- Internal Code :
- Subject Code : BAO6714
- University : Victoria University
- Subject Name : Accounting and Finance
Computerized Accounting
Table of Contents
Introduction.
Brief Historical Overview of SAP/S4HANA Enterprise Management
Benefits of using SAP S/4HANA..
Part 2: Use of Fiori in Comparison to T-codes.
Part 3: Changes in S4 (Simple Finance) as compared to SAP FICO ECC Version.
Part 4: Issues Faced by Companies in Migrating to SAP S/4HANA and the measures taken for overcoming the issues.
Case Study of IBM...
Case Study of Aequs.
Conclusion.
References.
Introduction to Computerized Accounting
The ongoing digital revolution has largely impacted the business environment by evolving new challenges and opportunities for future growth. The businesses are integrating the use of e-commerce, e-banking, social media marketing, and the use of other innovative digital tools for meeting the changing needs and demands of the customers. The digital revolution has caused a major shift in the behavior and attitudes of the consumers as they are demanding immediate response and easy access to the products or services. As such, it is becoming largely essential for business companies to respond faster and provide a better customer experience. The fast and immediate response to be provided to the consumers is also causing the need for businesses to enhance the effectiveness of their decision-making process. They are integrating the use of a different type of online software and programs for improving data quality, improving cash flow, and growing business (Pan and Seow 2016).
SAP S/4HANA is one such software used by an enterprise for developing a consolidated view of the operational and financial data and thus improving the flexibility of the business processes and developing the financial reports steadily. The use of these digital software tools also enables real-time analytics, simulations, and forecasting that supports the decision-making of business managers. The major benefits of SAP S/4HANA are not limited to provide better forecasting and assisting in business planning but also are providing analytics support and also have global regulatory and compliance abilities across all languages and industries to the businesses.
In this context, the present report is developed to carry out the discussion in regards to the benefits of SAP S/4HANA. This specifically includes a brief historical overview of SAP S/4HANA software for enterprise management and the use of Fiori for conducting comparison to t-codes. The changes in S4 relative to SAP FICO ECC are also discussed within the report. The issues faced by the companies in implementing SAP S/4HANA and the measures taken for overcoming the issues have also discussed within the report.
Brief Historical Overview of SAP/S4HANA Enterprise Management
SAP HANA is a database management system and its primary function is to store and retrieve data and also perform advanced analytics function. SAP S/4HANA is the next-generation business software that is developed based on the most advanced technology platform and design principles with the SAP Fiori user experience. The software provides extensive features to the businesses for meeting the digital needs and expectations of the consumers (Carey 2017). The major features provided by the software include enhanced decision-making, integrating business processes, data modeling, big data creation, establishing a business network, and others. The ERP software of SAP S/4HANA is developed on the memory platform of SAP HANA and is specifically developed for supporting the needs of the digital business and providing instant insight into the business processes. The major benefits of using this software are real-time processing, dynamic planning, and analysis of the different business operations. The software is adequately connected with the business networks and thus promotes internal collaboration with the use of the Internet of Things (IoT). The adoption of SAP S/4HANA provides a digital framework for the companies by the use of data analytics and predictive scenarios gaining real-time insights into the business data and meeting the needs of the users (S/4 HANA Finance: An overview 2017).
The major four components of SAP S/4HANA are stated as below:
- Functional /Core Component: SAP offers different financial supporting and enhancing capabilities that are regarded as an integral part of its core component. It enables in carrying out high volume processing of sales data and real-time analytical processing based on a unified data model.
- Presentation/user Experience Component: The Fiori based SAP component that assists in interacting with the core component through user-friendly Fiori screens (KTern 2018).
- Reporting or Analytics component: It carries out reporting and analytics function with the use of real-time data and is also known to be an optional component
- App Component: It is primarily a collection of different types of analytical applications in the financial suite for supporting the financial decision-making within an enterprise.
Benefits of Using SAP S/4HANA
- The functions of the software such as carrying out financial transactions and real-time analytics assist the users in evaluating, reporting, stimulating, and predicting real-time information. The users can seek the solution to various business problems at any time.
- It also assists in carrying out analytical processes based on a unified data model without redundant data layers (Jones and Burger 2011)
- The simplification of the data model assist the businesses in fostering their technological innovation a wide scale
- The acceleration of cloud deployment and the industry-specific functions provides by the software assist the companies in increasing their ability to react
- The software has enabled the businesses in the reinvention of their business models
- The immediate response and increased efficiency of the business processes with real-time reporting has helped in driving business performance and thus the creation of higher revenues and profits
- The creation of big data has foster collaboration among the different business departments and helping in sharing of real-time data for effective decision-making (Mereddy 2011)
Part 2: Use of Fiori in Comparison to T-codes
SAP Fiori is known to be a new user experience in the context of the software and applications of SAP. It offers different types of applications that are used for carrying out regular business functions such as work approvals, apps for carrying out financial activities, and different self-service apps (SAP Fiori: Introduction 2020). It is estimated that Fiori provides about 300 role-based applications that can be illustrated as below:
SAP Fiori assists various business roles within an organization with its easy to use functions and effective responsiveness. The various apps provided by the SAP Fiori enable users for developing a process on the desktop and continuing the process identified on the Smartphone and tablet. The integration of SAP Fiori with the SAP HANA enables in providing an unmatched application response and offers a personalized experience to users for promoting engagement across different areas of business within an enterprise. The major design principles that have been developed for SAP Fiori are stated as follows
- Role-based: The different interactive apps provided by SAP Fiori has helped in providing more pertinent information to the users
- Responsiveness: The integration of Fiori and HANA enables in creating an unmatched application response for the users (Dart 2018)
- Simple: SAP Fiori can be easily matched with the demand of the users and thus providing a personalized experience
- Delightful Experience: Fiori is intended to work in collaboration with ECC and thus making it easier for the users to get deployed on the SAP system
On the other hand, transaction code, that is, t-code in SAP is known to be a 4 digit key that provides a short cut for accessing a requested transaction. Transaction code gives direct access to a transaction that has been requested anywhere within an SAP system. The code is used for generating SAP documents based on various business tasks. The transaction can be accessed with the use of the SAP menu path or through the transaction code. The list of the t-codes used in the SAP can be illustrated as below
SAP S/4HANA consists of hundreds of t-codes but all of these are not converted into Fiori apps. SAP has provided provisions for launching standard t-codes from the Fiori launchpad. The configuration steps for launching t-code from the launchpad of SAP Fiori can be stated as follows:
- The first step is the identification of t-code for conducting custom tile configurations
- This is followed by launching Fiori launchpad via URL
- The catalog is then selected from the list of catalogs in the left pane
- The app launcher is then selected from the list of tile template (John 2018)
The most significant difference that can be cited in the context of SAP Fiori as compared with SAP t-code is that Fiori enables in providing personalized services to the business users. Personalization means that a business user can adjust their suite as per the working needs. Also, the regular notifications provided are the most anticipated feature of Fiori and they automatically appear within the Notification Center viewport. These notifications can be easily directed for launching a specific app and this is also the major benefit of using Fiori in comparison to the t-codes (Dart 2018).
Part 3: Changes in S4 (Simple Finance) as compared to SAP FICO ECC Version
SAP simple finance was known to be the first part of the business suite that is written on new superfast memory HANA databases. It was mainly integrated by the business for automating the financial activities of a business by its advanced features. The new features such as universal journal, streamline designing and real-time data analytics provided by S4 helps in increasing the business process efficiencies (Carey 2017). The business software was mainly used to reduce the amount of time that was involved in the financial processing of complex data and gain real-time insights into financial transactions. The software intends to improve the financial data and thus helping in developing better business activities for management and financial accounting purposes. SAP has realized its S4 which is Simple Finance software in the year 2014 and is an ERP 6.0 suite of SAP and can be run on the SAP HANA database. S4 was an add-on version of SAP HANA and is an optimized version of the financial accounting module that is used in the business suite of SAP.
SAP FICO is the finance and cost controlling module used in SAP ERP and was mainly used by businesses for financial reporting both internal as well as external purposes. The major objective behind SAP FICO is to properly record all the financial transactions carried out by an entity and develop the financial reports that provide an actual depiction of the financial position of an entity at the end of the trading period. It is made of different sub-modules that ate mainly accounts receivables, payables, assets, general ledger, and bank accounting. However, the traditional ERP systems were not proved to be largely effective in carrying out financial processes in an effective manner. SAP FICO is the traditional software modules used for conducting financial accounting activities (Introduction to SAP FICO 2020). The shift from SAP FICO to SAP S4 has enabled in integrating the various business processes and also provided a higher level of personalized experience with the use of SAP Fiori. The major advantage that the business is realizing with the adoption of S4 as compared with the SAP FICO systems is the high speed of processing financial transactions with the use of SAP HANA. The faster reconciliation of accounts and financing processes through SAP HANA has also provided an advantage over SAP FICO (SAP FICO vs. S4 HANA Finance 2019).
The differential features of SAP S4 HANA that largely distinguishes it from SAO FICO technology and is stated as follows:
SAP Fiori
This can be described as a relatively new feature of the SAP S4 HANA has provided personalized user experiences that were not possible in the case of SAP FICO software. FIORI has provided more user-friendly apps that are informative and interactive applications that enable in overviewing the outstanding items in the accounting balances in an adequate manner (John 2018).
Ledgers of S4 Finance
SAP FICO only provides parallel ledgers for the recording of the accounting entries while the S4 FINANCE has provided extension ledgers, simulation as well as prediction ledgers that enable in real-time data analytics. The parallel ledger provided by SAP FICO only assists in making physical entries to the ledger while the simulation and prediction ledgers features of S4 HANA enables in automatic processing of the financial entries and developing the financial reports in an easy manner (Carey 2017).
Universal Journal
The most important feature of S4 Finance is the creation of a universal journal and its major function is to examine the impact of different transactions of a business and also analyzing the configuration changes. The universal journal can be easily created with the use of advanced features of SAP HANA with any financial transactions that are posted (Introduction to SAP FICO 2020).
Also, the benefits that the businesses can realize with the use of SAP S/4HANA over SAP FICO are mentioned below:
- SAP S4 provides higher stability within the different areas of business and has also significantly reduced the errors in the processing of financial transactions that are present in the traditional FICO systems
- It is more efficient in conducting financial closing activities and increases the efficiency of the accounts payable and receivables activities (SAP FICO vs. S4 HANA Finance 2019)
- The timely and relevant decision-making by the use of SAP S4 helps in developing real-time insight into the business processes without causing the delay
- It enables in achieving rapid control over the financing activities and producing accurate financial results that can be sued for internal as well as external reporting functions (Etemadi and Kazeminia 2014)
- It also helps in strategic planning activities through accurate forecasting of financial and operational data
- S4 (Simple Finance) helps in gaining the benefit of advanced features such as data analytics, intelligent services big data and internet of things that enables in the automation of the payment and billing processes
- It also helps the businesses in complying with all the relevant regulatory compliances and updates that enhance the transparency within the financial processes (Mereddy 2011)
Thus, it can be stated that the major changes in S4 (Simple Finance) as compared with SAP FICO is that it provides more advanced and personalized user experience and is also according to the latest technology.
Part 4: Issues Faced by Companies in Migrating to SAP S/4HANA and the measures taken for overcoming the issues
The major problems that are faced by the business companies in shifting from SAP S/4HANA to SAP FICO can be demonstrated with the case studies of IBM and Aequs.
Case Study of IBM
IBM is a leading technology company that provides its computerized services across the world. IBM has undertaken major transitions from SAP FICO to SAP S4 and the major challenges that have been faced by the company in adopting the significant changes are stated as below:
Technical Complexity
The migration from FICO to S4 is highly complicated and it requires the integration of advanced features for centralizing the finance function and processes. The IT infrastructure of the company requires up-gradation in accordance with the new features of SAP S/4HANA. The changes in the IT infrastructure are quite costly for the company and also require a huge amount of time and this is a major challenge associated with this transition process
Structural Changes
The integration of structural and functional changes in the business activities of the company also requires implementing a major transition within the organizational structure. The organizational structure needs to be more flexible by promoting communication across the different business departments and fosters the development of an integrated IT work environment. This requires providing proper knowledge to the employees at all levels regarding the need and benefits of the change process. This would help in removing any discrepancies and providing clear knowledge to the employees at all levels regarding the strategic goals and priorities (Mereddy 2011). This would also help in overcoming the change resistance from employees and increasing their readiness for the new changes undertaken by the company.
Data Migration
The migration of large amounts of data from SAP FICO to SAP S/4HANA is also a very complicated process for the company. The company needs to develop and maintain a competent team of IT for conducting the process of data migration. This also requires a large amount of time and investment on the part of the company (IBM Services 2019).
Case Study of Aequs
Restructuring The Business Model
Aequs requires a complete transformation of its present business models to adequately adapt the software of SAP S/4HANA. The company is partnering with India Software Solutions Pvt Ltd for fostering upgrading in its business processes. The restructuring would incur the company's high cost and time and thus can also lead to creating budget constraints.
Problems in Collaboration with the Work Processes
The company can also face problems for integrating the various work processes and aligning its long-term goal with the objectives of SAP S/4HANA. The streamlining of the different work activities involves modifying the different business processes that can be quite complicated on the part of the company (Jones and Burger 2011).
High Cost Incurred in Employee Training
It is also largely difficult for the company to incur high costs on giving relevant training to the employees so that they can work effectively as per the latest advanced features provided by SAP S/4HANA. The creation of a training manual is largely complicated for the company and this would require high cost and time on the part of the company (ETCIO 2019).
Conclusion on Computerized Accounting
It can be summarized from the discussion held that businesses are adopting the use of SAP S/ 4HANA that provides a personalized user experience with the use of SAP Fiori. The use of S4 (Simple Finance) as compared with the SAP FICO provides more technology advance features for processing and reporting of the financial information. The major problem that a business face while adopting SAP S/4HANA is the technical and architectural issues that can result in incurring high cost and time on the part of a company.
References for Computerized Accounting
Carey, S. 2017. What's the difference between SAP HANA, S/4HANA and HANA Cloud Platform. [Online]. Available at: https://www.computerworld.com/article/3426752/what-s-the-difference-between-sap-hana--s-4hana-and-hana-cloud-platform.html [Accessed on: 6 May 2020].
Dart, J. 2018. Fiori for S/4HANA – Top 5 Fiori features that bring value to every Business User. [Online]. Available at: https://blogs.sap.com/2018/06/21/fiori-for-s4hana-top-5-fiori-features-that-bring-value-to-every-business-user/ [Accessed on: 6 May 2020].
ETCIO. 2019. Aequs to adopt SAP S/4HANA business suite to facilitate its robust growth. [Online]. Available at: https://cio.economictimes.indiatimes.com/news/corporate-news/aequs-to-adopt-sap-s/4hana-business-suite-to-facilitate-its-robust-growth/67654550 [Accessed on: 6 May 2020].
Etemadi, H. and Kazeminia, S. 2014. Impact of Enterprise Resource Planning Systems (ERP) on Management Accountants. Management and Administrative Sciences Review, 3(4), pp.507-515.
IBM Services. 2019. Insights from IBM on the journey to SAP S/4HANA. [Online]. Available at: https://www.ibm.com/downloads/cas/BJZRNZOE [Accessed on: 6 May 2020].
Introduction to SAP FICO. 2020. [Online]. Available at: https://www.guru99.com/introduction-sap-fico.html [Accessed on: 6 May 2020].
John. 2018. The Most Useful SAP Fiori Tcodes List and SAP Fiori Launch Pad Tcode. [Online]. Available at: https://sap4tech.net/list-useful-sap-fiori-tcodes/ [Accessed on: 6 May 2020].
Jones, P. and Burger, J. 2011. Configuring SAP ERP Financials and Controlling. John Wiley & Sons.
KTern. 2018. History of SAP S/4HANA. [Online]. Available at: https://medium.com/@ktern/history-of-sap-s-4hana-ad6b0d938bbc [Accessed on: 6 May 2020].
Mereddy, R. 2011. SAP Basis Administration Handbook. McGraw Hill Professional.
Pan, G. and Seow, P. S. 2016. Preparing accounting graduates for digital revolution: A critical review of information technology competencies and skills development. Journal of Education for Business, 91(3), pp.166-175.
S/4 HANA Finance - An overview. 2017. [Online]. Available at: https://www.michaelmanagement.com/blog/an-overview-of-s4-hana-finance [Accessed on: 6 May 2020].
SAP FICO vs. S4 HANA Finance. 2019. [Online]. Available at: https://skillstek.com/difference-between-sap-fico-and-s4-hana/ [Accessed on: 6 May 2020].
SAP Fiori – Introduction. 2020. [Online]. Available at: https://www.tutorialspoint.com/sap_fiori/sap_fiori_introduction.htm [Accessed on: 6 May 2020].
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