Describing Organization and Change Management

Objective

After completing this lesson, you will be able to memorize how a Central Finance implementation will result in process changes for users and process efficiencies for the organization

Key process changes with Central Finance vs Central Payments vs Shared Services vs Group Reporting

With Central Finance, there are some key areas where there are process changes and require Organizational Change Management (OCM) and user training. Some of those key areas and processes are highlighted below:

  1. Central Finance system

    Provide an overview of Central Finance, explaining its purpose, benefits, and how it integrates with existing systems, which is extremely beneficial from user’s point of view. The OCM training also ensures that users understand the role of Central Finance in consolidating financial data from multiple source systems.

    Central Finance and S/4HANA system are essentially the same system. No separate logon is needed to access the Central Finance system.

  2. Use of FIORI

    Familiarize users with the SAP S/4HANA user interface, navigation menus, and features such as SAP Fiori apps. Provide hands-on training to ensure users are comfortable navigating the system.

  3. Running Finance reports out of Central Finance systems

  4. Finance processes (invoicing, payments, etc.) if moving from non-SAP to SAP systems

    • Transaction Processing: Provide training on executing financial transactions in Central Finance, such as posting journal entries, processing accounts payable/receivable, and managing intercompany transactions. Ensure users understand the differences in transaction processing compared to their previous systems.

    • Financial Close Processes: Train users on the financial close processes in Central Finance, including period-end closing activities, reconciliation, and reporting requirements. Ensure users understand their roles and responsibilities in the financial close process within the Central Finance environment.

    • Running period end close processes: Once Central Payment is activated for a company code, all dependent processes based on open item management must take place in the Central Finance System:

      • Dunning

      • FX Revaluation

      • Customer / Vendor correspondence

      • Regrouping of Payables / Receivables

      • Provisions for Doubtful Receivables

      • Calculate and post Balance Sheet Adjustment

      • Inter-Company Reconciliation process

      • Month-end reporting e.g. Open Item lists, etc.

      • Foreign Trade Report

      • Withholding Tax for central payments

      • IntraSTAT (within EU), ExtraSTAT (EU with non-EU) Reporting, etc.

    • Running payments from Central Finance system after Cpay has been activated.

  5. Role-Based Training

    Customize training sessions based on users' roles and responsibilities within the organization. Offer role-specific training that covers the tasks, transactions, and reports relevant to each user's job function.

    • Data Management and Analytics: Provide training on data management in SAP S/4HANA, including data entry, validation, and maintenance processes. Train users on how to leverage analytics and reporting tools in SAP S/4HANA to extract insights from data.

    • Integration with Other Systems: If applicable, provide training on integrating SAP S/4HANA with other systems within the organization's IT landscape. Train users on data exchange, interface configuration, and troubleshooting integration issues.
    • Customization and Personalization: Teach users how to customize and personalize their S/4HANA environment and FIORI user experience to suit their preferences and work style. Provide training on personalization settings, user-specific configurations, and custom reports.
    • Advanced Topics and Specialized Modules: Depending on the organization's requirements, offer training on advanced topics and specialized modules within SAP S/4HANA, such as advanced financial accounting, predictive analytics, or industry-specific functionalities.
    • Master Data Management: Train users on managing master data in Central Finance, including customers, vendors, materials, and accounts. Cover topics such as data creation, maintenance, and governance processes to ensure data accuracy and consistency.
    • Data Replication and Integration: Provide training on data replication processes between source systems and Central Finance. Cover topics such as data extraction, transformation, and loading, as well as data replication monitoring and error handling.
    • System Support and Issue Resolution: Train users on how to seek support and resolve issues related to Central Finance. Provide guidance on reporting system bugs, submitting enhancement requests, and accessing help resources such as user manuals and support portals.

Value of OCM with Central Finance

The organizational change management (OCM) regarding Central Finance implementation consists of establishing governance around technological and process-oriented changes. While the Central Finance implementation requires a lot of work at the back end, there are changes at the front end as well like the user interface and the user experience changes. One example of this is role-based SAP Fiori applications.

There are two aspects of organizational change management pertaining to Central Finance implementation.

  1. Identifying the groups impacted during and after a central finance project implementation and designing training strategies to develop capabilities and capacity to accommodate the changes. The training strategy must include a knowledge transfer process to all instances who participate in design and mapping exercises. This also includes clearly identifying the roles and responsibilities of the stakeholders and defining roles and authorizations for each of them.
    The image depicts a hierarchical organizational structure for managing various aspects of corporate finance and operations. At the top sits the Corporate Controller and Management, who oversee the entire organization. Directly below them are the Business Unit Controller and Management, responsible for overseeing individual business units. The Corporate CFO/CIO also reports directly to the top level management. Supporting these upper management roles are various functional owners and teams, including FICO (Financial Accounting and Controlling) Users, IT Architects who define the technology strategy, the Shared Service Center handling centralized operations, Authorization & Controls governing access and permissions, and Business Process Owners managing end-to-end processes. Underpinning the entire structure is the Master Data Governance & Owner, ensuring data integrity and proper data management across the organization.

  2. Defining governance for master data change, configuration change, release, and refresh procedures. For example, a master data governance process must be established so that mapping is created in the central finance system before using any new master data in source system for transactions which are subject to replication. This will avoid any master data mapping issues during replication.

For configuration changes too, a synchronous approach must be maintained between the source systems and the Central Finance system. Any asynchronous change relevant to document replication can result in errors in SAP Application Interface Framework.

Governance needs to be implemented around release and refresh processes as well. For release it must be made sure that the relevant changes move to production together for both source and the central finance system. If there are more than one source system, then the refresh of lower environments for all the source systems should be done together to keep the data in the Central Finance system relevant for testing.

Another important consideration is a well-planned end user training strategy to reap the benefits of SAP S/4HANA innovations. In this context, the end user should be familiarized with the use of diverse types of SAP Fiori apps such as transactional, analytical and fact sheets. The true benefit of the SAP S/4HANA innovations can only be realized if end users use them to complete their daily tasks more efficiently, which will require well-structured training.

Highlight granular and centralized reporting capabilities and real time reporting capabilities

By leveraging the advanced features of SAP S/4HANA, including its HANA database and Universal Journal, Central Finance provides a comprehensive and real-time view of an organization's financial data. This system enables both high-level and granular reporting, ensuring that business leaders have the insights needed to make informed decisions. Here are key highlights of its reporting capabilities, including the use of Margin Analysis for more detailed analysis:

Centralized Reporting Capabilities

Real Time Insights: Central Finance offers real-time financial reporting, allowing businesses to access up-to-date financial information instantly. This timeliness is crucial for responding quickly to market changes and making informed decisions.

Unified Financial View: By consolidating financial data from various source systems into a single SAP S/4HANA system, Central Finance provides a unified view of the financial status across the entire organization. This "single source of truth" enhances the accuracy and consistency of financial reports.

Granular Reporting Capabilities

Account-based COPA, integrated into the SAP S/4HANA environment, provides detailed insights into profitability by leveraging the Universal Journal's comprehensive data model. This approach allows for a nuanced analysis of financial performance across various dimensions such as product lines, customer segments, and geographic regions. Organizations can thus examine revenue streams and cost structures with a high degree of granularity, identifying specific areas for strategic improvement. The real-time nature of SAP S/4HANA ensures that this detailed financial analysis is based on current data, facilitating timely and informed decision-making. By harmonizing data from diverse sources, Central Finance with Margin Analysis empowers businesses to achieve a deeper understanding of their financial health and profitability drivers, leading to more effective resource allocation and strategic planning.

Benefits of starting OCM early in the implementation

Organizational change management has a very crucial role in successful Central Finance implementation. It ensures that the transition from current processes to the new SAP Central Finance system is smooth and without disruption.

Each Central Finance project depends on successful and early adoption of key change enablers.

The methods of each change enabler, together with some key factors, lead to a successful organizational change during a Central Finance project:

This image presents a framework for Change Enablers that outlines various elements and activities that can facilitate organizational change. It is divided into four sections, each representing a different focus area. The first section, Lead, Communicate, and Engage, includes Change Leadership, Stakeholder Management, and Communication. The second section, Develop Capability and Capacity, consists of Change Program Planning and Learning & Training. The third section, Design Organization and Governance, encompasses Organization Design, Organization Governance, and Project Governance. Finally, the fourth section, Align Individuals and Teams, involves Project Team and Organization. This framework provides a structured approach to understanding and addressing the various aspects necessary for successful organizational change initiatives.

Focus on Benefits and Outcomes

One of the most important factors in a successful implementation, is to understand the value of the Central Finance with regards to the value of the As-Is. Develop a Central Finance vision and outline the key benefits which leads to a commitment to the project by all persons involved. KPI tracking is responsible for the visibility of the results leading to the aligned strategy in the organization.

Lead, Communicate, and Engage

For change to happen successfully, the stakeholders must understand the change issues and risks and must analyze the level of preparedness of the conditions, attitudes, and resources, at all levels in an organization. The value of Central Finance replication requires full support of all stakeholders involved at system and data level. A communication plan helps to obtain a greater buy-in from various stakeholders at an early stage and minimize resistance.

Develop Capability and Capacity

It is important to establish the scale and scope of change so that activities are clearly defined, ensuring all key elements are being addressed so that the skills and competencies to perform work effectively are identified. This approach avoids confusion and overlapping of activities with may result in conflicts for the project.

Design Organization and Governance

Job role descriptions must be updated in accordance with the new processes with clearly defined roles and responsibilities. Project governance plays a critical role in ensuring effective oversight of strategic initiatives. One of the most critical factors for success is that the governance model must match the unique culture and objectives of the organization.

Align Individuals and Teams

The ultimate goal of change management is to drive organizational results and outcomes by engaging employees and inspiring their adoption of a new way of working. A project is only successful if individual employees change their daily behaviors. The project manager is the first person responsible for supporting the project members throughout the change. The attitude and actions of the manager will directly impact how the team members perceive the change, whether they embrace it or oppose it.

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