Last Updated on September 12, 2022 by Pradeep
SAP FICO vs. S4 HANA Finance
The main difference between SAP FICO and S4 HANA Finance is the technology used in them. SAP FICO works on the ECC model, while SAP S4HANA Finance (Simple Finance) is based on the in-memory HANA database which works on cloud technology.
The following are covered in this post:
- What is SAP FICO?
- What is the use of SAP FICO?
- Sub-modules of SAP FI
- Sub-modules of SAP CO
- What is SAP S4 HANA?
- What is SAP S4 HANA Finance?
- Difference Between SAP FICO and S4 HANA Functionality
- SAP Migration from ECC to HANA
- Functions and Features of SAP S/4HANA (and S/4HANA Finance)
Let’s start with what is SAP FICO and what is SAP S4 HANA Finance.
What is SAP FICO?
SAP FICO standards for FI (Financial Accounting and CO (Controlling). SAP FICO is an important module in SAP ERP. It works on the ECC model. Both FI and CO modules cover complete business processes related to Financial Accounting and Management Accounting.
Know: Why to learn SAP FICO S4 HANA
What is the use of SAP FICO?
- SAP Finance (FI) is used for external reporting i.e. Balance sheets, Profit and Loss statements.
- FICO integration with Material Management (MM)
- Also, FICO integration with Sales and Distribution (SD)
- Likewise, SAP FICO integrates with Production Planning (PP) and other modules too.
Sub Modules of SAP FI
- General Ledger Accounting
- Accounts Receivables
- Accounts Payable
- Asset Accounting
- Bank Accounting
Sub-Modules of SAP CO
- Cost Element Accounting
- Cost Center Accounting
- Profit Center Accounting
- Internal Orders
- Product Cost Controlling
- Profitability Analysis
Related: Interview Questions on SAP FICO Profit Center Accounting
Now let us know about SAP S4 HANA, SAP Simple Finance, and SAP S4 HANA Finance.
What is SAP S4 HANA?
SAP S4 HANA exists as the S/4 HANA cloud. This comes with a mandatory FIORI user interface and quarterly releases. There is also the On-Premise S/4 HANA with greater flexibility, freedom to customize as before, and optional FIORI and annual releases.
What is SAP S4 HANA Finance?
SAP Simple Finance was the first part of the Business suite to be rewritten to run on SAP’s new superfast in-memory HANA database.
This new product is a combination of New GL with different category Extension Ledgers and complete Management Accounting solutions. These are Overhead Management, Product Cost Calculation, Account-Based Profitability Analysis with Cost of Goods Splitting, Material Ledger New Asset Accounting, Cash management, etc.
Also Check: SAP S/4HANA Finance Online Training
Difference between SAP FICO and S4 HANA Functionality
The exact functionality of S/4HANA varies depending on its release. Although some of the functionality may be available in the later enhancement packs of ECC 6. However, a lot of the ECC 6 functionalities are still available in S/4 HANA in the GUI. Sometimes you can enhance and recognize the transactions easily. Not only this but both the old and new transactions co-exist also.
An Example
Transaction numbers FAGLL03 and FAGLL03H are sometimes redirected to new functionality automatically. It may be like FK01->BP. Here it seems that where the letter H is added at the end of the transaction, it tends to be a new S/4 HANA-specific transaction.
The letter N has often been added to new transactions anyway. It includes those transactions also which are introduced with the SAP New GL. Furthermore, some are already available in the later versions of ECC. The letter L at the end of some transactions seems to allow posting to different ledgers e.g. FB01 and FB01L as well as a lot of the new asset transactions.
However, please note that these are just guidelines, not strict rules.
SAP Migration from ECC to HANA
In Traditional ERP, there was a delay in Closing activities, which could not begin until the period ended. Not just this, you have to do monthly closing for many operative entities leading to high transaction volume at month-end.
The migration of SAP FICO to SAP S4 HANA Finance has not only bound all processes together but also gives a high level of personalized UX (User experience) using SAP Fiori.
One other key advantage of SAP Finance on HANA is its high processing speed. This speed results in faster reconciliation of accounts and finance processes such as period-end closing, report analysis & more.
Related: SAP Brownfield Vs Greenfield Implementation in S/4HANA
What are the Functions of SAP S/4HANA that make the major difference between SAP FICO and S4 HANA Finance?
New features and functions of SAP S/4HANA Finance create a good difference between SAP FICO and S4 HANA technology. These functions are more advanced, provide great UX (user experience) and are in line with the latest technology.
Now let’s see them below one by one.
1. SAP Fiori
Described as the new User-Experienced, SAP Fiori replaces most of the SAP GUI transactions resembling the more users friendly smart Device apps like Phone Tablets, etc. Informative & Interactive apps are available so that we can see the number of outstanding items or account balances in the Fiori apps.
2. Ledgers in S/4 HANA Finance
In SAP FICO we have Parallel Ledgers as part of New GL. While the in Ledgers in S/4HANA Finance, we additionally have Extension ledgers, Simulation Ledgers & Prediction Ledgers or Predictive Accounting (From 1809 onwards).
With an additional parallel ledger, postings are physically made to both the leading ledger and the parallel ledger. You do the adjustments only to the parallel ledger. Whereas you need to link the extension ledgers to a base ledger and only take delta postings. As a result, when you run a report for the extension ledger it pulls in both the base ledger and the extension ledger data.
However, you cannot use extension ledgers in asset accounting. There are now 8 additional freely definable currencies available.
This poses one of the major differences between SAP FICO and S4 HANA Finance.
Also Learn: What is SAP? Its Historical facts and Journey
3. Data Structure of S/4 HANA Finance
In S4 HANA Finance, the calculation is “On the Fly”.
It means you no longer require index tables along with aggregate tables Thus, these have been removed. See the following table for example.
| Index Tables Removed | Aggregate Tables Removed |
| BSIS | GLTOFAGLEXT |
| BSAS | KNC1 |
| BSID | KNC3 |
| BSIK | LFC3 |
| BSAK | COSS |
| FAGLBSIS | COSP |
| FAGLBSAS | |
| FAGLLEXA |
However, if you have developed your Z tables, with the help of Compatibility views in the same name, it will support the same old programs. So customers no need to worry about their Z Reports.
Related Article: Important tables in SAP FICO
4. Change in Open and Close Posting Periods (OB52)
An additional column appears in Transaction OB52 (Opening and closing periods) for postings from Controlling to Finance, although still, OKP1 is required at the CO area level.
5. CO-PA Update – A major difference between SAP FICO and S4 HANA
One of the major changes that have happened in S/4HANA from ECC is in Controlling Profitability Analysis i.e. CO-PA.
You must activate Account-based profitability analysis (CO-PA). Though, you still can use costing based COPA in parallel. The Process flow in S/4HANA finance is much simpler than the COPA Process Flow in SAP FICO.
In account-based COPA, we use a group of accounts rather than value fields or key figures, an account model (account-based profitability Analysis and a key figure model (costing-based profitability Analysis) represent two different ways of looking at the same information.
In account-based profitability Analysis, we look at the values by account (in other words, we use the same format as the income statement). While in costing based profitability Analysis, you assign the values to key figures or value fields. Depending on the definition, key figures (such as revenues or cost of goods sold) may be the same in the accounting view. However, it is the transformation from accounts to key figures that make reconciliation difficult.
Revenues
In general, revenue postings to account-based Profitability Analysis are easy because the sales account already flows into the G/L. The only limitation is that statistical postings such as freight calculation, do not generally flow into the G/L.
If you want to include freight and other calculations in your profitability reports then you should continue to use costing-based profitability Analysis alongside the account-based model for these items.
Cost of Goods Sold
Organizations that manufacture the goods they sell typically use costing-based Profitability Analysis. This is because it allows them to take into account the standard costs for the goods sold. It determines which part of these costs we can consider raw material costs, activity costs and so on.
S4 HANA Finance provides new options that allow organizations to break out their cost of goods to these separate accounts. To do this, they extend their chart of accounts to include new accounts for each cost component in their standard cost estimates and thus gain transparency about the relative weight of each cost type in their product costs. This allows them to see where they are potentially exposed to risks due to changing commodity prices for their raw materials or changes in their wage structure.
Variance
Organizations manufacturing their products also typically calculated production variance to determine the scrap, price variance, quantity variance, resource usage variances and so on for each manufacturing order and assigned these to value fields in costing-based Profitability Analysis.
S4 HANA Finance provides the same options for account-based Profitability Analysis allowing the organization to break out their price difference into separate accounts representing scrap, price variances, resources usage variance and so on. Adding new variance and scrap accounts increase the transparency companies have in the efficiency of their production processes.
Related Article: Production Order and Variance Calculation using Material Ledger
Allocation & settlement
There are no changes to the allocation and settlement functions as such. However, it makes sense to revisit your chart of accounts to check the accounts you will use to record the allocation of marketing costs, sales costs, administration costs and so on. It provides sufficient detail for your reports and ensures that all these accounts are included in the financial statement version for reporting. You will need to create corresponding assignment cycles for account-based Profitability Analysis.
Quantities
In addition to reviewing the revenues and costs associated with their goods and services many organizations also analyze the volume of goods sold. The quantities captured in logistics flow into accounting, but they are often in units (for example boxes) that make an aggregation across product lines impossible. Many organizations convert these quantities into comparable units such as kilograms. Account-based COPA has been extended to support this type of analysis.
6.1 Universal Journal
Universal Journal is an important section of SAP S/4HANA Finance. Its main function is to analyze the major impact of SAP S/4 HANA Finance’s table architecture design on General Ledger Accounting. Furthermore, Universal Journal also checks the impact of business process transactions and configuration changes.
Whenever you post anything from any module, the system creates a universal Journal. Each posting is seen as before using the displayed document, using transaction FB03.
You can still post documents using GUI transactions like FB50/FB50L (Ledger specific). Also for this posting, you can use FIORI which is more user-friendly.
Universal Journal is known as the “Single Source of Truth” for Finance, Management Accounting (CO), COPA, ML and Asset Accounting. This includes all cost objects like Cost Centers, Internal Orders, and WBS elements.
When you post any new document from any other app like Logistics, Finance to Controlling, the system generates a single document. This document is a part of the Universal Journal and all other areas like CO Posting, COPA, Material Ledger will have Cryptic Document.
However, if any document flows from CO to FI (Cost Reposting and Month End allocation) then the CO document will have the original document. Subsequently, with a reference to that document, you will get a new document in FI. Both documents will be parts of the Universal Journal.
6.2 ACDOCA Table
ACDOCA is the Universal Journal Table. This table contains data for Leading Ledger, Non-Leading Ledger, Simulation Ledger, Prediction Ledger, etc.
6.3 Single Source of Truth
Now, Finance and Controlling are merged to avoid data duplicity and the need for reconciliation. The FI-CO integration also becomes obsolete and ACDOCA stores controlling data in SAP. Furthermore, both the GL account and Cost Element are merged. Cost element categories are now available in the GL account master. To achieve this there are now four types of GL accounts instead of the previous two. An example of this is the Balance sheet and Profit & Loss.
If you select Primary and Secondary Costs as GL account Types, then in the Control Data tab you see CO Cost element categories. However, there is no change in cost element categories for both primary and secondary cost elements.
When cost elements are migrated to the chart of accounts, all the required fields from cost elements are also migrated to the chart of accounts, except the account assignment. The Account assignment is moved from master data table CSKB to customization table TKA3A. So now you can access the default assignment setting through Transaction Code OKB9.
Related Article: Universal Journal Concepts and Features
7. Vendors and Customers difference between SAP FICO and S4 HANA
You can now easily maintain Customers and vendors using the Business Partner Functionality. With the BP functionality, the system will redirect all old transaction codes to Transaction BP automatically. For e.g FK01, FK02, FK03 to create, edit or display vendor and FD01, FD02, FD03 to create, edit or display a customer.
Also, along with all old screens, a lot more data is available and one Business Partner may have different roles like MM, SD, and FI, employees, banks, etc.
Also Read: Key TCodes in SAP FICO
8. Line Item Reports
The old reports such as FBL1N, FBL5N, and FAGLL03 still exist along with FBL1H, FBL3H & FBL5H.
9. Credit Management
FSCM replaces the previous Accounts Receivables credit management transactions Example F.28/F.31/F.32/F.33 and sales transactions VKM3/VKM5. Thus making the AR data management more feasible to work upon.
10. Material Ledger
The Material Ledger in S4 HANA is mandatory (although Actual Costing is still optional) and there are also new tables for Material documents (MATDOC). The Material number field extended from 18 to 40 characters and this includes in the Universal Journal document and therefore in ACDOCA table.
Also read: Material ledger in SAP ECC
11. Legacy System Migration Workbench
Although the LSMW (Legacy System Migration Workbench) is still available in S/4 HANA, it is not a good option for migration. This is because it has not been amended for the new data structure and some functionalities are not available. For example, transaction recording cannot be possible through FIORI. The maintenance planner tool can be used for system conversion.
12.1 New Asset Accounting
New Asset Accounting is SAP’s latest version of the Asset Accounting module and was introduced in SAP ERP 6.0 Enhancement Pack 7 (EHP7). Since then, it has been optimized for SAP S/4 HANA and S4 HANA Finance.
Thus, as a difference between SAP FICO and S4 HANA Finance here is, now you don’t need to set up delta depreciation areas where you have additional accounting principles.
However, you do need to have one to one match for each currency and ledger in Finance with a depreciation area in Asset Accounting.
Furthermore, the transaction ASKB (to post additional depreciation areas periodically to finance) has been removed. This is because now you can post all depreciation areas to Finance in real-time. Subsequently, as all the postings are in real-time, you can navigate and drill down to most of the financial documents.
Related: Accounting vs. Ledger Approach in New Asset Accounting
12.2 Asset Postings too make here a Difference between SAP FICO and S4 HANA
As I already explained earlier, a lot of the tables are now converted as CDS views. For instance, different Asset tables data are also now part of ACDOCA table. These are:
- ANEK
- ANEP
- ANEA
- ANLP
- ANLC
The depreciation run posting has been improved and the depreciation journal contains asset information in like item detail.
12.3 Technical Clearing Account in Asset Accounting
You need a Technical Clearing account to post the other depreciation area (Other than Book Depreciation areas) in real-time. This allows flexibility to post each asset as per different accounting principles and with different standard ledgers.
Below images are examples of asset postings as per two accounting principles i.e. IFRS and Local GAAP.
Related Video: SAP New Asset Accounting – Practical Overview
Conclusion
With the all-new features of S/4HANA SAP has leapt its ERP functionalities. It has made its user’s experience ever best.
With the in-memory technology, the processing speed is increased. Likewise with the Fiori APP cloud computing users can access their system from anywhere and anytime.
Consequently, the effect of S/4HANA has also impacted financial accounting too. Thus, it has become more advanced than SAP FICO, which was ECC based. Still, it is important to learn SAP FICO as well to get an edge on S/4HANA Finance.
In conclusion, these features have created a significant difference between SAP’s ECC based SAP FICO and S/4HANA Finance.
Do Visit: SAP S/4HANA Finance 2020 Course
