow ad-hoc watch for •  Cash Posi)on / Liquidity forecast –  Use the Cash PosiDon Details app, Liquidity Forecast: –  Data IntegraDon: Bank Statement, Bank Statement AccounDng •  Memo Record – No change in current process •  Liquidity planner –  Embedded Liquidity Plan with BPC/PAK (Planning ApplicaDon Kit) and Design Studio UI No ETL is needed. Automated liquidity forecast is integrated –  Rolling Liquidity plan process, Automated forecast, Variance analysis •  Cash Concentra)on – Based on New Bank Account Management •  Distributed Cash -Retrieve remote Liquidity Planner actual data into the Exposure Hub SAP S/4HANA: CASH MANAGEMENT

16. What are the features of Integrated Business Planning? •  Embedded end-to-end planning process uDlizes real Dme operaDonal data from ERP, eliminaDng redundancy / reconciliaDons between forecasDng and operaDonal systems. •  All data stored in a single table in memory allowing for various data forms, volumes, and conﬁguraDons at the desired level of granularity. •  Complete planning app that supports plan development as well as the ability to enter and report upon planned data. •  Pre-delivered content designed to signiﬁcantly reduce cost of implementaDon, ongoing maintenance, and to support adaptaDon in lieu of full implementaDon of plan/forecast capabiliDes. SAP S/4HANA: INTEGRATED BUSINESS PLANNING – SAP BPC ON S4HANA

17. What are the features of Integrated Business Planning? S/4HANA Finance includes templates that provide support for: "  Cost Center Planning "  Internal Order Planning "  Project Planning "  Proﬁt Center Planning "  Cost of Sales Planning "  P&L Planning "  Market Segment Planning "  Liquidity Planning "  Balance Sheet Planning S/4HANA Finance also includes: "  Queries "  Planning FuncDons "  Sequences "  Info-Objects "  Info-Providers SAP S/4HANA: INTEGRATED BUSINESS PLANNING

18. SAP S/4HANA: FINANCE MIGRATION •  Training on G/L in SAP AccounDng •  Blueprint for G/L configuraDon •  ReconciliaDon, period-end close acDviDes, reporDng snap shots for comparison •  InstallaDon of the Financials Add-On •  CreaDon of back-up tables •  ReconciliaDon & Checks •  Data transfer from classic G/L to G/L in SAP AccounDng •  ReconciliaDon & checks auer data transfer •  MigraDon of financial data (for GL/AP/AR/CO) – due to dropped totals tables, etc. •  ReconciliaDon & checks auer migraDon •  Cold parDDon for old index tables •  AcDvaDon of GL of SAP AccounDng and configuraDon for asset accounDng •  ReconciliaDon / comparison of financial KPI‘s •  Process tests Prepara)on Installa)on of Financials Add-on Data Transfer * Data Migra)on Post Processing Please explain the high level migra)on steps

19. What are the repor)ng improvements available? IntuiDve user experience SAP S/4HANA: FINANCE REPORTING Example: Post General Journal Entries !One Screen App for manual postings to G/L accounts !Calculate taxes automatically !Add attachments and enter notes to explain the reason for postings

20. Drilldown Repor)ng - Example SAP S/4HANA: FINANCE REPORTING

21. DETAILED ANALYSIS OF JOURNAL ENTRIES Drilldown Repor)ng - Example

22. REFERENCES •  hlp://scn.sap.com/community/s4hana •  hlp://s4hana.sapjourneymap.com •  hlps://training.sap.com/shop/learninghub

23. FOLLOW US Thank you for your )me Nutan.Deshpande@Capgemini.com Follow us on at @ASUG365

24. APPENDIX – S/4HANA TECHNICAL CHANGES •  Index tables removed Aggregate tables removed BSIS Index for G/L Accounts BSAS Index for G/L Accounts (Cleared Items) BSID Index for Customers BSAD Index for Customers (Cleared Items) BSIK Index for Vendors BSAK Index for Vendors (Cleared Items) BSIM Index, Documents for Material FAGLBSIS Index for G/L Accounts – New G/L FAGLBSAS Index for G/L Accounts – New G/L (Cleared Items) GLT0 General Ledger: Totals GLT3 Summary Data PreparaDons for ConsolidaDon FAGLFLEXT New General Ledger: Totals KNC1 Customer master (transacDon figures) LFC1 Vendor master (transacDon figures) KNC3 Customer master (special G/L transacDon figures) LFC3 Vendor master (special G/L transacDon figures) COSS Cost Totals for Internal PosDngs COSP Cost Totals for External PosDngs

25. MATERIAL LEDGER: TECHNICAL CHANGES WITH SIMPLE FINANCE 2.0 Usage of Material Ledger for parallel currencies and parallel valuaDon purpose #  Contents of tables MLIT, MLPP, MLPPF, MLCR, MLCRF, MLCD, CKMI1, BSIM is stored in ACDOCA. MLHD data is stored in BKPF #  CompaDbility views V_<TABLENAME> (e.g. V_MLIT) are provided in order to reproduce the old structures #  Access to old data in tables sDll possible via the views V_<TABLENAME>_ORI (e.g. V_MLIT_ORI) #  MLHD, MLIT, MLPP, MLCR sDll keep prima nota informaDon, in case of manual price changes or material debit/credit. Usage of Material Ledger for Actual CosDng purpose #  MLIT, MLIT, MLPP, MLPPF, MLCR, MLCRF, MLCD are used as before Simple Finance 2.0 MLHD MLIT MLPP MLPPF MLCR MLCRF BSIM CKMI1 MLCD ACDOCA BKPF

26. ASSET ACCOUNTING: TECHNICAL CHANGES WITH SIMPLE FINANCE 2.0 Actual items #  Actual data of ANEK, ANEP, ANEA, ANLP, ANLC is stored in table ACDOCA. ANEK data is stored in BKPF. #  CompaDbility views FAAV_<TABLENAME> (e.g. FAAV_ANEK) are provided in order to reproduce the old structures. #  Access to old data in tables sDll possible via the views FAAV_<TABLENAME>_ORI (e.g. FAAV_ANEA_ORI) Non actual items #  StaDsDcal data (e.g. for tax purposes) previously stored in ANEP, ANEA, ANLP, ANLC is now stored in table FAAT_DOC_IT #  Plan data previously stored in ANLP and ANLC is now stored in FAAT_PLAN_VALUES ANEK ANEP ANEA ANLP ANLC ACDOCA BKPF FAAT_DOC_IT FAAT_PLAN_VALUES

27. CONTROLLING (CO): TECHNICAL CHANGES WITH SIMPLE FINANCE 2.0 Actual Items #  Contents of COEP, #  Needed actual data for long running orders/ projects from COSP_BAK, COSS_BAK is stored in table ACDOCA. Currently, COBK is wrilen as before. Target is to replace COBK through BKPF. #  CompaDbility views V_<TABLENAME> (e.g. V_COEP) are provided in order to reproduce the old structures. #  Access to old data in tables sDll possible via the views V_<TABLENAME>_ORI (e.g. V_COEP_ORI) Non actual items #  Value types other than ‘04’ and ‘11’ are sDll stored in COEP, COSP_BAK, COSS_BAK COEP COSP_BAK COSS_BAK COBK ACDOCA BKPF

28. GENERAL LEDGER: TECHNICAL CHANGES WITH SIMPLE FINANCE 2.0 #  Data of FAGLFLEXA, FAGLFLEXT is stored in table ACDOCA. #  Data of New G/L industry tables for Public Sector and Joint Venture AccounDng <Industry>T, <Industry>A is stored in table ACDOCA. #  Data of customer created New G/L tables ZZ<CUST>T, ZZ<CUST>A is stored in table ACDOCA #  A compaDbility view is provided for FAGLFLEXA. #  FAGLFLEXT is deﬁned as (compaDbility) view. #  CompaDbility views for the New G/L industry tables are provided: V_<Industry>A, V_<Industry>T #  CompaDbility Views are provided for customer created New G/L tables. The views are numbered sequenDally: ZFGLV_GLTT_Cx and ZFGLV_GLSI_Cx, where x is a number. #  Access to old data in tables sDll possible via the views V_<TABLENAME>_ORI (e.g. V_FAGLFLEXA_ORI) . #  The old data of FAGLFLEXT is stored in table FAGLFLEXT_BCK #  Customers that want to access old data in customer deﬁned New G/L tables have to create views in the data dicDonary. As template, V_FAGLFLEXA_ORI can be used FAGLFLEXT FAGLFLEXA ACDOCA ZZ<CUST>T <Industry>T ZZ<CUST>A <Industry>A