One of the top priorities for corporate finance is to provide a simple and complete view of corporate financial information. Typically, this involves pulling information from multiple systems and finding some way to integrate it – intensive, manual, and error-prone work that often falls short of the “simple, complete” objective. Fortunately, SAP has introduced SAP S/4HANA Central Finance to solve this problem. The core value proposition of SAP Central Finance is that it can pull together data from multiple financial systems and present it in a single, unified system for maximum visibility and control – a worthy and most valuable objective, to be sure!
In considering an implementation of SAP Central Finance, it is worth looking at all the data sources that may be needed and determining the integration tasks required for each. In other words, how the data will be extracted, harmonized, and synchronized between systems. For most Central Finance implementations, there will be a mix of SAP and non-SAP source systems, so consideration of the following requirements is essential.
Let’s look at the main integration tasks:
- Master Data Harmonization – Often overlooked are the many data disparities within and between source systems. Customer and supplier names, as well as product names, are misspelled, abbreviated, and contorted in innumerable ways. If left in this state and loaded into Central Finance, the reports will be dubious at best and dangerously inaccurate at worst, so they must be reconciled – harmonized – to a single version of the truth. Some companies do have unique customers and products that are clearly identified by unique IDs, but these rarely cover all master data entities across all systems, so some harmonization is still generally needed. Longer-term, the source systems should really be reconciled through a Master Data Management (MDM) program, but can you wait that long to implement Central Finance? In the short term, it is much faster to take the “master” data from all the source systems and create a cross-reference table that can be loaded into Central Finance to link the customers, suppliers, products, and other relevant information. As a bonus, this cross-reference information can later be used to kick-start a future MDM project that can properly reconcile the source systems at a more fundamental level.
- Source Data Extraction – Each source system holds financial transaction data in its own proprietary schema, spread across multiple tables, and views each with its own processes, definitions, and operating nuances. This information must be extracted from the source so it can be made available to Central Finance. Clearly, creating a script for this kind of extraction requires significant knowledge of the source system’s data schema, and it should be noted that there is no single “transaction” to be integrated, but depending on the source, there can be up to 25 financial transaction types that must be understood and supported. Naturally, this can drive a considerable amount of effort and complexity.
- Upload to SAP – Data from the respective source systems must be validated and transformed into an SAP-specified format for loading into staging tables and then into Central Finance. This requires intimate knowledge of the SAP load formats.
- Reconciliation – The finance organization must ensure that all transactions across all sources made it successfully to Central Finance and the universal journal. With inadequate tools, this task can be highly inefficient and problematic. It is critical to have a powerful reconciliation framework to track source postings through the replication process, compare sources to Central Finance at both summary and detail level, and provide lineage and other reports to auditors.
- Transaction-Level Drill Down – Of necessity, Central Finance only holds financial transaction information at a summary level. When a Central Finance user needs to drill down on an item to investigate it, they can try to find it in the original source system (if they even have access), or the original source details can be kept in a small data repository for click-through access direct from Central Finance. With good planning and design, that can be a simple addition to the integration work that is already being undertaken.
- Write-back to Source – The Holy Grail of financial systems is that any changes made in Central Finance (payments, adjustments, etc.) should be reflected in the various source systems. A “write-back” capability enables payments authorized in Central Finance to be cleared in the source ERPs so all systems are kept in sync. This process requires complex calls to available APIs while satisfying the business rules in the various source systems.
Not every one of these areas may be needed to be fully implemented on day one, but over time, they will become requirements if Central Finance is to be used to its best effect.
It should be clear from the above, that integrating data into SAP Central Finance from source systems – especially third-party systems – is not a trivial undertaking.
In the next part of this blog series, we will dive deeper into data sources, specifically what to consider when selecting the ERP systems that will need to be integrated during your SAP Central Finance implementation and how those should be addressed. Stay tuned for more data integration best practices for SAP S/4HANA Central Finance.
John Hume is a Solution Consulting Leader for Magnitude SourceConnect solutions, designed to enable faster and more cost-effective SAP Central Finance implementations and globally available through SAP as SAP Solution Extensions.