New Perspectives Blog Series: Digital Transformation with SAP S/4HANA

Perspective 1: Looking Back to ECC and its role in Digital Transformation

JS Irick: Matt, you represent a new generation in that you started your consulting career just before Simple Finance was released, so you are one of the first industry experts who “Grew Up” with S/4HANA. Obviously, you spend a lot of time with previous ERP versions working with Central Finance, as well as needing to communicate effectively with business stakeholders who are in the system day-to-day. There are hundreds of articles about what people with extensive ECC 6.0 think of S/4HANA, but I’d like to flip that on its head. What is your perception of ECC 6.0?

Matt Montes: This is a great question, especially in the context of how my SAP career started. My first implementation as an SAP consultant was actually a BPC Standard (10.0) Financial Consolidation project for one of the largest utility companies in Texas. To provide some context here, this project dealt with 55+ company codes and an enormous amount of master data. As you can imagine, I was in SAP terminology overload and immediately overwhelmed. Insert ECC6.0. Once I gained access to ECC I realized that all the information I needed was at my disposal, and quickly began analyzing and dissecting the Enterprise Structure.

From here I was able to better understand how SAP modeled core FI concepts (Company Code, G/L Account, Version) and tie them back to BPC. This was my lightbulb moment per se, which allowed me to start connecting the dots between the various financial modules and their integration points.

Taking what I learned in FI and figuring out how that tied into the Controlling and Logistics modules allowed me to gain a more holistic understanding of ECC. ECC to me is a revolutionary ERP that can be strategically leveraged to improve financial proficiency throughout an organization. Today’s strategic conversations are hyper-focused on S/4HANA being the next generation ERP, specifically for those organizations looking to undergo a financial transformation and gain the benefits of a relational database, real-time centralized financials, and a unified financial table (ACDOCA). However, I will argue that without the core concepts and modules within ECC, S/4HANA wouldn’t be as profound as it is today. This is bolstered by the fact that when I deliver customer demos of S/4HANA I tend to focus on the Fiori user experience, as this is an added benefit to the core concepts and modules that the customer is already used to in ECC” Ultimately, my perception of ECC is that it is the foundation for what an ERP should be, while simultaneously allowing S/4HANA to build upon that core foundation and deliver additional value.

JS Irick:  I love the positive take.  ECC stands as a true technical accomplishment, weathering major infrastructure, network, architecture and industry changes. It is refreshing to hear someone talk about the benefits of S/4HANA without denigrating the parts of ECC that have aged poorly.

You talk about three key benefits – being on a relational database, real-time centralized financials, and the Universal Journal.  Frankly, all three are critical, can you dive down on one of them a bit more to give our readers some more insights?

Matt Montes: Absolutely. As you are aware, financial reporting in ECC today can be quite convoluted as there are a variety of tables that house actuals data (BSEG, BKPF, COEP, COBK, FAGLFLEXA, etc). This often leads to a BW driven reporting solution with multiple cubes pointed to multiple tables, and data is loaded via batch jobs. The Universal Journal (ACDOCA) is a game-changing concept as it allows enterprises to persist all of their actuals data in one central table, which is a stark contrast to the complexity associated with a BW reporting solution. In addition to housing actuals data in one universal table, the data is also written to ACDOCA in real-time, which eliminates the need for batch jobs and provides the business with quick access to their data. Centralized reporting and real-time data can significantly increase how businesses operate and conduct their financial reporting and analytics.

 

Perspective 2: Hidden Advantages of SAP S/4HANA

JS Irick: With its strategically limited scope and replication-based architecture, Central Finance implementations are an order of magnitude faster than a full-blown S/4HANA rollout. This means users get into the system on live data fast. Based on the compressed timeline, I would expect the transition to the Universal Journal and Fiori based applications to be even more refreshing. Everyone’s S/4HANA talk track seems the same “single source of truth, profitability on all dimensions, role-based mobile enabled user experience, etc. etc.”. What are some of the S/4HANA advantages in process, UX, reporting or operation that doesn’t get enough press in your opinion? Sell me on S/4, “What nobody mentions, but you’ll love is ______”.

Matt Montes: There are some benefits of S/4HANA that are going to steal the headlines, such as increased performance, coding block simplification, digital core, and unified financials. However, those benefits barely scratch the surface on what makes S/4HANA the ERP of the future. Fiori gets a lot of praise, rightfully so, but the praise usually highlights the tile-based user experience or mobile accessibility. What isn’t as talked about is the innate drill-down functionality and linkage amongst the financial tiles.

For example, within Fiori, a financial analyst can select from a variety of tiles such as display financial balances, display financial line items, manage journal entries, or journal entry analyzer. However, if they were to start with the financial balances tile (summary level data), they can seamlessly drill-down to the line items without having to open another tab or access a different tile. Furthermore, from the line item tile, the end user can now manage journals from a specific document or run a journal entry analyzer report. To me, this adds an enormous amount of value for the financial analyst or accountant who needs quick and easy access to their data. When accessing data via ECC or S/4HANA you are susceptible to multiple sessions and multiple TCODES to access data, and this isn’t efficient nor effective. Everybody talks about “single source of truth”, but doesn’t mention the operational benefits of having an actual, plan, and consolidated data spread across ACDOCA, ACDOCP, and ACDOCU. Think about the reporting landscape today for an ECC environment, which is almost always a batch process populating various BW cubes in which reports are subsequently built off of. In addition to the batch processing causing a delay in real-time reporting, there is also a concern of reconciling the data in ECC vs what was loaded into the BW cubes. The operational benefits of having three core financial tables with actual, plan, and consolidated data persisted in real-time, which can then be queried through Analysis for Office, Fiori, or CDS views is unquantifiable. S/4HANA’s value proposition lies with its ability to integrate a multitude of technologies and software’s into one all-inclusive ERP that meets statutory, management, and internal requirements.

JS Irick: That’s a great way to describe the tangible benefits of the improved user experience. I hear “Role-Based UX” so often, but you’ve really explained what that means in terms of the user experience within discrete processes.

I’m a huge fan of the Launchpad UX in S/4HANA and SAC. Not only for the simplified way to change your shortcuts/tiles, but also the fact that you can introduce key metrics into your Launchpad. A question for you – Have you seen much adoption of the Fiori KPI tiles? To me, they’re one of the 4 pillars of S/4HANA reporting (along with AO, SAC and Fiori Reports), but I don’t see them mentioned very often.

Matt Montes: This is a great point JS, I haven’t seen much adoption of the Fiori KPI tiles; however, I do have some hands-on experience using them. In one of my previous engagements, we leveraged Fiori KPI tiles and SAP Smart Business to create utility-centric tiles. In the utility industry companies have to report two sets of financials, one for GAAP accounting and another to abide by the Federal Energy Regulatory Commission (FERC) standards. Within the FERC reporting requirements are metrics like Rate of Return, Rate Base, Return on Equity, Capital Structure, and Revenue Requirement. Each of these metrics is vital to a utilities regulatory decision-making process, as well as determining the amount of money they can recoup on their infrastructure-based investments (Power Plants, Natural Gas Pipelines, Water Treatment Plants, etc). The Fiori KPI tiles and SAP Smart Business enabled us to create a utility-focused dashboard within Fiori that gave business users a medium to analyze their regulatory data. I think as Fiori continues to evolve, we will start to see a lot more integration of the KPI tiles, specifically as companies work towards building an S/4HANA environment with actual, plan, and consolidated data.

 

Perspective 3: Upskilling for the Future

JS Irick: In my opinion, your dedication to educating and training our Central Finance customers is crucial to our project success, and one of the reasons your customers are so happy with the final result. Any major technology disruption can be really scary to IT organizations because their day-to-day requirements don’t slow down, even as this major shift in their role is on the horizon. What’s your actionable advice for gearing up for S/4HANA, especially on a tight schedule?

Matt Montes: You bring up a really good point here. Digital transformations or changes in technology can be very demanding on the IT organization. Asking someone to acquire a skillset in new technology while simultaneously maintaining their day-to-day duties can be incredibly cumbersome. My advice would be simple, understand your organizations business processes and financial data model as best you can in order to reduce any uncertainties and close any knowledge gaps. Said more precisely, understand what modules of your ERP are being utilized and what data is associated with those modules. As an SAP consultant, we often analyze business processes, master data, and configuration to gain an understanding of an enterprise. Therefore, IT organizations can also embark on a similar exercise to analyze and digest the business processes, master data, and configuration that make up their organization. This understanding helps to eliminate any uncertainties and close any potential knowledge gaps as the gearing up for S/4HANA occurs. Another approach to gearing up for S/4HANA is to undergo a POC that is designed to address the potential uncertainties or gaps that may exist within the ERP. POC’s can be extremely informative if positioned correctly, and they help to ramp up the end users by giving them hands-on experience prior to the full implementation. A majority of the configuration and master data that exists within ECC will be leveraged and reimplemented in some form or fashion into S/4HANA; therefore, truly understanding the inner workings of your ERP will help to reduce some of the barriers to entry that come with S/4HANA.

Another approach to gear up for S/4HANA is through training or knowledge transfer sessions. At TruQua, we understand that a lot of the changes that come with a digital transformation often produce more questions than answers, so we have developed a repository of training material known as TruCert. The TruCert material can be compiled and constructed to address one technology in detail, or multiple technologies at a high-level. In conclusion, understanding your ERP at a process level, gaining hands-on experience with S/4HANA, and ramping up on your S/4 knowledge are all ways in which the digital transformation to S/4HANA can become less intimidating.

JS Irick: “Truly understanding the inner workings of your ERP will help to reduce some of the barriers to entry that come with S/4HANA” – I think you’ve really hit the nail on the head here. Those who truly understand their current system are indispensable in a Financial Transformation. Can you lay out a couple of areas where customer knowledge is crucial? I know that’s a super broad question, but I’m looking for something along the lines of “Understanding Customer/Vendor enhancements vis-à-vis the move to Business Partner”. 

Matt Montes: Customer Vendor Integration (CVI) to Business Partner is definitely a big component of the transition to S/4HANA; however, for me the most important area of customer knowledge lies in the ability to understand and speak to the cost flow and end-to-end business processes associated with your ERP. It is one thing to understand your ERP at a process level, but even more important is understanding what master data and configuration points are being leveraged throughout those processes. It is critical to not only understand how things are done, but why they are being done as well. For example, a quick analysis of an ERP can uncover the fact that certain costs booked to sending Cost Centers are ultimately settled to a Fixed Asset; however, understanding why those costs are being settled and what configuration is dictating that settlement is exponentially more valuable. To me, this type of skill-set and knowledge can be the difference between a good implementation and a great one.

Matt Montes, thank you for taking the time to speak with me today. S/4HANA and Financial Transformation are such broad topics, with so much content published daily, that it is really refreshing to sit down and speak with an expert about a few key areas. All the best in your upcoming projects and I look forward to speaking with you again.

 

 

About our contributors:

JS Irick has the best job in the world; working with a talented team to solve the toughest business challenges.  JS is an internationally recognized speaker on the topics of Machine Learning, SAP Planning, SAP S/4HANA and Software development. As the Director of Data Science and Artificial Intelligence at TruQua, JS has built best practices for SAP implementations in the areas of SAP HANA, SAP S/4HANA reporting, and SAP S/4HANA customization.

Matt Montes Montes is a Finance and Data-driven professional currently working as an SAP Financials Senior Consultant. He received his education from the University of Texas at Austin with a degree in Finance and a minor in Accounting. His professional experience is comprised of financial analysis, budgeting, consolidation, accounting, and data analytics. Matt Montes has 4 years of financial consulting experience utilizing Central Finance, S/4HANA, ECC, Fiori, and BPC. In addition to 2 full lifecycle implementations, product development, and 6 POC’s, Matt Montes also works as a trainer and content developer. Matt Montes has conducted two internal and external training covering Central Finance, Group Reporting, SAC, and Reporting & Analytics. Additionally, Matt Montes has written and delivered two blogs, a webinar, and a 3-part demo series on Central Finance.

 

Thank you for reading this installment in our New Perspectives blog series. Stay tuned for our next post where we will be talking to Recruiting Director Stephanie Hettrich on identifying and developing young consulting talent.

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