If you are in the SAP field and haven’t heard of S/4 HANA, then you must be living under a rock! Every conference you go to and everyone you talk to keeps bringing up this topic
What’s all the hype about S/4 HANA and what is new in it?
It is the biggest improvement that SAP has made in about 20 years and the change is pretty drastic.
Ok, so what exactly is new in?
Let’s first understand what a CEO needs from a software to run a company. SAP is the biggest ERP software out there and most fortune companies run on it. If you are not familiar with what SAP is then check this out first (insert link)
Business is changing everyday and a CEO has to constantly make decisions and changes.They rely on SAP to give them accurate and REAL TIME data in order to make these decisions.
For e.g. let’s say you are the CEO of apple and you want to know the cost of making an iPhone in order to price it for its release date.
If there is a delay in knowing the cost of the iphone and you price it incorrectly, then that could be millions of dollars in losses for your company.
You need to know all the details of your company in real time. If the reports that you are reading are 1 day old, then it could affect your business.
Let’s look at another example. You decide to get into the stock market and you see that the price of Apple’s stock is 200$ and you decide to spend $10,000 to buy 50 of its stocks. Later on, you realize that the 200$ price was a day old and the actual price was $250, so instead of getting 50 stocks, you only get 40!
Had you known that the price was $250, you wouldn’t have bought these stocks.
The problem was that you didn’t have real time data.
This issue keeps coming up in a company in numerous scenarios where decisions are taken based on data that isn’t in real time or to get to that information is really hard.
S/4 HANA gives
Single source of information
Let’s look at how S/4 HANA starts to solve these issues. You will hear the word single source of truth a lot when you hear what’s new with S/4. This basically means that you don’t need to fetch data from 10 tables to get to what you need.
In the current Sap version, we don’t have a single source for all our information. Data is posted into financial tables, asset tables, material tables, copa and so on. It isn’t easy to drill down to get to the source data.
All the data isn’t available in one table in order to report on it. We need to do a lot of reconciliation efforts in order to get an accurate view of our business. E.g. Costs may be posted to one cost center and then get allocated to another cost center at month end. During the month, we don’t get an accurate picture of the costs to that cost center.
This uses up a lot of database space.
Because of this structure, we face some challenges
Solution with S/4 HANA
SAP has provided a universal journal (table ACDOCA) where postings from all the modules get updated along with G/L information.
This makes it easy to get the details by cost center, asset, internal order etc. for any posting
As shown below, the information from Asset Accounting, CO, COPA, GL etc. are all stored in the Universal Journal(table ACDOCA).
One table stores the financial information
Since we have all the information for a G/L, we can get a better picture of a transaction. We can drill down better and view the source of an entry. E.g. if we look at a G/L, we can drill down and see which customer posting or asset posting affected the G/L
In the Old way(SAP ECC), each of the submodules, would have it's own table
But in S/4 HANA, all the information from these tables flows into one table.
For e.g. if you wanted to get Controlling info, you could go to table COEP or ANLC for Asset information, but all this information is now available in table ACDOCA.
Having all the info in one table makes it much easier to write an ABAP report now
No duplication of data
In our current SAP system, the same data is stored in multiple tables. E.g. if we create a vendor invoice
The document number gets updated in multiple tables.
Table 1- Line item table
Table 2- Index table- Tells us whether an invoice is open.
These entries also get updated in CO tables, total tables and header tables.
SAP has gotten rid of index tables and total tables and all aggregation is done from one table
This reduces our database size and reports run much faster than before.
The HANA database is very powerful and can fetch millions of records within seconds. This makes it possible to view large amounts of data in real time without it being sent to another system overnight.
Please note that even though SAP has deleted many tables, it has created views in its place.
SAP FIORI -Ability to run SAP from a mobile device
Have you ever waited on someone to approve a purchase order an invoice or anything else in SAP, but they weren't able to do it cause they weren't near a computer?
It happens all the time right? you need to do something real quick in SAP, but you have to wait till you get back to your desk.
The world uses their mobile devices first now before everything, so if we use facebook, instagram, what's app etc,. from our cell phones and tablets, why can't we do the same with SAP?
Welcome SAP FIORI- Better late than never
Finally SAP has a solution to address this problem!
you can now access SAP easily from a mobile device or a tablet and the screens look different as well.
SAP FIORI is a powerful tool that gives us great visuals of our data and allows us the ability to post transactional data, run reports, view KPIS from our mobile devices.
The AR app gives the user the ability to post invoices, dispute cases, clear payments and other functions that they need to perform.
The AR manager can view KPIS on the AR dashboard and get real time information of open receivables.
We can customize the KPIS for users. In the screen below, we can see in real time, the orders that are open, the number of customers who promised to pay, future receivables or any other information that is important to us.
We can get a lot of insights into our customers with the help of beautiful graphs
The accounts payable app allows an AP account to make a payment to the vendor, clear vendor open items, make a payment to the vendor with an invoice (down payment)
KPIS for AP Manager- The AP manger can look at a tile which shows them the key information they need to know without spending hours trying to figure out who needs to pay and who has already paid today etc.
A G/L accountant can perform all of his functions through his phone as well. This is really handy where for e.g. someone wants a posting period open and the person who is opening the posting period is at the airport. That person doesn’t need to connect his/her laptop to a wifi network, login to the vpn and then open the posting periods, this function can be done from a mobile itself.
Similarly, if we need any adjustments to be made, these can be done from a mobile device.
Some of the reporting features- Users who prefer not to use the GUI version, can also use the web based application to run reports or perform day to day functions.
We can drill down to the line item from any report
We can add attachments to G/L accounts
These are some of the functions. Details can be shown at a later time.
Other roles- There are lots of other roles available on FIORI and these roles. Below is a screen shots of some of the roles.
In Memory Technology
Go to your task manager. You will see a lot of tasks in there. When the application is being used, it is in memory.
Think of the "memory" as the place where everything is 100 times faster, but you only have a limited amount of memory.
Because the memory is limited, most of the processes happen in SAP at the hard disk level. That's how programs were written.
If everything gets processed faster in memory- then why doesn't the current SAP use it to process everything?
That's a great question!
Remember we are talking about a technology that hasn't changed that much in around 30 years. Back then, Memory was very expensive.
You can buy a small external hard drive drive with 1Tb data for 70 bucks!
Back then it would cost you a fortune!
If processing in "memory" is faster and it isn't very expensive, then why doesn't all processing happen in there?
This is why S/4 HANA does the processing in memory. This makes everything go much faster. Below are some more details about it.
SAP HANA is a massive parallel database management system that runs fully in main memory. Traditional DBMS are designed for optimal performance on the hardware.
A traditional database focuses mainly on optimizing the hard disk, but HANA focuses on optimizing the memory access.
How does in memory technology help us?
The main difference is the way the code is written and how SAP does its calculations. Currently, if we want to fetch purchase orders, we select all the orders on the application layer at the ABAP level, then we fetch all the line items for these purchase orders and store them in an internal table and then do our calculations and do a database update and then push the data to the UI, so the user can view the report
In S/4 the orders are selected on the application layer, then we move to the database layer to select order data and do all the calculations on the data database layer (in the current method, all the calculations are done on the application layer) and then the data is moved back to the application layer and displayed to the user. This saves a lot of time and reports run much faster with S/4 HANA as the calculations are done at the database layer.
When depreciation is posted in AA, the fixed asset details by G/L and Cost Center aren’t easily available. The Cost Center manager can’t quickly determine the assets that make up the total of his cost center. This is because the G/L info, cost center info and Asset info is stored in separate tables.
In S/4, we can view the fixed asset on the line item of a depreciation posting
This is possible due to the universal journal where data from FA, GL and cost center is all stored in one table.
Faster depreciation postings
Currently, the depreciation for future periods is calculated and then posted when we run depreciation at month end. The planned values are not stored in a table
When depreciation runs at month end, depreciation takes a while to process as it has to fetch values from multiple tables and then calculate the depreciation.
In S/4 HANA, values from all the asset tables are stored in one table and depreciation is calculated in real time and stored in a table. When depreciation is run at month end, it takes significantly less time to post compared to the current version.
If there are any assets with an error, SAP will not allow us to run depreciation and complete our month end. In S/4, SAP will allow us to run depreciation and just not update that asset with an error.
Secondary Cost elements
Currently, the Secondary Cost elements are not created as a G/L account, there is a separate transaction code to create them and these fall under CO.
In S/4 HANA, the secondary cost elements are created as G/L account. This makes allocation easier as previously we would have a FI allocation and a CO allocation.
Central finance is a feature where companies that have multiple ERP systems due to acquisitions etc. can send all their data to a Central Finance box that is powered by SAP HANA.
Transactions don’t get posted directly in the SAP HANA box, but it is fed by all the other systems.
All the systems send its data to a middleware and from there it gets sent to the central finance box. This requires an additional license.
Different options of deployment
On Premise- We continue with our current process i.e. software is installed in our own data center. We manage everything.
Cloud deployments- We pay SAP a subscription fee and Sap manages our sofrware. We have the option of using a dedicated server or a public cloud deployment.
More details will be updated to this soon.