In our lat­est ASUG Asks the Authors fea­ture, we sit down with a team of finance trans­for­ma­tion lead­ers at Deloitte: Usman Aji­az, man­ag­ing direc­tor; Sam Parikh, man­ag­ing direc­tor; Mau­nil Mehta, part­ner; and San­jib Chat­topad­hyay, finance trans­for­ma­tion leader spe­cial­iz­ing in process opti­miza­tion. All four lead­ers are the co-authors of the sec­ond edi­tion of SAP S/4HANA Finance: An Intro­duc­tion, a new SAP Press publication.

For orga­ni­za­tions ini­ti­at­ing finan­cial trans­for­ma­tions with SAP S/4HANA, this must-read pub­li­ca­tion details the suite’s archi­tec­ture and var­i­ous capa­bil­i­ties for core finance process­es, includ­ing finan­cial account­ing, man­age­ment account­ing, trea­sury and risk man­age­ment, plan­ning, con­sol­i­da­tion, and close. Cov­er­ing such top­ics as report­ing and ana­lyt­ics, deploy­ment options, and imple­men­ta­tion plan­ning, the book is struc­tured as a beginner’s guide to SAP S/4HANA Finance. 

Below, ASUG asks the authors about recent evo­lu­tions in the SAP ERP land­scape, the struc­ture of their pub­li­ca­tion, and the new trans­for­ma­tion areas top of mind for CFOs at the mod­ern enterprise. 

This inter­view, con­duct­ed joint­ly with the authors over email, has been edit­ed and condensed. 

Q: So much has changed since the first edi­tion of this book was pub­lished in 2019. What inspired and moti­vat­ed you to write this sec­ond edi­tion now?

A: SAP announced the end of main­stream main­te­nance for SAP ERP Cen­tral Com­po­nent (ECC) as Decem­ber 31, 2027, and also offered to pro­vide option­al extend­ed main­te­nance until the end of 2030. This will impact many exist­ing SAP ERP 6.0 cus­tomers who are in the lat­est three Enhance­ment Pack­ages (EhPs) — i.e. EhP6, 7 and 8 — as they need to migrate to SAP S/4HANA. The path to SAP S/4HANA could be through a sys­tem con­ver­sion of the exist­ing ECC sys­tem or imple­men­ta­tion of a new SAP S/4HANA sys­tem. Some orga­ni­za­tions may also adopt a selec­tive data tran­si­tion from ECC to a new­ly built S/4HANA sys­tem. This had cre­at­ed a lot of inter­est and, at the same time, con­fu­sion for the finance com­mu­ni­ty. Our goal with this sec­ond edi­tion was to pro­vide clar­i­ty on the SAP S/4HANA func­tion­al­i­ty to make the finance com­mu­ni­ty more comfortable.

Addi­tion­al­ly, SAP has released a lot of new func­tion­al­i­ty that we want­ed to explore in this new ver­sion of the book. Some of this func­tion­al­i­ty includes a focus on cen­tral pro­cess­ing, in areas such as cen­tral assets and cen­tral projects. We also addressed SAP Busi­ness Tech­nol­o­gy Plat­form (BTP), migra­tion to the cloud, finan­cial plan­ning, report­ing and ana­lyt­ics in SAP Ana­lyt­ics Cloud, and infor­ma­tion on tax and statu­to­ry report­ing that is more rel­e­vant to today’s leaders.

Q: Can you walk our read­ers through how you struc­tured this book and the think­ing behind that?

A: This book starts with a gen­er­al intro­duc­tion to finance trans­for­ma­tion process­es, then moves into defin­ing the high-lev­el SAP S/4HANA sys­tem archi­tec­ture and the under­ly­ing user inter­face. The core finance process­es — name­ly, finan­cial and man­age­r­i­al account­ing areas that include gen­er­al ledgers, accounts receiv­able, accounts payable, fixed asset account­ing, gen­er­al over­head account­ing, prod­uct cost­ing, and prof­itabil­i­ty analy­sis — are includ­ed next. 

The book con­tin­ues to explain the finan­cial plan­ning, trea­sury, and risk man­age­ment areas and wraps up with dis­cus­sions on finan­cial close and report­ing. We have also includ­ed poten­tial deploy­ment options dur­ing an SAP S/4HANA finance trans­for­ma­tion jour­ney and project plan­ning, includ­ing explo­ration of the process of select­ing a sys­tem inte­gra­tor. This struc­ture pro­vides a novice finance prac­ti­tion­er with the option of start­ing from the begin­ning and going all the way to the end, where­as more sea­soned prac­ti­tion­ers can pick and choose the top­ics they are inter­est­ed in.

Q: As not­ed in the pref­ace, this book is for ​“finance exec­u­tives, end users, con­sul­tants, and any­one who wants to bet­ter under­stand intri­ca­cies of a finance trans­for­ma­tion enabled by SAP S/4HANA.” How did you pin­point this tar­get audi­ence for the book?

A: The whole finance ecosys­tem can ben­e­fit from this book. Often­times, finance exec­u­tives and non-finance lead­ers are faced with ques­tions about finance trans­for­ma­tion, and this book can steer them towards the appro­pri­ate respons­es for their audiences. 

A sea­soned exec­u­tive will be able to gain insights into cre­at­ing an effec­tive IT infra­struc­ture to serve as the foun­da­tion of all finance-relat­ed sys­tems and process­es, as well as what a suc­cess­ful roadmap should look like to do so. End users will ben­e­fit from under­stand­ing how to uti­lize com­mon SAP Fiori Apps for finance busi­ness process­es and how to define val­ue for the work they are per­form­ing. Con­sul­tants will gain deep­er under­stand­ing of uti­liz­ing indus­try-lead­ing prac­tices to stan­dard­ize com­plex finan­cial busi­ness require­ments and trans­form a com­pa­ny using the func­tion­al­i­ty present in S/4HANA.

Q: SAP S/4HANA Finance was first released in 2014, and you write in your pref­ace that it has since ​“rede­fined the ERP land­scape for finance.” Look­ing back on near­ly a decade of SAP S/4HANA Finance, what have been its biggest impacts on the ERP land­scape, and what fac­tors allowed it to be so transformative?

A: While there are so many areas to men­tion, let us attempt to touch upon a few key areas that impact busi­ness process own­ers, end users of SAP, con­sul­tants, and senior lead­ers with­in orga­ni­za­tions. The Uni­ver­sal Jour­nal, a cen­tral finan­cial steer­ing mod­el for SAP S/4HANA, embold­ened the busi­ness process own­ers to rethink how they can restruc­ture their finance orga­ni­za­tions. SAP S/4HANA Finance has also facil­i­tat­ed migra­tion to a shared ser­vices mod­el, lead­ing to homoge­nous busi­ness process across the orga­ni­za­tion and there­by deriv­ing busi­ness val­ue. User expe­ri­ence has under­gone a sea change with the intro­duc­tion of SAP Fiori. Migra­tion to the cloud has allowed lead­ers to rethink their tech­nol­o­gy land­scape, there­by cre­at­ing cost-sav­ing opportunities.

Q: Finance trans­for­ma­tion is often poor­ly defined, and so you open the book by defin­ing it as ​“a method­i­cal approach that assists chief finance offi­cers and finance orga­ni­za­tions in dri­ving busi­ness per­for­mance and share­hold­er val­ue while simul­ta­ne­ous­ly improv­ing oper­a­tional effi­cien­cies.” Tell me about com­ing up with this def­i­n­i­tion and how doing so informed your approach to writ­ing the book.

A: In our expe­ri­ence, we have not­ed that many orga­ni­za­tions embark on a trans­for­ma­tion jour­ney to mod­ern­ize their aging IT infra­struc­tures. How­ev­er, in doing so, they tend to ignore that their users’ expe­ri­ences, either good or bad, are an after-effect of poor­ly defined process­es within. 

It is imper­a­tive that busi­ness process­es be aligned with strate­gic dif­fer­en­tia­tors, often referred to as busi­ness process seg­men­ta­tion, and that this dri­ves strate­gic process­es. Once busi­ness process­es are opti­mized, they can be imple­ment­ed uti­liz­ing the fit-to-stan­dard SAP S/4HANA func­tion­al­i­ty to dri­ve busi­ness per­for­mance. User sat­is­fac­tion is an inher­ent byprod­uct of this process opti­miza­tion, cre­at­ed through this method­i­cal approach.

Q: What have been the biggest devel­op­ments in finance trans­for­ma­tion since SAP S/4HANA Finance was first intro­duced? How did you address those in this sec­ond edition?

A: Finance has moved toward cen­tral­iza­tion of every­thing: through the empha­sis on cen­tral pro­cess­ing, on Uni­ver­sal Jour­nal (ACDO­CA), non-cen­tral­ized payables, receiv­ables, assets, and so on. We see improved deci­sion-mak­ing through real-time embed­ded ana­lyt­ics and drill-down capa­bil­i­ties. Improved finan­cial clos­ing process­es are some of the key devel­op­ments we’ve observed in recent years. Our book intro­duces these func­tion­al­i­ties and explains their inter­ac­tion with exist­ing busi­ness process­es to derive max­i­mum val­ue dur­ing the finance trans­for­ma­tion journey.

Q: What are the ​“new” trans­for­ma­tion areas (i.e. ones that have emerged in the past decade) that the next gen­er­a­tion of CFOs con­sid­er to dri­ve share­hold­er value? 

A: CFOs can gen­er­ate share­hold­er val­ue by tak­ing advan­tage of the cen­tral finance and the cen­tral pro­cess­ing func­tions to restruc­ture their finance orga­ni­za­tions, bring­ing about process stan­dard­iza­tion, effi­cien­cy, real-time insights, and trans­paren­cy in report­ing. The abil­i­ty to con­sol­i­date finan­cials across dis­trib­uted sys­tems — and to estab­lish short­er month­ly, quar­ter­ly, and year-end close cycles with short­er audit peri­ods — will go a long way in cre­at­ing an intel­li­gent enterprise. 

The rise of arti­fi­cial intel­li­gence (AI) and machine learn­ing (ML) capa­bil­i­ties will enable automat­ing man­u­al process­es and opti­miz­ing data qual­i­ty, there­by reduc­ing errors and main­te­nance require­ments. Improve­ments in user expe­ri­ence in SAP S/4HANA via SAP Fiori will fos­ter a hap­py finance orga­ni­za­tion, allow­ing them to do more mean­ing­ful work with real-time insights avail­able through S/4HANA.

Q: Are there any com­mon mis­con­cep­tions about finance trans­for­ma­tion, or specif­i­cal­ly about SAP S/4HANA Finance, that you sought to address and clar­i­fy with­in this book?

A: Human beings are slaves to our expe­ri­ences and habits, and we avoid change. This resis­tance comes from the mis­con­cep­tion that ​“our ways of doing things” are the best ways and can­not be changed, and in this con­text from the mis­con­cep­tion that orga­ni­za­tions will lose key finance process­es if they switch sys­tems to SAP S/4HANA. This book shows how key finance process­es can be adapt­ed, inte­grat­ed, and improved into one S/4HANA sys­tem. Sim­pli­fi­ca­tion and stan­dard­iza­tion is the key that  keeps busi­ness process­es and account­ing in com­pli­ance with the gov­er­nance requirements.

Q: What do you want read­ers to, in the end, learn and do dif­fer­ent­ly, hav­ing read the book?

A: The key take­away from the book for read­ers will, we hope, be that they should become agile and look at the big pic­ture dur­ing their finance trans­for­ma­tion jour­ney. We would also encour­age our read­ers to con­tin­ue learn­ing as they embark on the finance trans­for­ma­tion jour­ney. One thing is cer­tain: the design that any­one embraces with the tools and tech­nol­o­gy avail­able at a par­tic­u­lar point  in time will soon become out­dat­ed, but a stan­dard approach to the design will elim­i­nate much risk and make the solu­tion nimble.

Q: Any part­ing thoughts for the ASUG community?

A: SAP is com­mit­ted to con­tin­u­ous improve­ments to finance capa­bil­i­ties in S/4HANA, and each ver­sion has new­er capa­bil­i­ties. So, be bold enough to chal­lenge the cur­rent process­es, whether those with­in your own orga­ni­za­tion or those of your trust­ed clients. New­er func­tion­al­i­ty has improved effi­cien­cy with­in the finance mod­ule and cross-func­tion­al­ly with inte­gra­tion to oth­er mod­ules. Out­dat­ed cus­tom busi­ness process­es with­in the finance orga­ni­za­tion can be replaced by stan­dard func­tion­al­i­ty avail­able in SAP S/4HANA. Final­ly, we would like the ASUG com­mu­ni­ty to share their feed­back so that we can grow our col­lec­tive under­stand­ing of SAP S/4HANA Finance.