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Differences between SAP S/4HANA and SAP ERP FICO

Discuss about the Architecture For Enterprise Application Software.

The availability of SAP S/4HANA Finance can be traced back in the year 2010. There are some applications that have been able to run on the database of SAP HANA database like SAP ERP and what many calls as the SAP Business Suite. The official launch of SAP S/4HANA happened on 3rd of February 2015 at the popular New York Stock Exchange. Despite the introduction of both cloud and on premise editions, there was only the launch of the on premise edition. On the 6th of May 2015, there was a launch of cloud edition which happened at SAPPHIRE. Over two decades, SAP S/4HANA has emerged as the biggest update to its ERP strategy. About 370 customers had purchased this system by 21 of April 2015. By the end of October 2015, there was a record of over 1300 customer getting the services of S/4HANA. However, it was during the fourth quarter earnings announcement in 2016 that it emerged that customers estimated to be about 5400 had made an implementation of SAP S/4HANA.

Despite the fact that there are a lot of options for computerized systems, there are some features that are basic which tend to be more of the same across almost all the programs. Most of the companies go for the off-the-shelf accounting software systems which are least expensive. Some businesses are forced to change their operation processes so as to adapt to how the software works. There are also some accounting software packages which are best suited for small businesses like QuickBooks, Bookkeeper, and sage (Gellaw 2016, p.85). The company must set up income and also expense accounts upon purchasing any of this software.

SAP S/4 HANA Finance which was formerly called SAP Simple Finance and is comprised of some feature that is new like a universal journal, real-time analytics, and streamlined design (Pattanayak 2017, p.5). SAP Asset Accounting (FI-AA) has been modified to S/4HANA with the efforts to increase the efficiency of the process. In the year 2014, SAP announced the release of SAP S/4HANA which came with a lot of confusion about why it came about. It was one of the Financial Accounting and Controlling (FI/CO) and was so simple in terms of configuring than the ERP suite. SAP S/4HANA is basically a SAP ERP 6.0 suite which is compatible with a SAP HANA database. SAP Simple Finance which was version 1.0 came as an add-on SAP HANA basically for the Financial Accounting module (Singh 2017). SAP Simple Finance 2.0 is known to be part of SAP S/4HANA that was launched in 2015. SAP Simple Finance 2.0 outfaced SAP Simple Finance 1.0.

Benefits of SAP S/4HANA Finance to businesses

SAP S/4HANA also is accompanied by a component called the user experience or the presentation. It is a GUI component that assists in the process of interaction with the core component. It only requires SAP Gateway version 2.0 and SAP Net Weaver 7.4. The other component is the analytics or the reporting component which plays an important role in real-time reporting with the help of HANA Live views. SAP HANA Live 1.0 which is for SAP ERP and SAP HANA are the prerequisites for installation although this tool is an optional component (Walker, Pathak & Patkar 2016). The last component is an app component that consists of analytical applications that are so essential for those who are seen to be decision-makers in a company concerning financial issues.

There are notable differences between SAP ERP FICO and SAP S/4HANA. SAP FICO has the best configuration both internally and externally for accounting processes (Nica et al. 2017). It is seen to represent both the Financial Accounting (FI) and Controlling (CO). When it comes to real time transactions, SAP FICO is of great importance in the process whereby it assists in integrating the SAP modules so as to yield better results. It is also embraced by most professionals in the field of finance and accounting. High sophisticated ways of financial transaction services and best handling of accounts is offered by SAP Financial Accounting. Tax Authorities and Banks among others are making maximum use of SAP FICO (Finance 2015). SAP Controlling Module is seen to be behind internal users and data while SAP FI is tasked with generating a lone system for the whole organization and integrating assorted modules. SAP S/4HANA is, on the other hand, an ERP software which is known to run the in-memory platform on the SAP HANA. This comes with more options like it can run on-the-fly analysis, processes can be optimized, it is designed more for easy usage, and it can also be used by financial professionals to deliver instant insight (May,  Bo?hm &Lehner, 2017).

SAP S/4HANA comes as a comprehensive set of accounting solutions and financial management taking care of both financial planning and accounting, analysis, financial risk management, risks occurring as a result of enterprise, and collaborative finance operations among others. SAP FICO, on the other hand, stands for Financial Accounting (FI) and Controlling (CO). The financial transaction of data is stored by the FI and CO modules since SAP FICO is a very important module ERP. Simple finance basically operates on HANA environment but the module FI operates on ECC 6.0 platform and CO is just but another financial sub module. SAP S/4HANA runs on HANA DB but on the other hand SAP FICO is capable of running on Oracle or SQL server that is also a compatible database version (Plattner & Leukert 2015). Again looking at SAP S/4HANA, all king of information that is functional is usually stored in one table called Universal journal (ACDOCA) unlike in SAP FICO where consultants have to mug up n-number of tables.

SAP S/4HANA Finance comes with a lot of benefits for businesses that makes a choice of trying it in business. Some businesses view it as a tool that is essential when it comes to real-time processes of reporting operations of a business. The good thing about SAP S/4HANA is that it has one of the highest processing speed compared to other financial programs. SAP S/4HANA is also very portable and it can also be implemented on any premises either in the cloud or even any other environment that you wish (Schfer & Melich 2016). The products also where this program is implemented may be on a bundled basis or standalone. The finance industry is being revolutionized with SAP S/4HANA simple finance since those firms with a lot of data sharing are all depending on it fully.

Being a core component, SAP S/4HANA there are various financial enhancements and benefits that come as a result of its existence. For you to upgrade you only need SAP Net Weaver 7.4 or version 1.0 of SAP HANA. There is an added advantage of a good user interface that comes with SAP S/4HANA which is Fiori-based GUI. This user interface component can also be upgraded optionally with NETWEAVER CLIENT to serve as a user interface. There is also a benefit that is brought about by the enhanced reporting component and the APP component (Morillejo 2016). This pre-packed component serves a user of the system with real-time analytics and reporting which is compatible with components like SAP HANA and SAP ERP. This component serves the financial decision makers of a company with the services of analytical applications.

SAP S/4HANA is more of a warehouse into one accounting transaction where posting is directed to one single unified journal rather than multiple balance sheets. It operates so well that the component that determines the price usually generates a direct entry straight to the journal table. There is reduced data and duplication across all the FI modules of SAP which is a very important factor (Rouda 2016). Clients with this system have the joy of transacting and reporting at the same time whereby the need for offloading and analytics is not necessary. Clients have also the liberty to take tactical and strategic decisions basing on the very recent data due to the capability to combine historical and transactional data at the same time.

There is also a good view of simplifies data as a result of a graphical user interface powered by SAP Fiori. It was time consuming and a tiresome task for many tables to be updated for a single transaction. Since SAP S/4HANA was released, financial experts have been relieved from the tasks of complex data models that used to exist. Fiori is also the user interface for the cloud version and it can work for both laptops and mobile phones whereby it can perform on both SAP S/4HANA analytics and HANA live content (Missbach et al. 2016). Also in terms of financial planning and account analysis, there is freedom to take decisions at any time. Users can enjoy end-to-end simulations together with the go financial analysis a model provided by SAP S/4HANA Simple Finance. There is also the generation of real-time reporting leading to reporting dimensions and closing of the book in a faster way which is an incredible feature.

There is also a reduction on the part of cash management as a result of real-time flow access to an enterprise cash flow which is provided by SAP S/4HANA. Your decisions are not affected at all by the fluctuating dynamics in the market since they are standardized by SAP S/4HANA tools (AG 2018). Therefore, there is a reduction in time spent waiting for payment with the help of SAP S/4HANA which is automated to enable accounts to receive and at the same time pay. Compliance and enterprise risks are automated making it easy to keep an eye on any fraud that may take place in the finance department of an organization. There is real-time detection and mitigation of any fraud activities with the help of SAP S/4HANA Simple Finance tool before it gets worse. The SAP S/4HANA has too helped by removing tables that may be unwanted leading to increasing in the time required to respond to queries and transactions (Mayer et al. 2018). This leads to high level of democrat sized data access on those applications that run on this platform.

ECC applications can now run in a web-based format that is more advanced as a result of Fiori user interface that is so innovative. The perspective of modern design of redesigned user experience has been changed with the use of Fiori (Kalaimani 2016). Fiori has qualities that are highly responsive, simple and personalized making it the best among all irrespective of whatever device. There is a benefit of data accessibility, speed, and also context which cannot be achieved by most applications but with SAP S/4HANA, all is at your disposal. It is free unlike other applications to users who may wish to upgrade to other versions for those using SAP S/4HANA Simple Finance since it is optional for these updates to all customers.

The SAP S/4HANA application is future oriented in nature with the ability to synchronize with the latest technology and as the users may demand. SAP S/4HANA Simple Finance is able to go with today’s changes that are being witnessed in the world of technology that most firms are not able to catch up with. With SAP S/4HANA, firms are able to match with the latest technology making it most favorable (Schweinfurth, Bieser, & SE 2016). With the use of SAP S/4HANA Simple Finance, there is an approach that leads to the development of management and financial accounting solutions and also guiding and planning a firm’s compliance and risk management. SAP S/4HANA also has a supporting tool that helps in treasury management, finance operations that are collaborative, and even with giving support to financial close.

Planning cycles are profitability are boosted with the help of efficient financial functions which are analysis and financial planning. By accessing real-time master data, planners can now deal with data replication problems very efficiently with the use of SAP S/4HANA Simple Finance (Riesner & Sauer 2017). Real-time operational data can help clients in linking up their planning which helps in getting rid of unnecessary data and possible time lags. There is a choice of desired levels of granularity when it comes to an exercise of financial analysis where by an individual table in memory is used. The financial planning lifecycle of an organization cannot be separated from development, updates, and reporting.

There is also an easy way to migrate from on-premise version for those users who may wish to go to the cloud bases platform while they benefit from the SAP S/4HANA products (Ghattamneni 2016, p.8). This in most cases to reduce the cost overhead for most organizations where not only applications can be moved but also infrastructure. Businesses can, therefore, benefit from this news since this migration can be implemented in either of the versions and is also pertinent in a fusion manner.

There are some challenges that we cannot go without mentioning that a company may go through while trying to implement SAP S/4HANA Simple Finance program. Considering a company that is starting from the ground and is totally new to SAP and willing to have SAP S/4HANA, or on the other hand, doing away with the old system and only moving its data. For instance, the Sokotow Group implemented the SAP in the year 2010 which was intended to cover almost all areas of the company as far as business is concerned. The tasks like finance, reporting, and logistics among others were the main aim of the company bringing in the system

 (Hofmann 2016). The company had to create a roadmap to lead them through since the process included testing that is so extensive to any organization which is installing the system from the ground (Sun, Gregor & Keating 2015). The overall migration started in the year 2013 and it completed including the upgrade by the end of the same year 2013. The migration is said to have taken more time as a result of an inability to freeze other system charges and the longer periods of tests that were unnecessary (Collignon 2017).

Despite being the largest Chocolate manufacturer in North America, Hershey’s also faced a lot of challenges migrating to SAP S/4HANA.There were challenges to start with like, lack of documentation from SAP which was to help in the migration process, the information is said to be found on a variety of places and not a single place. The company also had a challenge where by a report was not reconciled properly as a result of pre-migration activities. Before go-live, everything will have to be tested in a more extensive manner and even after you have deployed SAP S/4HANA, you will have to continue testing so that you make sure that nothing has been left behind accidentally in the process. An organization has to appreciate the fact that a brownfield migration is by no means a quick path to SAP S/4HANA Simple Finance program (König & Milanov 2017). Usually, it is the work of an organization to ensure that its data is clean and that their system is ready.


More compliance and control will be enhanced by organizations hence the workloads and costs will be minimized with the help of SAP S/4HANA Simple Finance. Financial and management accounting are integrated by SAP accounting to form a single journal that is universal (Maheshwari 2017, p.44). This leads to the elimination of totals, indices, and other aggregates that are pre-defined while at the same time relying on line items as the only source of truth. Fixed Asset Accounting is enclosed into the Universal journal design for SAP S/4HANA Simple Finance leading to the elimination of data redundancy. The correctness of values is assured due to the posting of parallel documents for every stage in real time.

In summary, there will be the real-time execution of closing tasks together with processes that are inter-period for users of SAP S/4HANA Simple Finance. A user will be able to witness enhanced productivity and minimal risks through real-time reporting using a unified model that is single. There is a smooth execution of downgrading alongside popularization of dispensation logic and data configurations are made to be real. Each individual asset will be leveraged by users leading to detailed reporting hence resulting in the success of SAP S/4HANA Simple Finance. Basing on the facts in this article from the start as I have stated, it is to my believe now that there is no way the path to migration can be termed to be single as much as the truth about SAP S/4HANA Simple Finance is concerned (Maheshwari 2016, p.123). There are more and more pieces of SAP S/4HANA that are now being released day after day. For instance, the previous year we had just what many knew as Simple Finance but now it is being called SAP S/4HANA Enterprise Management which is actually the move that is next in the SAP HANA suite.

What was known to be the perception of SAP HANA has totally been changed by SAP S/4HANA Simple Finance. According to a survey done by ASUG, there is a good percentage of around 32 that have plans to direct their investments in technology in the near future. For example, two famous companies like Sapphire Now which is based in Orlando and Lexmark have all plans set to migrate to SAP S/4HANA Simple Finance and they already have welcomed people so that soon after their migration they share their success stories as a result of the migration. This is a clear indication that SAP S/4HANA Simple Finance will get there as far as the market and competition is concerned. An organization only needs to ensure a smooth transition path to SAP S/4HANA Simple Finance. There are challenges and benefits that come with both brownfield and greenfield but from the research, most organizations opt going with greenfield over brownfield with best of their reasons as I have earlier explained in this article.

Reference list

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Collignon, S., 2017. An Interview with Frederic Girardeau-Montaut, Managing Director, Deloitte Consulting LLP (focused on SAP Source-to-Pay & Ariba Technology Services). Journal of Global Information Technology Management, 20(4), pp.205-211.

Finance, S.S., 2015. The future interests me far more than the past, as I intend living in it. Signal, 9, pp.16-00.

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