The SAP S/4 Transformation, which involves moving your current environment into the most recent SAP ERP, is a popular topic in the SAP industry. The majority of businesses view this move as a daunting task that won’t yield any return for several years. They have a long discussion on brownfield vs. greenfield strategies. They regret that there is no one size fits all when it comes to digital transformation as they struggle to comprehend which delivers greater value, lower risk, cheaper expense, etc. With our RunWay methodology, we at Applexus have done away with that debate and tailored your journey to SAP S/4HANA by taking into account all of these factors and more.For a risk-averse firm that also needs the benefits of SAP S/4HANA right away, one method for implementing SAP S/4HANA inside the broader RunWay approach works very well. The strategy is to make use of SAP S/4HANA Central Finance Foundation (Central Finance or cFIN).

What is cFIN?

It will be referred to as “SAP S/4HANA” in SAP collateral. An S/4HANA sidecar system called Central Finance Foundation (Central Finance) receives financial accounting transactions from one or more SAP or non-SAP ERP source systems in real-time replication. I see it in a simpler light. The integration layer known as cFIN is responsible for converting financial data from your legacy system so that it may be imported instantly into a SAP S/4 Finance system. To put it even more simply, it is a tiny black box that lies between your outdated ERP and SAP S/4HANA Finance.You may view your current financial data by using the box, which swiftly moves data from the previous system into SAP S/4 so you can take advantage of the platform’s potential. When SAP offers S/4 Central Finance for sale, it is frequently packaged with S/4HANA Finance, S/4HANA Enterprise Management, and SAP HANA (database) under the banner of Central Finance.

Central Finance high level view

How can it help my SAP S/4HANA Transformation?

The crucial words in the SAP definition are “one or more.” The cFIN option is typically used when it’s necessary to combine many ERPs to increase the efficiency and effectiveness of consolidated financial applications. Utilizing the robust analytical capabilities offered by SAP S/4HANA, this method offers a single view across all ERPs. Consolidations and carve-outs for mergers and acquisitions should be made simpler as a related goal. Centralized shared services for financial operations are also made possible by this integrated financial solution. The frequently overlooked use case is “Use SAP Central Finance to Avoid a Risky, Big-Bang Switch to S/4HANA,” which is even included as Gartner’s fourth out of four use cases. The remainder of this article will concentrate on this use case.Restructuring your finance system is typically an extremely dangerous task for businesses. This is precisely why Central Finance was chosen by a Fortune 25 retailer who was a prior client of mine. It is exceedingly dangerous to switch over $100B to a new finance backbone all at once. I appreciate using Central Finance to provide an agile strategy whereby smaller elements of your financials are migrated to SAP S/4HANA in shorter agile projects, as well as to de-risk a SAP S/4HANA Transformation. In fact, irrespective of your source ERP, you can migrate to S/4HANA using this method (SAP or non-SAP). Compared to previous approaches, the SAP Central Finance transition strategy to S/4HANA harvests many of the business benefits for Finance early.

Why do I need SAP S/4HANA Finance anyway?

Going Finance First has been the general advice since the early days of ERP. In that regard, nothing has changed. A recent Gartner recommendation for digital transformation is to put finance first. A Finance First approach is definitely the best option if you need to modernise your IT platform or feel that your organization’s potential to innovate is being stifled by your legacy environment. With or without the rest of the ERP functionality, S/4HANA Finance offers a number of advantages. Some of the major advantages of using the robust capabilities offered by the SAP S/4HANA platform and viewing your financial data in the more straightforward data architecture are as follows:

  • An improved user experience leveraging Fiori to simplify access to Analytics and operational transactions.
  • Embedded reporting and analytics which reduce your information to action ratio with live transactional data in a single source of financial truth.
  • Continuous close whereby you can make key strategic decisions all month long on real live data rather than waiting a couple of weeks after the monthly close.
  • If your Chart of Accounts has gotten bogged down with too many specific bank, vendor or customer accounts or it just has become outdated over time, SAP S/4HANA Finance will enable a reduced and/or lean CoA.
  • Moving to S/4HANA is also the perfect time to begin a transition to the cloud thereby significantly reducing your TCO for your ERP solution.

Central Finance sample early benefits

So, how do you do it?

The secret is to set up Central Finance rapidly using a sidecar approach, leaving your legacy system intact. All of your detailed financial data will be transferred from the legacy views into the new S/4 HANA Finance system, enabling fresh and potent new perspectives into your data, thanks to the built-in real-time replication of cFIN. This is an excellent chance to streamline not just your chart of accounts but also the hierarchies of your profit and cost centres, as well as the profitability divisions, inside your organisational structure. Your ability to view your financial data will be better thanks to these modifications, which won’t affect your current system.By incorporating agile concepts while maintaining as much standardisation as feasible, using the project methodologies SAP Activate or Applexus RunningStart will support a project that is moving quickly. The Explore Phase will spend the majority of its time developing your new financial structures and bridging the gap between the old and the new. You should keep the data travelling in one direction from your legacy system into cFIN to help keep this project brief, quick, and risk-free. Attempting to do too much too quickly has led to the failure of numerous cFIN projects. Ensure simplicity. Additional financial procedures in SAP S/4HANA Finance will frequently call for the dreaded back posting to the legacy system as they are enabled.Even though it appears like it should be straightforward, problems can arise from seemingly straightforward situations. Your primary goal in this initial stage of your SAP S/4HANA digital transformation is to gain visibility into your financial data using the new tools at your disposal and to build the future-focused vision for your company without becoming bogged down by the past.

I did the work, what do I have?

What then do you have after completing your first S/4 project using cFIN? You have, in fact, begun your journey toward S/4 HANA digital transformation. You have your data in a cutting-edge financial system, which permits all kinds of analytics and various perspectives on your organisation. Planning, forecasting, and budgeting expenditures were reduced by 18–24%, according to live customers’ reports to SAP. These same clients claimed that cFIN cut their financial close time by up to 50% and further lowered the expense of reporting and analysis on business and operations.If you are using various ERPs, you may finally have a consolidated view of your company that is considerably more detailed than what is offered by conventional consolidation packages, and you will be prepared to integrate a new acquisition in as little as six weeks. In order to achieve consistent visibility across all of your ERPs if you have several ones, it is recommended to set up Central Finance to consume data from all of your ERPs in this way.

Since you haven’t altered any of your legacy solutions other than to extract real-time (or as close to it as you can get) data, you haven’t put any aspect of your continuing operations at danger. Your agile SAP S/4HANA roadmap now allows you to integrate your financial operations into SAP S/4HANA Finance in smaller logical chunks as you see fit. Analyzing this component will be necessary to ensure that the functionality you move to SAP S/4 HANA is carried over unchanged and, ideally, prevents the need for back posting. This strategy’s agility enables you to move at any speed you choose and to change course as necessary.We are all aware of how a variety of factors, including financial constraints, global economic conditions, human resource availability, and others, can affect plans. The beautiful thing is that each project can be kept manageable in size with less risk, and each will add value to your company’s bottom line. If SAP ECC is your legacy platform, you still have till 2027 to switch over. However, you now have a much more adaptable strategy to reach that longer-term objective.

Wrap it up please.

You can see now that there are advantages to beginning your SAP S/4HANA digital transformation. You concur that starting with finance is the best course of action. You can utilise a rapid and flexible strategy to get there by using a tool like Central Finance, as you can see. Now, why would you choose this strategy?

  1. It is virtually no risk to your current Finance platform.
  2. It gets you started on the digital transformation journey with a smaller project that gets your feet wet.
  3. As you move your remaining financial processes to SAP S/4HANA you can do it in smaller lower risk projects.
  4. The smaller projects add agility to your roadmap that allows you to change direction later if your business environment changes.
  5. Once Finance is all on SAP S4/HANA, you can add additional ERP modules on to the powerful SAP S/4HANA platform in smaller agile projects.
  6. After you have completed your migration, you can keep the cFIN integration layer to facilitate future acquisitions.

You now have it. a clever, quick, agile, low-risk method for converting to the SAP S/4HANA platform. Please get in touch with me or my colleague Shiraz Cooper if you want to talk about this strategy in more detail. We would appreciate any feedback, ideas, or opposing viewpoints on this strategy.