Last Updated on September 5, 2022 by Pradeep
Central Finance in SAP
First and foremost Central Finance is one of the deployment options in SAP S/4HANA. It curbs the needs of the new-age ERP-enabled enterprises and plays a transformative role.
Why SAP Central Finance?
Today multi-ERP system landscapes are complex and may involve several different ERP source systems. They require several installations of applications for business planning and consolidation.
Likewise, they need numerous business intelligence (BI) and business warehouse (BW) systems and tools for analytics and reporting.
Every time you post a business transaction, copies of it are moved and stored all over the place. That’s how a traditional legacy system operated.
Due to this, they don’t match the fast-paced working environment needs of having all in one place in no time. Here SAP Central Finance comes as a saviour.
It is a New Technology.
Central Finance represents a new approach to finance. It is based on a new set of technologies in a central ERP system. You can easily deploy the central system for finance.
It enables consolidated transaction execution, business planning, and group consolidation. And also reporting and analytics. All this you get out of a single system without the need for further data duplication.
SAP Central Finance Key Innovations – The Silver-Bullet Solution
We best know Central Finance for its power-packed well, advanced features that make it just desirable for every organization that needs an ERP solution for its work structure.
Following are some key features.
SAP HANA as a high-performance database
With the arrival of the SAP HANA, a high-performance database has recovered the barriers stemming from relational database design principles. In other words, you no longer need to move the data to applications in redundant pieces and portions.
Single system reporting
End users can consume financial data directly via their frontend applications using the Universal Journal of Central Finance. They need not extract and transform datasets as prerequisites to consuming data.
SAP S/4 HANA Finance data model
The SAP HANA database has resulted in a new architecture for the SAP S/4 HANA finance data model.
It has introduced the Universal Journal, a single tablet that captures all financial data, rather than the data being spread out to different tables. Such as for the general ledger (G/L), sub-ledgers or management accounting, etc.
SAP S/4 HANA Finance embedded applications
With SAP S/4 HANA Finance, you can post financial transactional in the same system as you would do in your business planning, group consolidation, and shared services.
Your users will share the same set of transaction data and master data. They get benefits from real-time reporting without further data duplication.
A single source of truth for Financial data
You can store all the organisation’s financial transactions in one and only one table, the Universal Journal. It is updated in real-time every time a new transaction is added anywhere in the organization.
This information is easily consumable for all users directly from various SAP and non-SAP frontends, including Excel. You don’t need additional ETL tools, data provisioning, or data extraction. Further, you can access the information directly with the same SAP S/4 HANA system.
SAP Source Systems
Integration of SAP ERP source systems today is supported by standard technical mapping content. It also allows financial transactions from ERP systems to be brought to the Central Finance (target system). Interestingly, the version of SAP ERP (Source system) does not impact this process.
Non-SAP source systems
You can accommodate the integration of non-SAP ERP source systems through the standard Central Finance third party staging area. Likewise, you can either custom-build the data provisioning to that staging area or can use a pre-defined template.
Do visit: SAP Central Finance Training on S/4HANA
Earlier Innovation in SAP Central Finance
Choosing SAP S/4 HANA–based CF allows you to bring innovations into your organizations faster than other approaches.
It supports business model changes by simplifying the ERP system landscape and providing access points to make finance-related changes.
Mergers and Acquisitions
This is an important feature. With this, you can bring together financial data from different ERP source systems for advanced reporting and central process execution.
It also supports new mergers and acquisitions by providing a platform and a playbook for onboarding new entities and systems.
Rationalization
It helps to reduce the number of ERP systems and FI applications installed in the organization. Mainly the ERP source systems, that you can migrate into the C-Fin instance.
SAP Central Finance can also help to reduce the number of redundant FI applications installed. While typically you install only one application for group consolidation. Still, you may find numerous separate, non-integrated applications for business planning and analytics present.
Consolidation with SAP Central Finance
Here you can install the following capabilities and run in the same technical stack as Central Finance.
- Business planning (using embedded SAP BPC)
- Consolidation/group reporting ( using embedded SAP BPC or SAP S/4 HANA Finance for group reporting)
- Business analytics ( using SAP Fiori or Microsoft Excel as the frontend)
- Shared services ( no longer require a separate SAP Customer Relationship Management (CRM) installation.
These capabilities are now embedded or connected to the core SAP S/4 HANA stack underlying Central Finance. Hence, these no longer require interfaces for data integrations between the Central Finance system and the respective application.
Related: SAP Central Finance Architecture System
Cloud Transition
The trend to move platforms and applications to the cloud.
- Central Finance can run in the cloud – either a private or a hosted cloud.
- Core functional components can run in the cloud- Business planning, group consolidation, and analytics. Also, several finance operations have specific SAP cloud apps available.
- Complementary Finance functions can run in the cloud or Cloud-based business network capabilities. Such as SAP Ariba (for Procurement), Concur (For Expense Management), or SAP Hybris (For Product Content management). You can also adapt and natively integrate them through standard cloud connectors.
Related: SAP Central Finance – What you should know
SAP S/4 HANA Adoption in Central Finance
Central Finance allows you to bring SAP S/4 HANA into your organization no matter what your existing SAP ERP and non-SAP ERP system landscape looks like.
SideCar Adoption
SAP CFin is the best way to bring SAP S/4 HANA finance innovations holistically into your organization in an accelerated and non-disruptive way. Since it allows for SAP S/4 HANA adoption via the “sidecar” concept.
In this approach, you can establish and integrate a central SAP S/4 HANA system with ERP source systems via real-time data replication.
Using the sidecar implementation for your future adoption of S/4 HANA provides the following benefits of SAP Central Finance:
- Non-disruptive- You don’t need changes to the ERP source systems. CF does not impact the source system (SAP or non-SAP).
- Separated from Logistics- You can adopt SAP /S4 HANA for Finance without concern for your organization’s logistics readiness.
- Business model-agnostic- From a customising and master data perspective, you can have the Source ERP system as either brownfield or greenfield. If the source system is a brownfield, you can map it to a greenfield.
- Transformation- Deploying CF allows you to redefine the system setup, the master data, and the process execution for finance in the central system. It is a “Finance First“ step in your overall business transformation.
- Enterprise-wide – You get improved local finance capabilities (where the process shift from local to the central system). Likewise, you also have enterprise-wide cross-system reporting and transaction processing for finance.
You may want to read: SAP S4 HANA Finance deployment options
EndNote
In this blog, I provided information about the motivations behind adopting SAP C-Fin. We discussed how it accelerates the non-disruptive adoption of innovations and supports business model evolution and technology transformation.
We also explored how this new technology removes many barriers that once applied to traditional legacy systems.
You surely get a lot of new things to learn in Central Finance. Since this is a new subject in the book of SAP S/4HANA. So, it holds good value for SAP Finance consultants (FICO or S/4HANA Finance). Not many consultants possess expertise in Central Finance. Hence this carries great importance career-wise in today’s time.
Also Read: Initial Load Process in SAP CF
Watch Related Video: SAP CF Process – Overview
