Over the past few months SAP has released information about its new SAP HANA based solution, SAP Smart Financials.
Core Finance is an area that is normally seen as stable within a client’s SAP portfolio and therefore does not gain the same level of interest as the SAP EPM suite to “C” level executives. Over 95% of current SAP customer bases uses ECC SAP Financials in some way or another. It was the stability and reliability of the design that attracted customers to implement ECC for their core financial data requirements.
Core Financials consists of a number of modules which can be broken down into core finance for statutory accounting such as FI-GL, FI-AP, FI-AR, FI-AA, FI-TR and so on. To complement the data being held in the statutory side, a number of management accounting modules are available to produce management reporting to suit the different customers that use SAP ECC. Modules such as CO-CCA, CO-PCA, CO-PS Co-PC and CO-PA provide customers many ways to design the end solution to meet their reporting requirements.
One size fits all
There is no single right way to implement SAP Financials, especially within the core solution. Some customers only use a few of the modules and others use more. Customers that use the entire suite of Core Financials modules, as well as all of the Controlling documents, will find that for a single transaction, numerous accounting documents are created. In turn this will mean that when reporting, they'll get different values for a single process when reporting on the different modules. At a high level this is acceptable as it provides additional granularity to analyse costs by different characteristics and measures.
However the downside to this approach is that a considerable amount of time can be spent internally to reconcile data between two modules. This overhead to the finance function is there for data reconciliation; however the real purpose is to check the system postings and not the accuracy of the underlying financial postings. Or to put this another way, highly skilled accountants are confirming the accuracy of an accounting system.
What is SAP Smart Financials?
SAP Smart Financials provides a simplistic approach to the underlying table design of financial data. The concept is fairly simple - one SAP document to capture both the finance postings and management postings in a single record. This simplifies the volume of tables that hold index views of the same accounting document, as well as total tables. The results are twofold.
A simplification of the financial data in SAP Business Suite on HANA. This leads to a reduction in the size of the SAP HANA environment which in turn removes the cost of the final solution
The ability to remove the need to reconcile data between the Finance and Controlling modules by skilled accounting staff.
How will this benefit my organisation?
With SAP Business Suite on HANA, SAP has unlocked issues that were previously seen as impossible to achieve. A common month-end process is to close off month-end in SAP ECC and then transfer the data to a SAP BW landscape to review the figures. Adjustments are made where applicable.
At the same time the finance team is under tight time constraints to publish month-end figures for local entities and then provide a consolidated group figure. The core financial postings will be made pretty quickly, however certain accruals and pre-payments may need to be posted in the first couple of days of the month-end close. At the same time the controlling data must be reconciled to ensure the figures show the data as it is required. Costs may need to be allocated across different accounts or cost objects.
Due to high volumes of data it is not achievable to analyse this as standard in SAP ECC, so data needs to be transferred to SAP BW for analysis and this can be timely.
SAP Business Suite on HANA provides the ability to perform all core financial reporting. This would only be possible if all of the data required for financial reporting was held in the single SAP Business Suite on HANA environment.
Sapphire Now is just around the corner
So far, the introduction to SAP Smart Financials has been pretty low key. It has been introduced via various SAP Insider events and I’m assuming it will get wider introduction at SAPs flagship event Sapphire Now in Orlando next week. The messaging around the solution will be critical, so the focus needs to be what is in it for the client rather than the technical solution.
Will SAP Smart Financials inrease the adoption of SAP Business Suite on HANA?
This is the big question. In isolation SAP Smart Financials provides significant benefits to the majority of the current SAP ECC install base. The SAP Business Suite on HANA solution has been available for over a year now and therefore the solution is no longer viewed as new or cutting edge. I’d expect that over the next 24 months we’ll see a number of high profile SAP Smart Financials success stories leading to a wider adoption across the current SAP ECC install base.