Central Finance and Treasury: A marriage to last?
Central Finance (CFin) is an SAP S/4 HANA product launched to activate on an S/4 HANA engine. Given that it runs on a S/4 HANA engine, it is mainly profiled in the market as a phased approach to adopt SAP S/4HANA, as well as a method to centralize and harmonize local finance processes.
CFin is an SAP S/4 HANA product that was launched in 2015. In its first stage, it enables data collection from multiple ERPs into one S/4 Hana running Central Finance. This also allows opportunities for data harmonization achieved by data cleansing in the source systems and/or by applying derivation rules (during the transfer of data to S/4) to achieve data attributes that have common usage across the organization. Data transfer to CFin occurs in real-time. The harmonized data in one CFin system enables systematic consolidated reporting, removing manual work around consolidating reports (in different formats) from multiple ERPs. CFin provides the most value to an organization where there are multiple older SAP ERP instances or other non-SAP Finance applications.
CFin exploits the capabilities of HANA - real-time, speed and agility to replicate financial documents into the central system - providing a real-time organization-wide financial view. In other words, CFin allows you to create a real-time common finance reporting structure for an organization.
Perceived use cases in the market for CFin are the following:
- Merger and acquisitions: repeatable onboarding for non-organic growth.
- Instance consolidation: credit, accounts payable and collections can be centralized in one instance.
- System consolidation: migrate and decommission selected existing SAP and non-SAP ERP systems.
- Subsidiary onboarding: smaller entities or subsidiaries can be easily onboarded onto the platform.
- SAP & non-SAP: the solution lets you consolidate and harmonize data on the fly, and update enterprise structures across SAP and non-SAP ERP systems like Oracle, PeopleSoft, or JD Edwards.
- Business transformation while staying on the ECC platform but leveraging on the S/4 Hana capabilities around improved processing.
- Enriched user experience via transformed UI and Fiori apps running on S/4.
- Shared service centre optimization through central process execution in one system.
- Centralized treasury through centralized payments, In-House Banking, Bank account management, Cash positioning and forecasting and Exposure identification and measurement
Deployment as Central reporting (release 1511 and onwards)
In a first phase, SAP CFin allows real-time replication of FI Documents. The replication of data is enabled via the SAP Landscape Transformation (SLT) replication server. More specifically, SLT is a tool that allows you to load and replicate data in real-time or via batch processing data from the SAP and non-Sap source systems into the SAP S/4 HANA database. This piece of software is a key element of the CFin solution. To provide full visibility on the SLT server, SAP has developed an application interface management framework (AIF). AIF is a monitor that allows error handling and full visibility on the SLT interface, as well as mapping functionality. It is important to highlight that CFin allows both the AIF and SLT for the integration of older SAP and non-SAP ERP systems.
Once an initial load of data is performed out of the various source systems into the CFIN application, continuous replication can be setup. If all systems are setup and connected to the CFin box, CFin can function as a central database of all financial data across the organization. If fully implemented, even a single universal journal can be operated
CFin also includes a Master Data Governance (MDG) application. The MDG allows you to manage all your master data centrally with a workflow and distribution functionality to all connected systems. If MDG is fully deployed, no new master data can be created outside of MDG. While basic functionality is included in CFin license, a separate license is required for full functionality.
To minimize any impact on the source system, CFin offers the functionality to enable mapping. General master data mapping can either be configured in the CFin customizing or by using the MDG functionality. Master data related to cost object is mapped using the cost object mapping framework.
Next to the technical complexity, CFin requires intensive business changes in order to be successful. The following business changes need to occur to unleash CFin’s full potential:
✓ Clean up master data.
✓ Clean up transactional data and verify consistency.
✓ Clean up old processes in source systems.
✓ Data harmonization of GL Accounts to enable one Universal Journal.
✓ Harmonization of profit and cost centers across legacy systems.
✓ Unification of Business partner set.
✓ Move to standard SAP as much as possible.
Mapping, either via the cost mapping framework, customization or the MDG, can alleviate the burden of harmonization on the source systems.
The key benefits of the deployment of CFin as a central reporting solution are:
- Real-time harmonized global financial reporting on various units and source systems.
- Universal journal for external, internal and management accounting.
Deployment as Central reporting (release 1809 and onwards)
After the first level of deployment, CFin can be an enabler for central processing. To enable central processing, the CFIN engine needs to be used as the single source of truth. This means that any documents created in the source systems are technically cleared and replicated in the CFin system. Even transactions can be directly entered in the CFin system. As a logical consequence, all status management is executed in the CFin application.
Zanders & Central Finance
Given our 25 years of experience in treasury and our renowned SAP Treasury practice, Zanders is well placed to take up the role of treasury at the table. Thanks to our in-depth business expertise, as well as our extensive experience with both systems, we can be the perfect partner for your Central Finance implementation.