Identifying Central Finance Use Cases

Objectives

After completing this lesson, you will be able to:

Define the integration of SAP as well as non-SAP system with Central Finance system
Highlight key use cases and scenarios for deploying Central Finance

High Level Integration Capabilities between SAP and non-SAP Systems using Central Finance

Central Finance enables customers to integrate financial data from non-SAP systems. The process includes a staging area where customers can store non-SAP financial data in a format that can be consumed through the Central Finance Third-Party (non-SAP) Accounting Document interface. The non-SAP data is then replicated from the staging area, mapped, transformed, validated, and posted to the Universal Journal in SAP S/4HANA, bringing into play the latest innovations only accessible via SAP S/4HANA.

As for the technical conversion of non-SAP financial data to the Central Finance staging area, SAP provides customers with the flexibility to select their preferred middleware. Additionally, SAP provides comprehensive documentation that helps customers understand the target structure for data processed via the 3rd-Party Central Finance interface. This information greatly supports customers' efforts to identify their relevant non-SAP Financial Data and technically map this information into the SAP staging format.

Once data is in the staging area in a format compatible with Central Finance, it is replicated using the SAP Landscape Transformation Replication Server to Central Finance for processing and posting.

The image illustrates the data integration process between a customer or partner system and SAP S/4HANA Central Finance. The third-party system, which serves as the source, sends data through middleware that performs inbound mapping. The mapped data then goes through the SLT (SAP Landscape Transformation) process for staging before being passed to the SAP S/4HANA Central Finance system via a third-party interface. Within SAP, the data undergoes the SAP AIF (Application Interface Framework) process for enrichment and error correction before being posted to the Universal Journal in the central finance system.

This process allows customers to have access to general ledger, accounts payable & accounts receivable data from one or more non-SAP systems in a standardized and consistent format within their Central Finance SAP S/4HANA system.

Furthermore, customers can transition processes from their various non-SAP systems to Central Finance to take advantage of functionalities such as Central Payments. This means they can make payments in SAP S/4HANA for invoices originating from non-SAP systems.

Showcase Different Use Cases for Implementing Central Finance

The image illustrates various scenarios for integrating SAP S/4HANA within an organization's IT landscape. At the center is the INNOVATE NOW concept, representing the main SAP S/4HANA system. Surrounding this are different integration approaches: mergers and acquisitions, where a new SAP system is connected; instance consolidation, where multiple instances are consolidated into the main system; system consolidation, where multiple systems are consolidated; move to the cloud, where the SAP system is hosted in the cloud; SAP and non-SAP integration; and subsidiary onboarding, where a subsidiary's system is integrated with the main SAP S/4HANA system. The diagram provides a high-level overview of the different ways an organization can integrate and consolidate their SAP systems around a central SAP S/4HANA core.

Note

Certain restrictions apply to S/4HANA Public Cloud Source Systems. Please see SAP Note 3398470 - Central Finance: Restriction Note for the integration of an SAP S/4HANA Cloud source system to Central Finance.

Mergers and Acquisitions (M&A):

Scenario: When organizations merge or acquire a new company and its ERP system, they often end up having disparate systems with different data structures.

Use Case: Implementing Central Finance helps in consolidating financial data from different systems, providing a unified view of the financial landscape. This accelerates financial integration, harmonizes processes and master data, and facilitates financial reporting by leveraging Universal Journal.

System consolidation:

Scenario: Organizations with multiple lines of business usually operate with a diverse array of legacy ERP systems across its legal entities, each with its own set of processes, challenges, and complexities.

Use Case: Implementing Central Finance allows for the consolidation of financial processes in one system (Example: Credit, Collections, Dispute, Intercompany reconciliations, etc.), leading to shared services and process optimization. This results in transparency, stricter controls, cost savings and improved efficiency.

Subsidiary Onboarding:

Scenario: Organizations with large footprints may want to connect an existing subsidiary or acquire a new subsidiary operating with an SAP or non-SAP ERP system integrating the subsidiary's financial operations into the existing Central Finance system.

Use Case: Implementing Central Finance allows for streamlining the onboarding process of new subsidiary, ensuring faster integration and harmonization of financial data while minimizing disruption to ongoing operations. This also ensures immediate visibility into subsidiaries' financial performance while also allowing the organization to achieve standard reporting across subsidiaries.

System Landscape Simplification: (SAP and non-SAP ERPs)

Scenario: Companies may have multiple ERP systems due to historical reasons or earlier acquisitions, leading to complexity and inefficiency. Also, organizations with multiple non-SAP ERP instances and/or classical databases may struggle with moving their systems to an SAP HANA database.

Use Case: Central Finance allows organizations to streamline their system landscape by consolidating financial data into a single SAP S/4HANA system. This simplifies IT infrastructure, reduces maintenance costs, and enhances operational efficiency.

Move to the Cloud

Scenario: Companies having large IT infrastructure and diverse ERP systems landscape are seeking to modernize their IT infrastructure and migrating to the cloud.

Use Case: Implementing Central Finance serves as a key component of a company’s cloud transformation strategy. By deploying Central Finance to a cloud platform such as SAP S/4HANA Cloud or a third-party cloud provider like AWS or Microsoft Azure, organizations can realize numerous benefits, including reduced infrastructure overhead, simplified management, scalability, improved accessibility, and cost-effectiveness of cloud computing while centralizing its finance operations for enhanced efficiency and agility.

Highlight Use Cases from Business Benefits Perspective

Examples: Automation, Simplification, Transformation, Consolidation, etc.

Key Business Benefits include:

Streamlined and efficient data integration: Central Finance automates the integration of financial data from disparate systems including various ERP systems and other financial applications reducing manual work and data consolidation errors.
Faster financial close: As consolidation processes become automated, financial close cycles become shorter and more efficient. By automating consolidation, organizations can speed up the overall financial reporting cycle, reducing the amount of time and effort needed for Month-end and Year-end close.
Simplified and scalable Landscape: One example of simplification is the activation of Central Payments. With a centralized payment system, multiple payment interfaces of the legacy systems can be replaced by one single payment interface reducing the cost of maintenance and simplifying the landscape. Regarding scalability, SAP Central Finance can seamlessly handle adding new systems and data sources as the business grows or undergoes mergers and acquisitions."
Improved reporting and Compliance: Data entry mistakes are minimized by automation, assuring data precision. This is crucial for adhering to legal requirements and accounting guidelines.
Single reporting standard: SAP Central Finance solution provides standardized reporting across the organization. Consolidating financial information into a single platform allows organizations to ensure sanity and precision in their financial statements, aiding them in meeting statutory requirements with considerable reduction in effort.

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