The value of Real-time, Simple, User-centric S/4HANA Applications to your Organization

In this post, I will share with you the benefits of S/4HANA Apps in the areas of finance, logistics, inventory management, sales and human resources. You can click on the links to go directly to a topic that interests you.

Real-time, Simple, User-centric S/4HANA Applications help in running your SAP solution faster, cheaper and better; thereby creating value for your Organization. SAP S/4HANA delivers massive simplifications (customer adoption, data model, user experience, decision making, business processes, and models) and innovations (Internet of Things, Big Data, business networks, and mobile-first) to help businesses run simple in the digital economy. S/4 HANA can be deployed as on-premise edition or a cloud edition.

Finance Process

SAP S/4HANA Finance is a comprehensive set of financial management and accounting solutions, covering financial planning and analysis, accounting and financial close, treasury and financial risk management, collaborative finance operations, and enterprise risk and compliance management. Finance organizations need to keep up with new and evolving business models and provide decision makers with instant insight. With SAP S/4HANA Finance, you can create a common view of all financial and operational data, provide flexible, easily consumable reporting, automate processes and instantly evaluate the financial implications of business options with real-time analytics, prediction, and simulation, all with a beautiful user experience.

Finance in real-time is a paradigm shift. Let’s take a few scenarios and analyze the impact of S/4HANA.

  1. Post General Journal Entries:
    With the transactional app Post General Journal Entries, you enter manual postings to G/L accounts. For example you can make adjusting entries during month-end closing, or record business transactions that have no source document (such as expenses paid with petty cash). Applicable taxes can optionally be calculated automatically as you enter the items. You can specify additional account assignment objects such as cost centers, orders, or materials. You can enter notes or add attachments to explain the reason for a posting.

Changes

Impact

  1. Analyze Third Party:
    • Display Financial Statement: With the transactional app Display Financial Statement, you can display balance sheets and profit and loss statements for your companies. These reports are generated on the fly by analyzing all the relevant line items. From these reports, you can also access the line items of a specific G/L account or customer/supplier line items.
    • Display G/L Account Balances: With this transactional app, you can check and compare the balances, and the credit and debit amounts of a ledger in a company code for each period of a fiscal year. You can restrict the data to a single general ledger account, or use other selection criteria (for example, profit center). In a further view, you can compare the balances relating to several fiscal years with each other.
    • Display G/L Account Line Items: You can use this app to check general ledger (G/L) account line items. You can switch between the general ledger view and the journal entry view. In both views you can use filter criteria to choose whether the app should display open and cleared items for open-item-managed accounts, or all of the items for an account. You can select the line items based on a key date or after the clearing date in connection with a key date. In the entry view, you can also choose whether the app displays normal items, noted items (items to remind you of outstanding payments), or parked items (incomplete and not yet posted journal entries) only, or all items.
    • Manage General Journal Entries:
      With the transactional app, you can analyze your journal entries and create reversals in order to make adjustments. Filtering and selection criteria enable you to quickly find journal entries, for example based on the type or user. The information provided includes the accounts posted, other account assignment objects, and any sales or purchase taxes. You can make reversing entries. Display variants allow you to add or remove fields. You can enter notes or add attachments to explain the posting. Information is shown on any related documents, such as purchase orders or incoming invoices.

Changes

Impact

  1. Process Receivables:
    • Process Collection Worklist: The transactional app, Process Collections Worklist is intended for collection specialists whose main task is to contact customers in order to request payment of overdue receivables. As a collection specialist, you can process your prioritized collections worklist. The worklist enables you to focus on the most urgent customers, for example, those with the highest overdue amount or where the amount has been overdue for a long time.
    • Process Receivables: The transactional app, Process Receivables is intended for collection specialists whose main task is to contact customers in order to request payment of overdue receivables. As a collection specialist, you can access a list of receivables payable by an individual customer. You can then create promises to pay and dispute cases. You start the app either by entering a customer number directly, or by searching for a customer, or by drilling down to an individual customer from the Process Collections Worklist app.

Changes

Impact

  1. Clear Incoming Payments:
    With the transactional app Clear Incoming Payments, you can clear a receivable payment manually, such as an open incoming payment for a customer invoice. The system usually clears these payments automatically. However, sometimes customer information is missing and the system cannot find appropriate open items that match the payment. In this case, you have to clarify this payment, match it to the correct open invoices and credit memos as aligned with your customer, and clear the payment manually.

Changes

Impact

  1. Payment Proposals:
    • Manage Automatic Payments: With the transactional app Manage Automatic Payments, you can schedule payment proposals or schedule payments directly and get an overview of the proposal or payment status. The app identifies the overdue invoices and checks whether all the required payment information is complete.
    • Revise Payment Proposal: With the transactional app Revise Payment Proposals you can check and revise payment proposals and the details of open items. This allows you to make sure that all the payments are made correctly and on time and are compliant with company policies.

Changes

Impact

  1. Manage Supplier Line Items:
    Manage Supplier Line Items is a key transactional app for accounts payable accountants and managers. Whether you use it for ad-hoc requests or recurring reports, the app enables you to easily find supplier line items using a wide range of search criteria. For example, you can see all line items of a supplier account or all open supplier invoices for a company code that are overdue at a key date.
    To make your work more efficient, you can personalize the layout of the table, predefine recurring queries, and save your settings as variants.
    In addition to displaying data, you can also take various actions such as setting a payment block or creating a manual payment. You can export the data to a file and collaborate with colleagues. The app also serves as a navigation target from other apps, allowing users to drill down into the supplier line items.

Changes

Impact

  1. Post Incoming Payments:
    With the transactional app, you can post and clear a single incoming payment in one step. You usually check for incoming payments using online banking. However, if payments are not received using electronic bank statements, you need to enter the payment data manually and trigger a search for the matching open items. Ideally, the system proposes a list of matching items for which you can post and clear the payment in one step. If it’s not possible to clear the payment, you can post it on account or to a G/L account.

Changes

Impact

  1. Planning and Forecasting:
    The unique business value of SAP S/4HANA is to have access to a single consolidated view of all planning and forecasting information in one system, which combines transactional and analytical data. Consequently the rollup of planning from different subsidiaries into corporate planning and planning from operations into financial planning is possible to manage the impact of operational plans. Real-time information to immediately update plans and forecasts, real-time revenue and cost analysis and liquidity forecasts can be performed.

Benefits

    • Efficient reporting. A simplified database table holds all required financial information and uses the data processing power of SAP HANA to help ensure real-time and accurate reporting. This feature also eliminates the need for batch jobs and data replication in other systems, such as business intelligence.
    • Accelerated financial close. With SAP S/4HANA Finance, CFOs and their teams needn’t worry about spending nights and weekends to ensure the timely closing of monthly, quarterly, half-yearly or annual financial closes. The financial closing process is significantly improved, and the instant visibility of P&L (profit and loss) ensures business decisions can be made quickly, based on emerging sales and financial trends.
    • Integrated business planning. A Microsoft Excel-based interface significantly reduces the entire financial planning process by transferring financial data such as cost center, profit center, internal order and P&L planning from Excel into ECC for real-time reporting and to make informed business decisions.
    • New asset accounting. The new asset accounting component of SAP S/4HANA Finance makes it possible to manage parallel valuation of assets using the ledger and accounts approaches. It is no longer necessary to record depreciation areas. All systems’ postings are also now real-time across all valuations.
    • Cash management. Replacing the cash and liquidity management component, the cash management feature manages bank account management, short-term cash position and liquidity forecast reports, and real-time liquidity planning, thereby allowing for tighter cash management for an optimized working capital.
    • Financials reporting. This feature replaces many of SAP’s traditional drill-down reports that are not only notoriously slow, but that also do not dive deep enough to provide in-depth analytics on important financial key performance indicators.

(Benefits section is from the site: What business benefits does SAP S 4HANA Finance offer CFOs. Thanks to its author.)

Functional Changes

  • Between FI and CO, in the new architecture FI and CO is merged so that real-time integration is guaranteed by design. Users can natively drill down to the same line items from the key figures and reports of both components.
  • Please refer to What You Need To Know About SAP S/4HANA Finance (On Premise)

Technical Changes

  • All transactions simply insert multiple into the database, which does not require locks.
  • The Universal Journal is one single physical table, and SAP HANA provides the necessary speed to aggregate hundreds of millions of line items of one table within seconds.
  • The new journal entry consists of a header (table BKPF) and the respective items (table ACDOCA). The table ACDOCA contains all fields needed for G/L, CO, AA, ML, PA and 6 digit fields for line item numbering (no longer the 999 document lines limit).
  • Concerning the usage of Material Ledger for parallel currencies and parallel valuation purpose, the contents of tables MLIT, MLPP, MLPPF, MLCR, MLCRF, MLCD, CKMI1, BSIM is now stored in ACDOCA. MLHD data is stored in BKPF. MLHD, MLIT, MLPP, MLCR still keep prima nota information, in case of manual price changes or material debit/credit

Links


MRP Process

MRP is a critical business process. A Material Planner is responsible for making sure the production plant never runs out of materials, components or sellable products. For example, if a material is produced in-house, the MRP calculates the dependent requirements. The quantity of components required to produce the finished product or the assembly, by exploding the Bill of Material (BOM). If a material shortage exists, Production Orders or Purchase Orders are created at every BOM level to cover requirements.

The MRP within SAP S/4HANA runs entirely on the in-memory platform SAP HANA which has been optimized and improved the overall performance. With the new transaction code the MRP planners are able to run transactions close to real time which were classical batch processes in the past. More filter functions provide a broader flexibility to parametrize the MRP.

Identifying solutions to material shortages traditionally, several ERP transactions have to be executed (see Figure). In the MRP within SAP S/4HANA, data is pulled in real time from all areas of material management including procurement lead times, inventory stock availability, lot sizes, manufacturing scheduling and sales orders across multiple sites. The system goes one step further and suggests potential solutions for the shortage through Solution Cards. In fact, Solution Cards has all information needed to resolve the material shortage (e.g. Reschedule Purchase Order, Increase Purchase Order, stock transfers). As this system is on one common base, financial data can be mixed directly into the process to rank proposed solutions. Each proposed solution is evaluated in real-time and the Material Planer can preview viability and impact before accepting a solution.

Starting from the current state of the supply chain and including the existing MRP algorithms, the simulation computes the future inventory situation in detail. The optimization algorithms make use of the simulation to find the ideal replenishment strategies and parameters. E.g. with this ability to simulate and compare the ways of resolutions, the Material Recourses Planner can compare, for example, the effectiveness of an external replenishing compared to a replenishing via a production on an industrial site. Additionally all financial implication of the proposed solutions is visible.

Functional Changes

  • MRP planners are able to run transactions close to real time which were classical batch processes in the past.
  • More filter functions provide a broader flexibility to parametrize the MRP.
  • Material resources planner can now optimize daily work tasks by focusing on exceptions and on the most urgent problems with the highest financial implication.
  • The Material Planner´s work environment will be role based and exception driven.
  • See below for changes and impacts with S/4HANA.

Technical Changes

  • The internal logic to read the planning elements from the database to the internal table has been fully redesigned to run in-memory planning.
  • Large parts of the application logic in the database server were implemented in SQL Script (15.000 lines of code).
  • Transactions were rewritten and tables simplified.
  • With SAP S/4HANA tables are read in parallel. (no need for the application server to call the database server many times to read relevant data. Tables were read sub sequentially. The additional roundtrips required a significant bandwidth to load the data. )
  • The calculation engine within the database is directly hosting the calculations, which eliminates data load into the application layer (old way of doing things).
  • All optimizations superpose each other to optimize the elapse time by a factor 10. (POC of 20 has been achieved)
  • Aggregated material views are historical necessary to achieve reasonable response times for specific views.
  • Customers transferred Analyzes into Data Warehouse Systems allowing a flexible reporting at reasonable response times but adding complexity. Due to the merge of OLTP and OLAP; we can use the real time analytical capabilities directly on the transactional processes, and propose simulations possibilities for the user.

Business Changes

  • Enables running MRP on a much higher frequency which changes processes and decisions.
  • Planner can meet the vagaries of production better and service levels can be increased.
  • Increased speed of execution and analyses enable meeting the new requirements of the market.

Benefits

  • Accelerated creation of purchase requisitions
  • Automatic detection of shortages
  • Higher accuracy of purchased quantities
  • Cost savings through process automation

Links
SAP MRP (Material Requirement Planning) Tutorial: MD01, MD02, MD04
MRP run using Re-order Point planning
Comparison Demo Video

Inventory Management Process

The challenge of inventory management is to reduce storage costs to an absolute minimum while providing customers with the right products in the right time in the right quantity. Classical inventory planning cannot keep up with flexible accommodations, or custom configurations which customers expect these days. Slow update cycles lead to outdated information as new orders fly in constantly high speed. Limited inventory visibility increases error rate and supply shortages which will affect available-to-promise to the customers and can lead to customer churn.

Inventory Management powered by SAP S/4HANA enables organizations to harmonize warehouse inventories, demand and supply planning. With real-time processing of inventory postings and inventory values, warehouse space can be reduced to a minimum and lead to higher accuracy of inventory, increase turnover and reduced days of items in stock. SAP S/4HANA enables taking all production locations and external supply chains into account and managing the changing demand for smaller lot sizes passing through entire logistic operations with all involved parties. It helps managing capacities and quantities in a much more needs-based way.

The supply chain stretches from planning via supply and production through packaging and finally to the delivery of the product, with various suppliers, service providers and internal operations working hand-in-hand. It’s crucial to keep everyone involved in the process up-to-date and react fast to incidents as products increasingly are sold as services.

Functional Changes

  • Enables high performance evaluations of inventory key figures based on the material document data.
  • Deep analyzes of stock movements and further complex stock evaluations are supported.
  • See below for changes and impacts with S/4HANA.

Technical Changes

  • A single table (MATDOC) with almost all required attributes and views represents the data for all business perspective. This single table structure allow high performance evaluations of inventory key figures.
  • Aggregates are created dynamically based on line item level on-the-fly.
  • The simplified code eliminate the risk of inconsistency and allows easier system maintenance.
  • The MM-IM aggregate tables and the classical document tables will not be updated anymore and aggregate tables will be replaced by new compatibility CDS views with the same semantics as their corresponding table. These CDS views perform an on-the-fly calculation for aggregates.
  • The existing fields MBLNR and MJAHR of the table MKPF are not key fields any more.
  • Elimination and reorganization of IMG table structure.

Business Changes

  • Ensures goods are consistently available at the right time and place.
  • Reduces inventory and increases working capital with deeper insight into supply chain.
  • Improve demand planning and decrease safety stock levels to cut costs.
  • Use enhanced supplier intelligence to minimize out-of-stock situations.
  • Enable SAP ERP to recommend specific actions that balance profitable service and inventory.

Benefits

  • Inventory data is always up-to-date, so safety net is low.
  • Enables catering to customer wishes at very short notice.
  • Improves delivery performance, satisfies customers and ensures customer loyalty.
  • Transparent view on the stocks currently available
  • Efficient processing of inventory adjustments

Links
SAP MM – Inventory Management
SAP Inventory Management Tutorial 
Comparison Demo Video

Sales Order Fulfillment Process

Customers are well informed, tech-savvy and are searching for ways to ease their daily life. Their smartphones play a vital role in enabling this trend. This evolution offers a chance to rethink and re-design offerings to customers. These offerings have the following characteristics:

  • The value is offered as a service, not as a product.
  • The value is delivered per request.
  • Service scales up and down according to demand
  • Customers pay per usage. Not a fixed cost.
  • Available from anywhere at any time.

Customer information is no longer available in one place. To deliver a one-to-one personalized customer experience, we have to assemble mass volumes of digital customer engagement information from social networks, location services, check-ins, buying history etc. have to be leverage them for deeper insights. This makes a cross channel execution of marketing processes and collection of personalized customer engagement data  a huge effort. Lack of visibility into marketing performance and lack of time to make changes lead to a very low agility level of the companies and their ability create value for their customer and increase their profit in a very dynamic environment.

To be effective, ensure growth or sometimes even to survive today, the individual’s expectations and buying behaviors need to be the center of your organization’s approach. Marketing organizations that already practice it and excel at cross-channel integration and data-driven marketing, achieve up to 61% greater revenue from new customers and 32% lower marketing spend.

The use of predictive analytics identifies purchasing patterns to narrow down the customers that have the highest purchase likelihood. This ensures maximum marketing budget efficiency and puts the individual customer and his preference at the center of the message. With SAP S/4HANA real-time contexts can be leveraged to collect data from various sources, analyze patterns and drive relevant engagements with known and unknown contacts and develop the full context of individual customers for individualized engagements at every stage.

Blending of structured and unstructured data from internal and external sources like sensors, payment information, purchase history and social media likes enables you to gain deeper and more comprehensive understanding of true customer value.  You need to ensure you think your processes end-to-end.

This has ramifications all the way to planning, production and your ability to deliver (your sourcing and supply chain). Small order quantity have a major effect to the business process (Material requirements planning, production, packaging, shipping). Often the processes in the companies are optimized for production and delivery for larger quantities and is a problem when you consider the impact on related documents (Production orders, delivery notes, goods issues, goods receipts…).

Functional Changes

  • Provides a real-time business, meaning accurate update inventory information (best in real-time), high frequent fast MRP runs and an efficient way to handle back-order.
  •  B2C or B2B orders run in real time within a company as so called ‘No touch order’.
  • A manual process is only required when unforeseen problems (e.g. credit limit check, Availability to promise Check) are occurring.
  • See below for transactions vs apps to execute with S/4HANA in the area of Sales Order fulfillment.
  • See below for changes and impacts with S/4HANA.

Technical Changes

  • With SAP S/4HANA there is no locking issue for material documents anymore because there is just an insert into the new table MATDOC .
  • Simplification of the SD data model (see Fig.1) shall be e.g. achieved by

    • Optimized Document Flow (VBFA)
    • Optimized Access to Business Data (VBKD), Contract data (table VEDA) and Partners (table VBPA).
    • Elimination of Status Tables (VBUKVBUP)
    • Elimination of Indices (VAPMA, VAKPA, VLPMA, VLKPA, VRPMA and VRKPA)
  • The user interface of the document flow will undergo a re-design, too. The new process overview will combine document flow and status information to be used in Sales Order Fulfillment Monitor App and others.

Business Changes

  • Core systems can react to this high and volatile demand up to the last second.
  • Orchestration of marketing processes through personalized customer information (in real time and across fully integrated processes and channels).
  • Deliver personalized experiences to the customer, making real-time recommendations and detailed tracking of the performance.

Benefits

  • Real-time insights into intents help to run campaigns with speed and agility. Adjustments are possible while the campaign is running and the lead is hot.
  • Understanding marketing activity performance can help to plan resources for customer advocacy and growth and can result in 24% higher revenue growth from new customers and 30% higher growth in market share.
  • Real-time operational insights and collaboration can result in 22% less effort to market and sell products more efficiently.
  • Enables order quantity of 1 piece and very short delivery time.

Links

Comparison Demo Video

Human Resources Process

SuccessFactors provides a unified, comprehensive solution that simplifies talent management – so you can proactively act, easily measure and clearly communicate talent results and business impact. The talent management solution from SuccessFactors includes Recruiting, Onboarding, Performance & Goals, Compensation, Succession & Development and Learning solutions.

SuccessFactors enables to attract and engage with the right people, for the right role, at the right time. Moreover the solution also helps to develop top people by continuous focus, feedback and relevant learning experiences. This helps companies retain the top talents and also supports them by recognizing, growing and rewarding talent.

The SuccessFactors HCM Suite (SuccessFactors) is the “default” HCM solution for S/4 HANA.  Customers choosing S/4 HANA as their next-generation business suite also require a next-generation HCM suite and this is the focus of SuccessFactors.  Productized integration (built and maintained by SAP) exists today so customers can connect SuccessFactors with S/4 HANA (both on-premise and cloud).

In a classic HR landscape there are many systems, interfaces, and requires high technical maintenance to support end-to-end process. For different functionalities of talent management system (like recruiting, learning or performance management) there are different systems on different databases.  This complexity often developed historically as within several years to the core HR functions were added more and more talent management functions. As a result companies have to deal with multiple legacy and disparate HR systems which are costly and difficult to manage. The employees are not engaged with their HR systems and find them difficult to use. The separation of functionalities in different system makes it also hard to connect the data and get a holistic view of talent. To gain a holistic view, data preparation is necessary because the information has to be retrieved from different systems.

SAP recommends new SAP customers implement SuccessFactors as their HCM solution for S/4 HANA. On the one hand, customer can benefits from SuccessFactors in the cloud, and on the other hand they can benefit from everything S/4HANA provides. The seamless integration of SuccessFactors to SAP S/4HANA provides the following:

  • Drives operational alignment between HR and Finance to optimize capabilities and align with the business
  • Enables consolidated access to real-time data to provide insights and measure the business impact of HR
  • Integrates end-to-end processes across financials and HR to help manage budget and headcount planning
  • Leverage an engaging, unified user experience along the processes by on role and responsibilities with SAP Fiori

Please refer to my post   Understanding SAP S/4HANA Finance with SAP SuccessFactors HCM Suite Cloud Deployment Solution for more about deployment options.

Functional Changes

Technical Changes

Business Changes

  • SuccessFactors is a new SaaS implementation. All the benefits of a SaaS product are the changes that you can expect such as less cost (pay as you go), quick innovations (releases every quarter), collaboration and Social features, mobile capabilities, user friendly interface, easy non-technical customization, etc.

Benefits

  • Reduce the employee turnover thanks to more engaged talent
  • Increase HR productivity thanks to a linkage with the business
  • Better cross company insights with a faster access to HR and financial data

Links

 

Please feel free to reach out to me for any decisions that you might need guidance on with regards to SuccessFactors, S/4 HANA, SAP Leonardo. I am happy to pay it forward. This post would not have been possible without all the help from blogs in SAP community and other articles published by SAP. Please connect with me at https://www.linkedin.com/in/krismoturi so that you can get notified if topics like SuccessFactors and S/4 HANA interest you.

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