SAP Central Finance is a standard SAP solution delivered for easier, faster, better and cheaper adoption and subsequent operation of the central system for Finance. Hence, it reduces the effort and risk of customized project implementation.
Further, SAP Central Finance replaced the traditional one-off implementation projects and operational aspects with standard SAP product capabilities, content and usage rights. The “Sidecar HANA” approach is one of the best options for implementing SAP S4 HANA Finance.
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The Central Finance solution is a combination of two layers:-
Central Finance Execution Layer is represented by the process capabilities of SAP S/4 HANA and related financial products.
Central Finance Enabling Layer consists of Central Finance-specific SAP products, content and best practices to make finance processes in a central SAP S/4 HANA system work. This layer further allows for the execution of finance processes in the central system and supports the integration of a central system.
Moreover, the enabling layer provides a set of capabilities required to make a Central Finance system work in a standard deployment, rather than a custom one-off implementation.
Also Read: SAP Evolution & its Versions
Central Finance is based on several technical core components, each contributing to and providing key capabilities that drive the overall functions and features.
The In-Memory Database stores and provides instant access to datasets of any size on any system with multi-dimensionality across the entire enterprise.
The application layer provides functions and features available in the Central Finance System.
Also read: SAP Central Finance system set up process & components
(SAP LT Replication server)– This works as middleware. The replication mechanism is the way to get financial transactions created in the source system into central finance.
This helps in the error correction and accounting suspension mechanism for post-processing postings that we cannot post initially.
User interfaces with the system to maintain business mappings between source and target systems for key finance master data objects.
Cloud Components – Dedicated Functional capabilities enhancing the functional scope of Central Finance outside the core Central Finance system.
Visit the course Page: SAP Central Finance Training on S/4HANA
We can deploy SAP S/4 HANA also with Central Finance. Since the business process execution in C-Fin is based on the capabilities found in an SAP S/4 HANA system, we must deploy SAP S/4 HANA as part of Central Finance.
We can deploy S4 HANA & Central Finance in 3 ways:-
Central Finance is the deployment of an SAP S/4 HANA system in an organization. This central system for finance works in conjunction with source systems, both SAP and Non-SAP that feed into the main system.
Central Finance is the deployment of Finance innovations in SAP S/4 HANA. These innovations become available to the finance user community across the enterprise; no matter what source system the users interacted with, before deploying central finance.
Central Finance is the deployment of SAP S/4 HANA in a non-disruptive fashion, providing business continuity. This case is especially true when we deploy the central SAP S/4 HANA system as sidecar implantation. This is in addition to (and not as a replacement for) the existing ERP source system.
Moreover, C-Fin is not a special version of SAP S/4 HANA or an alternative to SAP S/4 HANA. The Central Finance approach is based on a standard SAP S/4 HANA system at its core, hence delivering finance reporting and process execution capabilities.
Also Learn: SAP Central Finance implementation key operations
In traditional Central Finance systems, Central Finance can take financial transactional transactions from your underlying ERP source system. Consequently, in these ERP source systems, we can execute the original logistics business transactions, and create their corresponding finance transactions. We can also enter financial transactions as part of regular finance activities.
Central Finance can consume finance transactions in the following way:
Data replication is the key to Central Finance and makes the central system work. From a central Finance perspective, several key aspects of data replication include the following:
Traditional central systems for Finance are mostly based on last-generation ERP systems.
Learn details about – SAP S4 HANA Finance Training
Traditional central ERP systems for finance are built on older, less advanced technologies. Consequently, the functions and features in such ERP systems are usually limited to the functions and features coded within that system.
Traditional ERP systems for finance are not cloud-ready. Lacking a digital core, these ERPs cannot seamlessly and natively connect to and adopt complementary cloud-based finance capabilities. Likewise, these systems cannot or only in a limited way, be integrated with today’s vast offerings of the new and extended cloud-based finance process.
Also read:- SAP S/4HANA Finance Vs. Central Finance
The functions and features available in the underlying central SAP S/4 HANA system drive the functional foundation of a central finance system. This system includes components that are now part of SAP S/4 HANA (reporting, planning, consolidation, shared services, etc.) Previously, either these were not part of the core SAP ERP system or were separate products or applications integrated with the core system.
The functional foundation for central Finance is provided directly by the underlying SAP S/4 HANA system. The system enhances its functions, features and standard capabilities, every release cycle.
Central Finance does not provide any finance processes that are not already part of SAP S/4 HANA. Whatever is available in SAP S/4 HANA, is also available in SAP Central Finance.
Standard Finance processes are feasible and worth executing in Central Finance system.
Also, learn about:- Limitations of SAP Central Finance
Let us know why we should use central finance as a migration option.
Every time we post a business transaction in the organization, the system moves and stores multiple copies of this transaction all over the place. This is how the traditional system operates.
Complexity in Traditional Legacy System Environment
Central Finance represents a new approach to finance based on a new set of technologies in an ERP system. It is a more easily deployable central system for Finance, enabling consolidated transactions, business planning, group consolidation, reporting and analytics. It does all this out of a single system without the need for further data duplication.
Also read: Complete Guide on SAP HANA Migration
The most important innovations which make central finance silver-bullet solutions include the following:-
The arrival of SAP HANA, a high-performance database, has removed the barriers stemming from relational database design principles. Thus, data needs no longer be passed and moved around to application in redundant pieces and portions.
End-Users can consume financial data directly via their frontend applications using the Universal Journal of Central Finance, rather than having to extract and transform the dataset as a prerequisite to consuming the data.
The SAP HANA database has resulted in a new architecture for the SAP S/4 HANA Finance data model and has introduced the Universal Journal as a single table. It captures all financial data rather than spreading it out to different tables for General Ledger, sub-ledgers or management accounting.
The customizable universal journal can capture additional dimensionality like the colour of the product, the age of the customer, the time of the day, etc.
With SAP S/4 HANA Finance, you can post financial transactional in the same system for business planning, group consolidation and shared services. Your users will share the same set of transaction data and master data and benefit from real-time reporting without further data duplication. Central Finance also provides central reporting.
The SAP S/4HANA system stores an organisation’s financial transactions in one and only one table. It updates the Universal Journal, in real-time, every time we add a new transaction anywhere in the organization.
Hence, all users can easily consume this information directly from the various SAP and non-SAP front ends, including Microsoft Excel. Even, we don’t require any additional ETL (Extract, transform and load) tools, data provisioning or data extraction. So, the information is directly accessible by the same stack SAP S/4 HANA application as SAP BPC.
Today, the standard technical mapping content supports the integration of SAP ERP source systems by standard technical mapping content. This allows bringing financial transactions from ERP systems regardless of the release of the source system.
In a worst-case scenario where the source system is too old to integrate through the standard capabilities, use the central finance–party staging area.
We can accommodate the Integration of Non-SAP ERP source systems through the standard central Finance third party-staging area. Data provisioning to that staging area can be custom-built or can use a predefined template. Further, using predefined templates accelerates customers’ Non SAP ERP integration allowing technical mapping of a source system in as little as 10-15 days.
Integration of SAP S/4 HANA cloud instances used to move selected business or regional systems into the cloud with the support of the standard technical mapping content in Central Finance.
SAP Central finance is the future of SAP S/4HANA Finance solutions. More and more industries will adopt it for its centralised approach and integrated management structure. Thus, it is a must for all SAP S/4HANA Finance consultants to adopt the latest technology-based skills. Having advancement of S/4HANA and functionalities of Finance, it provides a robust solution to businesses. So, getting a deep understanding of SAP Central Finance will help in better job prospects and growth in SAP career.
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