Implementing Central Finance in SAP S/4HANA

S4F61
Implementing Central Finance in
SAP S/4HANA
.
.
PARTICIPANT HANDBOOK
INSTRUCTOR-LED TRAINING
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Course Version: 20
Course Duration: 5 Day(s)
Material Number: 50159463
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Contents
vii Course Overview
1 Unit 1: Overview of Central Finance in SAP S/4HANA
3 Lesson: Understanding SAP S/4HANA Central Finance
13 Lesson: Understanding Use Cases for SAP S/4HANA Central
Finance
19 Lesson: Understanding the SAP Central Finance Product Roadmap
23 Lesson: Getting to Know Innovations in SAP Central Finance
27 Lesson: Understanding the Central Finance Activate Roadmap
37 Unit 2: Architecture of Central Finance in SAP S/4HANA
39 Lesson: Understanding the Architecture of Central Finance in SAP
S/4HANA
55 Lesson: Understanding Data Flow in SAP S/4HANA Central Finance
59 Lesson: Understanding the SAP S/4HANA Central Finance
Functions
79 Unit 3: Setup and Configuration of Central Finance in SAP S/4HANA
81 Lesson: Setting Up and Configuring Source System for Central
Finance in S/4HANA Integration
87 Lesson: Setting Up and Configuring SLT and AIF for Central Finance
Integration
93 Lesson: Setting Up and Configuring Central Finance System
99 Unit 4: Replication Setup and Testing in Central Finance in SAP S/
4HANA
101 Lesson: Configuring Business Mapping with MDG Mapping
115 Lesson: Configuring the Cost Object Mapping Framework
121 Lesson: Understanding Additional Settings and Features
129 Lesson: Understanding Master Data Replication
139 Unit 5: Initial Load with Central Finance in SAP S/4HANA
141 Lesson: Understanding the Initial Load of Cost Objects
145 Lesson: Understanding the Initial Load of FI/CO postings
163 Lesson: Starting the Initial Load of CO Internal Postings
167 Lesson: Using Validation and Reconciliation in Central Finance
171 Lesson: Resetting the Initial Load
175 Lesson: Understanding Initial Load Improvements
© Copyright. All rights reserved. v

187 Unit 6: Real-Time Replication with Central Finance in SAP S/4HANA
189 Lesson: Understanding Real-Time Replication
195 Lesson: Understanding SAP Fiori Apps and Reporting
203 Unit 7: Corporate Finance Processes Supported by Central Finance in
SAP S/4HANA
205 Lesson: Understanding Central Processes
231 Lesson: Explaining Credit Management
237 Lesson: Understanding Dispute Management
241 Lesson: Understanding Collection Management
245 Lesson: Explaining Integrated Planning in Central Finance
247 Lesson: Explaining the SAP Shared Service Framework
251 Lesson: Understanding Advanced Compliance Reporting
255 Lesson: Understanding Central Accruals Management
265 Unit 8: Additional Enhancements and New Innovations
267 Lesson: Understanding Updates to Profitability Analysis
281 Lesson: Describing Replication of Classic Profit Center Accounting
287 Lesson: Understanding WBS Object Replication to the Universal
Journal
293 Lesson: Understanding Interface Innovations
305 Lesson: Outlining Commitments Management Reporting
309 Lesson: Using the Side Panel Display in the Source System
315 Lesson: Understanding the Side Panels
321 Lesson: Understanding Reconciliation Accounts
323 Lesson: Understanding Clearing Transfers
327 Lesson: Central Budgeting for Internal Orders
331 Lesson: Explaining Central Budgeting for Projects
335 Lesson: Describing Central Project Asset Settlement
337 Lesson: Understanding Delta Account-to-Ledger Solution
345 Unit 9: Realizing Projects with Central Finance in SAP S/4HANA
347 Lesson: Understanding Central Finance Project Setup
353 Lesson: Scoping a Project with Central Finance in SAP S/4HANA
355 Lesson: Understanding the Organizational Change Behind an SAP
S/4HANA Central Finance Project
359 Lesson: Understanding Central Finance Deploy and Run
vi © Copyright. All rights reserved.

Course Overview
TARGET AUDIENCE
This course is intended for the following audiences:
● Application Consultant
● Development Consultant
● Solution Architect
© Copyright. All rights reserved. vii

UNIT 1 Overview of Central Finance in
SAP S/4HANA
Lesson 1
Understanding SAP S/4HANA Central Finance 3
Lesson 2
Understanding Use Cases for SAP S/4HANA Central Finance 13
Lesson 3
Understanding the SAP Central Finance Product Roadmap 19
Lesson 4
Getting to Know Innovations in SAP Central Finance 23
Lesson 5
Understanding the Central Finance Activate Roadmap 27
UNIT OBJECTIVES
● Understand the motivation to move to SAP S/4HANA
● Understand Central Finance in SAP S/4HANA
● Understand the business benefits of Central Finance in SAP S/4HANA
● Understand the different use cases in Central Finance in SAP S/4HANA
● Understand the SAP Central Finance Product Roadmap
● Understand Innovations in SAP Central Finance
● Understand the Central Finance Activate Roadmap
© Copyright. All rights reserved. 1

Unit 1: Overview of Central Finance in SAP S/4HANA
2 © Copyright. All rights reserved.

Unit 1
Lesson 1
Understanding SAP S/4HANA Central Finance
LESSON OBJECTIVES
After completing this lesson, you will be able to:
SAP S/4HANA: Key Drivers
The following figure outlines the challenges that many customers face. Finance is complex,
and not (digitally) connected.
Figure 1: Drivers for Moving to a Central SAP S/4HANA Instance
Additional drivers in SAP S/4HANA adoption are as follows:
● Lowering costs by centralizing processes and reducing source system maintenance.
● Outsourcing individual processes to shared services centers, which ensures one version of
the truth.

Simplified Illustration of a Typical Distributed System Landscape
Figure 2: Simplified Illustration of a Typical Distributed System Landscape
Typically, customers with a large, distributed system landscape load financial data from their
system into various data warehouses. For example, SAP Business Warehouse (SAP BW). This
is often the only way to report on the figures of the entire company.
To load data into the data warehouse, long-running batch jobs need to be regularly scheduled
to extract data and transform it.
This does not happen in real-time, but rather once a day or week. As a result, the data that a
customer is looking at in the data warehouse is never up to date.
OLAP systems, such as data warehouse, need to transform data to be able to flexibly and
successfully report on it. This makes it difficult to reconcile with source systems.
Furthermore, the data quality is often very poor. In contrast to an ERP system, a data
warehouse accepts data without checking whether or not it is correct.
Many customers build custom-logic to do similar checks, like ERP Financials does when a
document gets posted, just to improve data quality.

Central Finance in SAP S/4HANA
Figure 3: How to Get to SAP S/4HANA as the Future Landscape
The benefits of SAP S/4HANA are clear, but customers face an adoption dilemma.
Many companies have a legacy of both SAP, and non-SAP, ERP systems. These systems have
different release levels, different customizing specifications, and some even have different
charts of accounts.
For companies like these, it seems like an enormous level of effort to adopt SAP's latest
innovations. The idea may seem too big and expensive to even get through their budget
committees.
The following paragraph displays options available to customers:
SAP S/4HANA Innovations: Three Options
Lesson: Understanding SAP S/4HANA Central Finance

Figure 4: SAP S/4HANA Innovations: Three Options
Central Finance in SAP S/4HANA is a replication-based path (also named "side-car"
approach). It carves out specific capabilities, together with their posting and master data,
from the existing ERP landscape, while keeping the rest running unchanged for the time
being. This allows for a more gradual move.
It is important to remember that the term "central finance" comes in two contexts:
● In the context of deployment options:
Central finance is a deployment approach that enables the replication of posting data. As a
result, it shortens the path to innovations provided by SAP S/4HANA and SAP S/4HANA
Finance.
● In the context of SAP instances in a system landscape diagram:
The central finance system is the target instance, running SAP S/4HANA or SAP S/
4HANA Finance, on which selected finance, accounting, and business planning scenarios
are operated.
The crucial factor for selecting a central finance approach, over other deployment options, is
highlighted in the previous graphic.
While essential restrictions exist in CFO functions, that strongly call for centralizing and
harmonizing a specific scope of capabilities on an SAP S/4HANA Finance instance, the client
has reasons to keep the existing SAP ERP landscape running for the remaining scope.
Customers with a distributed system landscape, who want to adopt SAP S/4HANA
innovations, have three choices:
● Migrate all systems to SAP S/4HANA.
The number of systems would remain the same.
● Merge the systems into one (or a few) and upgrade the merged systems to SAP S/4HANA.

Unlike the first option, all data would be consolidated, which would allow financial reporting
across the entire group.
● Leave the systems as they are, set up a new system (or take one of the existing ones),
upgrade this system to SAP S/4HANA, and make it the central system.
All Financials or Controlling (FI/CO) postings would be replicated to the target system and
posted again there.
Figure 5: The Non-Disruptive Step Toward SAP S/4HANA Finance
The following is a list of benefits that central finance offers:
● Advanced segment, entity, and group reporting.
● Business model-agnostic, roll-up reporting, and growth (re-org/ M&A) extrapolations.
● Embedded planning and (real-time) consolidation.
● User front-end agnostic/ self-service, real-time reporting, including Microsoft Excel.
● Scalable local and central process execution.
● Alternative complement to process execution in source ERP systems.
● Process centralization (cross-organization, shared service); economies of scale.
● Cycle-time reducing, SAP Fiori-based, and SAP HANA-optimized process execution.
● Transformation platform for the digital enterprise.
● Advanced digital finance data architecture (universal journal).
● Same (single) platform/ single source of truth for transactions and analytics.
● Digital core (workforce, network, customer, Internet of Things (IoT)) cloud connectors,
HCP ready.

Figure 6: The Non-Disruptive Step Toward System Consolidation
The following is a list of benefits:
● Provide, or replicate, finance transactions in real-time, without any disruptions.
● Harmonize underlying source data "on the fly".
● (Consolidated) reporting, with better performance and better service levels.
● Transaction processing, planning, and reporting, from the same, shared data set (single
source of truth).
Leverage centrally-staged data for consolidation activities.
● Process optimizations and productivity improvements (UI), through, for example, SAP
Fiori, SAP Lumira, and SAP Smart Business cockpits.
● A new finance architecture, SAP S/4HANA-optimized transactions, and unified FI/CO with
the Universal Journal.
*Requires respective SAP products and licenses (for example, SAP Accounting powered by
SAP HANA, SAP Business Planning and Consolidation, BOBJ BI) and so on.

Figure 7: Group Reporting for Complex Enterprise Structures, M&A Onboarding, or Divestitures
Group Reporting:
Creating consolidated entity and management reporting, including relevant business unit
information and supporting line-item details, is not a trivial task. This is often complicated
by multi-ERP system landscapes, where different charts of accounts and local business
rules are the norm.
SAP Simple Finance provides up-to-date entity and consolidated group reporting
capabilities. By using a central finance approach, based on real-time replicated data, and
with flexible data harmonization, you can create the reports you need by any dimension.
Mergers, Acquisitions, Consolidations:
Finance teams in growing companies face extreme challenges: integrating acquisitions,
providing a repetitive playbook for on-boarding or divestitures, and consolidating
reporting processes in multi-ERP system landscapes.
Companies can replicate financial transactions non-disruptively into a central finance
instance using SAP Simple Finance, regardless of source ERP system.
Your finance team can then provide central process execution and corporate
(management) reporting, to measure and manage your organic and non-organic growth.
Tangible Results of Simplification and Innovation

Figure 8: Tangible Results of Simplification and Innovation
The benefits of centralization are as follows:
● IT Simplification:
Establishing a single source of truth in a heterogeneous systems environment is a
challenge given a landscape shaped over decades of organic and inorganic growth. Manual
processes introduce errors into your systems that are expensive to clean up.
● Central Finance Instance as a Fresh Start:
A simplified landscape with clearly defined interfaces, innovative applications, and
harmonized data.
● Process Simplification:
Processes spread across multiple systems are complicated, and visibility is impossible.
With a central finance approach, data preparation and harmonization is taken care of,
giving you a single system where you can run important corporate reporting processes,
delivering more insight than ever, as well as world-class reporting.
● Process Innovation:
Together, IT and process simplification open the doors for process innovation. Where it
used to be a challenge to find the right data at the right time to respond quickly to
changing market conditions, now you can make use of real-time processes that are alert-
driven - changing the way you do your job and helping to deliver against your strategic
goals.
Main Benefits
Central Finance Solution offers a compelling deployment option for customers. This slide
covers the main benefits of Central Finance. Central Finance enables customers to move at
their own pace while avoiding a big bang approach, offers less risk and minimal change
management.

Figure 9: Main Benefits
Transparency:
Increase transparency with a single, central source of truth of harmonized financial data
for local, entity and group reporting.
Flexibility:
Quickly adapt to changing business environments and implement your own growth
activities and business model changes.
Efficiency:
Improve process efficiency by integration, standardization, and automation of business
processes.
Service Level:
Improve the service level provided to stakeholders; service quality, accuracy, speed and
timeliness, optimally in self-service scenarios.
Cost Reduction:
Reduce maintenance of multiple systems, applications, and interfaces, improve and
innovate local and introduce centralization and economies of scale (shared services) to
process execution.
Working Capital Improvement:
Simplify your cash-, collections-, and receivables management and improve your working
capital.
Simplification:
Run simple and live with one rationalized, and consolidated solution for transaction
recording, reporting, planning and consolidation.
Business Continuity:
Connect your SAP and non-SAP ERP landscape without disruption to SAP S/4HANA to
run as a digital business, capture market and transformation potential via cloud and
subscription options.
LESSON SUMMARY
You should now be able to:

Implementing Central Finance in SAP S/4HANA

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