SAP Central Finance Vs S4 HANA Finance

Due to the similar terminology and functionality, one of the top questions these days people search is SAP Central Finance vs S4 HANA Finance or what is the key difference between Central Finance and Simple Finance. To answer it in simple language, here I put a statement.

SAP Central Finance is one of the deployment options to do S4 HANA migration and conversion. Whereas SAP Simple Finance or S4 HANA Finance is the new business application on the HANA platform.

Key Differentiators – SAP Central Finance vs S4 HANA Finance

SAP Simple Finance is the next-generation financial solution of SAP. The SAP Simple Finance model looks at the fundamental features that have driven the development of Central Finance. Thus, prepares its key differentiators. These are:

• Firstly It inherently leverages the opportunities of in-memory technology
• Secondly, it removes the redundancy to simplify the system
• Finally, it facilitates non-disruptive innovation.

SAP S4 HANA Finance

The SAP S4 HANA Finance application offers planning, consolidation, accounting and compliance on Cloud technology. Further, it offers SAP Accounting, Cash Management and all financial aspects of the organisation. These are Financial Accounting, Management Accounting, Bank Management Accounting, Profitability Analysis & Bank ledger Accounting etc.

You may be interested in: Changes in Controlling in S/4HANA

Key Tools in SAP Simple Finance

In-Memory Technology

At the core of SAP HANA, there is a massively parallel database management system (DBMS). This DBMS runs fully in the main memory.

While the traditional DBMSs were designed for optimizing performance on hardware with constrained main memory. In contrast, the SAP HANA database is designed from the ground up. It works around the idea that memory is available in abundance to keep all business data.

Further, the input/ output (I/O) access to the hard disk is not a constraint in the S4 HANA Database.

Likewise, traditional database systems put the most effort into optimizing hard disk I/O. The SAP HANA focuses on optimizing memory access between the CPU cache and the main memory.

Features of In-memory database in SAP S/4HANA (Central Finance vs S4 HANA)

1. Keep Data in Memory – Although you still need nonvolatile storage (Disk-based memory) to ensure that write operations are durable. Since the read operations can anticipate that all relevant data resides permanently in the main memory. Thus you can execute them without disk I/O.
2. Optimize the In-Memory Data access – Since all the data is readily available in the main memory. Consequently, the data movement between the CPU cache and the main memory becomes the new performance bottleneck. SAP HANA resolves this by using the columnar store and effective data compression techniques. Hence it effectively reduces the overall size of data in memory. Not only this, but it also achieves high hit ratios in the different caching layers of the CPU.
3. Support Massive Parallel Data Processing – Modern computer systems have a continuously increasing number of processing cores. In order to natively take advantage of massively parallel multicore processors, SAP HANA manages the SQL processing instructions into an optimized model. Further, this model allows parallel execution and scales incredibly well with the number of cores. The optimization includes partitioning the data into sections for which the calculations can be executed in parallel.

Learn in detail: SAP Central Finance Implementation Key Operations

Columnar Data Structure of Table

Conceptually, relational databases represent data in two-dimensional structures called tables. A table is a set of data elements organized in vertical columns or attributes and horizontal rows or records. The attributes are identified with their name.

There are basically two options. Row-Based layout stores a table as a sequence of rows. In this, the data elements form a row. Further, this row is stored in contiguous memory locations. Likewise, a column-oriented layout stores a table as a sequence of columns. In each column, the data elements of individual columns are stored together.

Example:

In the row-based layout, we store all attributes of a tuple (ordered set of values) consecutively and sequentially in memory. On the contrary, in a columnar layout, we store the values of individual columns together in the resulting layout in memory.

For more detailed information read: SAP HANA In-Memory Database

Removal of Data Redundancy

Data redundancy is a data organization issue that allows the unnecessary duplication of data within the database. A change or modification, to redundant data, requires that you make changes to multiple fields of the database. Therefore, the new architecture of the HANA Database allows merged OLTP (Online Transactional Processing) & OLAP (Online Analytical Processing) data processing within a single in-memory column-based data. Further, we store this data with ACID compliance while eliminating data redundancy.

Real-time Analytics

The system stores the transactional and analytical data together. Thus, the SAP HANA application provides on-the-fly analysis for all combinations of data. As a result, the customer can take immediate decisions using real-time operational analytics whether the data comes from an SAP application or any third-party application.

Big Data

HANA can use the potential of Big data with its ability to handle large volumes and a variety of structured and unstructured data in real time. Hence, you can build a data warehouse and integrate it with Hadoop. Additionally, you can easily migrate your existing SAP Netweaver Business Warehouse (BW) to SAP HANA.

Single Source of Truth

The Universal Journal is the single source of truth and the holistic basis for next-generation accounting in SAP Simple Finance. Further, it changes the game with respect to reconciliation-free transparency, seamless navigation, and superior insight into financial data.

Technically, the new Universal Journal is a harmonized and redundancy-free data store of actual data.

It efficiently serves General Ledger (G/L), Management Accounting/Controlling (CO), Asset Accounting (AA), and Material Ledger (ML) components.

The New HANA-based Architecture

SAP HANA has some stunning features. One of them is the capability to aggregate hundreds of millions of line items in one table within seconds.

In this approach we take is straightforward:

• Combine the data structures of the different components into a single combined line item table—the Universal Journal.
• This is our single source of truth that replaces the previously separate physical tables.
• SAP Simple Finance provides compatibility views that give transparent access to obsolete individual tables. Hence, it offers a non-disruptive path to the innovative Universal Journal.
• Noteworthy, it is similar to the removal of redundant materialized views and materialized aggregates.

For More updates Read: Universal Journal with ACDOCA – Features & Concept

SAP Central Finance

But how can a customer take this massive project without disrupting their ERP system, that’s where the Central Finance function comes into the picture as part of the answer to Central Finance vs S4 HANA.

Central Journal Approach – Central Finance Vs S4 HANA

Central Finance is not a product but rather a deployment model for SAP Simple Finance, formerly known as the “Central Journal “approach.

How does it work?

With Central Journal as a starting point for Central Finance, you replicate the postings from source systems into the central instance in real-time. This is called Initial Load in Central Finance. This is facilitated by a software tool called SAP Landscape Transformation (SLT), which we can deploy centrally or decentrally.

SAP Central Finance in S/4HANA By Pradeep Hota

Tools in SAP Central Finance

SLT Tool

In financial systems from any software vendor, you store the data from financial postings in database tables. The SLT tool operates at a database level. Once you insert or update a data record in the database table, a database trigger is written SLT responds to this database trigger and retrieves the data records that were inserted or updated.

SAP HANA Sidecar – Central Finance vs S4 HANA

This principle is in use at many companies for SAP HANA sidecar scenarios. It was introduced in 2011 as a deployment option for SAP HANA accelerators. Its main purpose was to speed up critical reports, processing steps, and transactions with SAP HANA’s in-memory capabilities. The SAP ERP sidecar scenarios run an SAP HANA database in parallel with the classical database.

Furthermore, Instead of replicating a data record directly into the target database, SLT can move data records to a programming interface, such as an ABAP function module.

Central Journal Interface

Once you post and store a financial document in the database of the source system, the SLT can retrieve the data record and feed it into the corresponding Central Journal interface. The interface posts a new financial document in the central instance running on SAP Simple Finance.

CJI Processing

First, SLT uses the standard accounting interface to augment and complete the financial document. It is based on the master data and customizing configured in the central system.

Then it checks whether the financial document, the master data used, and the account assignments are consistent.

It persists the document in the data format required by the database tables of SAP Simple Finance.

Then, the newly posted financial document keeps the reference to the original document of the sender system. You can use it like any document posted in the central system—even if it originates from a non-SAP source system.

For more details Read: SAP Central Finance – What you should know

Conclusion

Do you really see a big difference between Central Finance Vs S4 HANA Finance?

Practically, it’s not fair to compare these two because both are not of the same level. While SAP Central Finance is a broader term, Simple Finance is just one of the applications. As with other deployment methods, central finance is one of the options. Though I have explained the basics of both here in this post, I suggest you should read both of these topics separately in detail to dig deeper.

Related: SAP Central Finance System Setup & Components

Related: SAP S4 HANA Features – Key Features