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USING SAP CENTRALFINANCE TO BEGIN YOUREVOLUTIONTO SAP S/4HANA Most SAP customers will eventually need tomove to the SAP S/4HANA platform. Butwhat is the most effective way of gettingthere? Taking a full migration approach canbe disruptive and invasive to a company.Instead, companies can use SAP CentralFinance as a means of gradually evolvingtoward the SAP S/4HANA world, reapingvalue at each step along the way.

THE ADVANTAGESOF AN EVOLUTIONARYAPPROACHThe majority of large SAP enterprise customers are onversions of SAP software that are showing their age.These systems include one-size-fits-all user interfaces andapplications that cannot deliver a single source of “truth”for the enterprise. They also fail to take advantage ofintelligent technologies and innovations such as in-memorycomputing, real-time analytics, machine learning, artificialintelligence, big data, cloud or the Internet of Things. Thatmeans companies cannot access on-demand analyticsto discover insights and value in the large amounts ofdata generated by the business. They also cannot deliverintuitive, easy-to-use, go-anywhere, task-specific andaction-oriented user interfaces for business users.What is a company to do in that situation? One answer isSAP Central Finance. Eventually, most SAP customers willneed to migrate to the SAP S/4HANA platform. But in theshort term, given the time and millions of dollars invested inexisting systems, what is a more effective and cost-efficientway to proceed?In this paper we’ll explore how SAP Central Finance canhelp companies take an evolutionary approach to SAPS/4HANA rather than engaging in an invasive migration.First we’ll look at how Central Finance improves the overallfinance function. Then we’ll provide more detail on usingCentral Finance as a means of moving in an evolutionarymanner toward SAP S/4HANA.2 S/4Central Finance

SAP CENTRAL FINANCE:CREATING A WORLD-CLASSFINANCE FUNCTIONCompanies today expect the financeorganization to be more agile, forwardlooking and decision centric. For theoffice of the CFO, this means creatingmore tangible insights from thevolumes of data flowing through thecompany's ERP systems. Stakeholdersare increasingly demanding access tothe right information at the right time tomake the right decisions. These trendsunderscore the need for agileinformation technologies and solutions.One global instance of finance datain Central Finance can improve theefficiency and effectiveness of thefinance function. The Central Financeinstance contains all universal journalpostings from upstream ERP systems,making it more effective in managing:SAP Central Finance allows users tocreate a global, common reportingstructure by mapping accountingentities in upstream systems to onecommon set of master data in theCentral Finance system (for example,general ledger account, profit center orcost center). Revenue recognitionThe centralized (or global) postings offinance data into the Central Financesystem as universal journal postings(a.k.a., single source of truth) allowthe office of the CFO to run thecomplete range of harmonizedfinancial reports efficiently. Thisprovides a solid base for thecompany's long-term decision-makingcapabilities and business strategies.In some cases, accounts payable,accounts receivable and payroll usershave to use multiple systems in aheterogeneous landscape to performtheir duties. Centralizing financial datainto a single global instance with CentralFinance provides an improved platformfor financial planning, resulting inreal-time planning data that facilitatesproactive and predictive financialreporting capabilities. The platform alsoimproves the productivity and efficiencyof shared services operations. Financial close tasks Cost assessments Cash flow management Rebate calculationsA Central Finance instance also enablesthe office of the CFO to be moreproactive in managing the financedecision-making process and can leadto reduced time to close the books.Additional benefits include improvedprocess efficiency, reduced total costof ownership (TCO) and harmonizeddata to assist the finance team inmeeting their stakeholders’ needs.Central Finance can be implementedon-premise, in the cloud or as asoftware-as-a-service solution. Each ofthese implementation methods deliversaccess on any device, instant insights,and a task-based, actionoriented SAPFiori interface3

Additional benefits that can be realized by deploying SAP Central Finance Global, unified, real-time financial and management reporting Enterprise-wide data governance for materials, customers, vendors, banks andgeneral ledger accounts Standardization of finance and accounting data and processes to create a fullfinance template:- Global, standardized financial organizational data such as cost centers, profitcenters, and segments/business units- Intercompany processes and reconciliation- Corporate/group allocation- Centralized accounts receivable/accounts payable/asset/material ledger- Treasury and cash management- Budgeting/planning and forecastingSAP CENTRAL FINANCEAS AN EVOLUTION, NOT AMIGRATION, TO SAP S/4HANAThe Central Finance environmentis an SAP S/4HANA EnterpriseManagement (EM) instance that canbe utilized as the initial entry point toa business’s SAP S/4HANA platform.The SAP S/4HANA EM instance has theappropriate finance functionality toenable Central Finance. SAP LandscapeTransformation (SLT) technology isleveraged to integrate the upstreamERP system(s). The SAP Central Financesystem can then be configured for yourorganization’s new or global chart andother key master data objects.SAP S/4HANA is the right destination foryour business, but it can’t be reachedin a day. By using an evolutionaryapproach with Central Finance, you arebetter able to take step migrations tothe SAP S/4HANA EM environment. Youcan plan or develop your SAP S/4HANAmigration roadmap as SAP develops thefull capabilities needed for yourprocesses and business.4 S/4Central FinanceStarting the SAP S/4HANA journey witha Central Finance instance is a noninvasive approach for your organization.The upstream ERP system or systemscontinue to be operated as theycurrently are today. You can takeadvantage of the functionality andassociated benefits within the CentralFinance instance immediately. You canbegin the SAP S/4HANA journey by firstreassessing your organizationalstructure and master data—dataelements such as the chart of accounts,cost centers, profit centers and keymaster data elements such ascustomers and vendors.These elements will be redesigned anddeployed to your Central Financeinstance and mapped to your existingchart and master data elements.

The evolutionary approach to SAPS/4HANA gives your organizationthe opportunity to rationalize andimprove the quality of key systemdata elements, all while buildingout your Central Finance instance.Master data elements shared betweenthe new Central Finance instanceand the upstream ERP system(s) arekept in sync by using SAP’s MasterData Governance (MDG) modulefunctionality. With the Central Financeapproach you are fundamentallydesigning and building your enterprisesystem for the future while continuingto operate as you do today with yourupstream ERP system(s).If your company has only one highlycustomized global instance of SAPECC, Central Finance can be yourdeployment path to SAP S/4HANA.Over time, your organization hasprobably designed and built a numberof customization and configurationlayers that were needed due to yourcompany’s evolving and changingbusiness model and needs. Theseconfigurations and customizationsmay have also led to a proliferationof master data objects that are nowcorrupt, non-standard and unusable.By moving first to a Central Financeinstance rather than developinga standalone greenfield instanceimplementation, your organization cantake advantage of the SAP S/4HANAtechnology and its related financebenefits immediately while the full suiteof SAP S/4HANA EM matures over time.With Central Finance, organizationswith a single SAP ERP instance andorganizations with heterogeneous,multi-ERP system landscapes withlittle appetite for a large migration orupgrade project can take advantageof SAP’s finance innovations in anondisruptive fashion while providingfor business continuity. This approachoffers several important capabilities:DIGITAL DATA ARCHITECTURE:Flexible and extendable coding blockto record and report external financialaccounting data as well as all businessperformance-relevant (microsegment)business dimensionality. Dynamicattributes for enhanced analysis canbe acquired through virtual queries.Revenues and cost are broughttogether to provide margin/ profitinformation on a micro-segment level.All financial transactions are onlystored once (single source of truth)in a central financial transactionleveldata repository. This provides reportingand analytics on top of a single dataset without replication to reportingsystems or data warehouses. Thismeans that data is stored only once,without additional replication andduplication for planning, and onlyonce centrally across the organizationin case of heterogeneous SAP and/ornon- SAP system landscapes.ABILITY TO SUPPORT GROWTH:Managing change, organic or inorganicgrowth, and internal business modelconcepts such as process automation,shared services or even zero-touch/exception-based finance operations.Also supported are modeling andsimulation of reorganization activities;automatic adjustments to marketsegment reporting without (physical)realignment of financial postings, andrestatement of key financial reports,and the ability to "plug in" entitiesfollowing a merger or acquisition.CAPACITY TO EXTEND BEYOND THECORE: In the digital economy, realtime interaction rather than integrationis the new standard. Pre-definedplugins, add-ons, and digital or cloudconnectors have replaced customintegration and, through functionaldepth, have surpassed traditionalcustom integration.5