The Future of Finance Real Time Insight for a Volatile World Lars Fleminggard May, 2015
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Simple Finance on S/4HANA SAP Accounting powered by SAP HANA Alternative in-memory functionality for ERP customers SAP Cash Management powered by SAP HANA New product for Group Cash Management Integrated Business Planning New capabilities and enhanced integration for ERP and BPC. S/4HANA SAP HANA Platform Aligned Single Source of Truth Agile Real time finance processes Predictive Insight and foresight 2015 SAP AE or an SAP affiliate company. All rights reserved. 4
What is the business vision of SAP Simple Finance? FINANCE TRANSFORMATION ENABLED BY SAP SIMPLE FINANCE SAP Simple Finance will enable the next phase of Finance transformation reshaping both transactional and analytical Finance processes through instant insight-to-action based on real-time information.. Single source of truth Harmonized information provided by a seamless central Finance platform. Flexible on-the-fly aggregation from individual line items replacing pre-built aggregates. Real-time processes Transformation of periodic (e.g., monthly) Finance processes, with peak activity at period end, into event-driven continuous processes via real-time information. Dynamic planning and analysis Embedded financial modeling with integrated planning, predictive forecasting, automated alerts and pervasive scenario simulation 2015 SAP AE or an SAP affiliate company. All rights reserved. 7
Why is SAP Simple Finance so much easier to use? NEW USER EXPERIENCE SAP Simple Finance provides intuitive user experience for analysts, line managers and transactional users. SAP s Business Intelligence available today, new Fiori user interfaces are being developed. Flexible analytics with Business Intelligence Dedicated dashboards for Finance and line managers Renewed user experience for transactional roles (planned) Business Intelligence Smart Business Cockpits Renewed UIs (Fiori) User-defined visual reporting with SAP s Business Intelligence solutions. Real-time access to ERP data from Microsoft Office (enabled by Analysis for Office). Dashboards for managers with real-time reporting and drill down for root cause identification. Dashboards are configurable and multi-device capable. Higher ease of use for transactional users through fully renewed user experience. First renewed roles planned to be globally available in early 2015. 2015 SAP AE or an SAP affiliate company. All rights reserved. 8
Demonstration State of Finance
What is the business vision of SAP Simple Finance? FINANCE TRANSFORMATION ENABLED BY SAP SIMPLE FINANCE SAP Simple Finance will enable the next phase of Finance transformation reshaping both transactional and analytical Finance processes through instant insight-to-action based on real-time information.. Single source of truth Harmonized information provided by a seamless central Finance platform. Flexible on-the-fly aggregation from individual line items replacing pre-built aggregates. Real-time processes Transformation of periodic (e.g., monthly) Finance processes, with peak activity at period end, into event-driven continuous processes via real-time information. Dynamic planning and analysis Embedded financial modeling with integrated planning, predictive forecasting, automated alerts and pervasive scenario simulation 2015 SAP AE or an SAP affiliate company. All rights reserved. 12
Aligned Single Source of Truth INCLUDED IN THE SAME IN-MEMORY BASED SYSTEM Both transactions, operational reporting and planning are available in the same system. Data is stored at the lowest level of detail and being aggregated on the fly SAP SIMPLE FINANCE PROCESSES Interfaces stay the same Business planning processes Analytical processes (BI, predictive) Transactional processes (FI and CO) Harmonized line-item data available in real-time What value does it provide? Planning: real-time access to master data, hierarchies & actuals Operational reporting in real-time Faster and higher flexibility in reporting and data customization Transactions are faster no updates anymore General Ledger has same (and more) capabilities as New G/L Flexible drill-down to line item details Legacy ERP Legacy ERP Legacy ERP 2015 SAP AE or an SAP affiliate company. All rights reserved. 13
Aligned Single Source of Truth CENTRAL JOURNAL SCENARIO Central Finance is not a separate solution but an implementation approach of SAP Simple Finance. It provides a central platform for group-level transactions and analysis without full ERP consolidation. SAP SIMPLE FINANCE PROCESSES Business planning processes What value does it provide? Planning: real-time access to master data, hierarchies & actuals Interfaces stay the same Analytical processes (BI, predictive) Transactional processes (FI and CO) Harmonized line-item data available in real-time Real-time replication of all finance transactions from legacy systems Central Journal Operational reporting in real-time Faster and higher flexibility in reporting and data customization Transactions are faster dramatically reduced no of updates General Ledger has same (and more) capabilities as New G/L Flexible drill-down to line item details Single Finance platform for all group reporting, analysis and processes Legacy ERP Legacy ERP Legacy ERP Back-end systems to be consolidated over time 2015 SAP AE or an SAP affiliate company. All rights reserved. 14
Real Time Processes Real time month end close Accelerated close with intra-month reconciliation for real time reporting and pre-close simulation Real time personal analytics Flexible analytics for instant data access with drill-down along any dimension down to line item level Next gen user experience New role based user interfaces with embedded real time analytics and mobile access for business users 2015 SAP AE or an SAP affiliate company. All rights reserved. 17
Near Real Time Month End Close Traditional Close Close Batches Consolidatio n Batches Close enclosed by HANA Reporting on-demand Initial Period Close & Consolidation Initial Period Close & Consolidation Real-time analytics for process oversight Local close processes involve >100 tasks with multiple batch bottlenecks Challenges Multiple batch run dependencies Batch bottlenecks delay downstream activities High error correction efforts Complex issues delayed till post close Time pressured resolutions Delayed visibility to reporting Processes designed for real-time operations eliminate close bottlenecks Benefit Drivers Eliminate end of period batch bottlenecks Continuous intercompany reconciliation Continuous financial reporting visibility CO-PA & line item detail reconciliation Automation for routine tasks Full management visibility of close tasks 2015 SAP AE or an SAP affiliate company. All rights reserved. 18
Real Time Close: Intercompany Reconciliation on the Fly Reduced time to close books Improved and accelerated automated matching FBICS3 Select Documents FBICA3 Assign Documents Automatically FBICR3 Reconcile Documents No more batch jobs, real time analysis supports continuous intra-period process execution Improved user experience and enhanced data drill down reduce manual reconciliation effort Better process oversight through new management dashboard New user experience Improved data drill down 2015 SAP AE or an SAP affiliate company. All rights reserved. 19
Profitability Reporting - Before ETL ETL Cache Transact Analyze Accelerate Transactions Invoices Sales Documents Assessment Cycles Settlement Correction Postings Assigned to Operating Concern Characteristics/ Value Fields Totals Records Summarization Levels Moved to InfoProviders Extract Enrich Load To Finally Deliver Profitability by Dimension SAP s Starting Point: Postings to CO-PA loaded to SAP BW every 8 hours 2015 SAP AE or an SAP affiliate company. All rights reserved. 20
SAP s approach to Profitability Reporting ETL Transact Operating Concern on SAP HANA CE1 table (transactions) CE4 table (dimensions) Virtual Info Provider (Create using transaction KEIP) Analyze DataSource: BW Query UI: Analysis for Microsoft Office Result: Postings to CO-PA are visible immediately and close schedule is reduced by three days 2015 SAP AE or an SAP affiliate company. All rights reserved. 21
Real Time Working Capital Management Real Time Cash and Liquidity Management How much cash do I have and how much will I need to fund the business? Real Time Working Capital Analytics What is the status of my key drivers of working capital like DSO or DPO? Real Time Receivables Management How can I accelerate cash collection to improve DSO? 23
Introducing SAP Cash Management powered by SAP HANA SAP Cash Management powered by SAP HANA Analyzing global bank balances and cash positions based on data from SAP and non-sap systems Integrated liquidity forecasting including cash flow analysis using multi dimensional real-time analytics Central Bank Account Management including overdraft limit analysis, bank risk analysis, signatory management and workflow support Smart Business for Cash Managers, a cockpit to monitor critical KPI s, also on a mobile device
Transition to Real Time Receivables Management 1 Preparation 2 Review open cases 3 Clarification with customer Monthly Automated AR processing Continuous and alert driven 4 Resolution with customer Challenges Resource intense Manual preparation High error rate Multiple process flows No situation context for resolution Low resolution rate Benefit Drivers Executive management cockpit Field alerts & payment status in real-time Integrated field & AR team collaboration Proactive field resolution Automated payment matching Expected Benefits 25% Lower DSO 10% Lower Overdue A/R 22% Lower A/R Write-offs
New Solutions for Real Time Receivables Management Real time SAP Receivables Manager supporting the Receivables Manager in Finance to monitor a continuous process SAP Customer Financial Fact Sheet enabling sales representatives to resolve open issues directly with the customer
SAP Runs SAP in Finance & Controlling Benefits and KPI s Financial Close On SAP HANA 86% faster Real-time analytics end-to-end process COPA 27 h to 4 h Real-time 91 % faster Automatic Maintenance Revenue Accruals 17% faster Software and Maintenance Billing 67,000+ Users 420 Hours less processing time at quarter end close From 1450 to 1030 Revenue, Profit and Loss Reporting 74 % faster Asset Depreciation 42% faster Automatic Cost Accrual Postings 173+ Operative entities and branches 1,300+ Colleagues involved in closing activities Search Type Ahead Search / Fuzzy Search 8 ½ day Closing, including group consolidation 100+ Closing activities every month/entity (in average) 5 days less 2015 SAP AE or an SAP affiliate company. All rights reserved. 28
SAP Simple Finance @ SAP Major Values Realized Account Receivables Receivables Management Books Closing Fast Close Enablement Intercompany Reconciliation Real-time 10% DSO Reduction 28% 40% Improvement on processing time Reduction in GL posting corrections 70% Reduction in time to process reconciliation issues Simple receivables management through integration of finance & sales functions Changes focus from data preparation to analysis & interpretation I/CO reconciliation moved to a real time process HANA No aggregates Increased performance 2015 SAP AE or an SAP affiliate company. All rights reserved. 29
Predictive Dynamic Planning and Analysis Recognize trends and anticipate future risks earlier Better understand the impact of changes to your business Adapt more dynamically to external shifts with a joint plan 2015 SAP AE or an SAP affiliate company. All rights reserved. 35 35
Dynamic Planning One rolling plan for the entire group Plan autonomy for the businesses Demand signals and smart forecasts Update of the group plan on the fly Rapidly changing customer demand High volatility of market prices Disruptive external shocks Volatile World New untested business models 2013 2015 SAP AG AE or an SAP affiliate company. All rights reserved. 36
A Single Solution for Integrated Business Planning Sub-plans 4 1 LoB Forecast (e.g. Sales) de-central satellites 3 2 Central plan governance and process orchestration for group controller Full planning flexibility and autonomy for owners of departmental plans De-central operational plans Corporate Financial Plan Access to master data and actuals from ERP for rapid modeling and planning Sub-plans Availability of plan data in ERP for variance analysis De-central operational plans Single planning solution for agility and high usability 2015 SAP AE or an SAP affiliate company. All rights reserved. 38
Migration to SAP Accounting powered by SAP HANA
Migration to SAP Accounting powered by SAP HANA Migration to the G/L in SAP Accounting is fast and easy. Duration and effort for the migration is small. It can be executed at any period end. It is supported by a migration guide and monitor. There is no required SAP migration service. Changes to coding blocks, external interfaces, security, reporting etc. are optional The New G/L is NOT a pre-requisite for an implementation of the G/L in SAP Accounting Both, customers with the classic G/L or the new G/L can implement SAP Accounting. The G/L in SAP Accounting is more powerful than the New G/L in SAP ERP It provides all the capabilities of the new G/L. It is further optimized for SAP HANA e.g. no totals tables, universal journal. Additional Notes for Customers with the classic G/L As part of the migration, classic G/L data is automatically transferred to the new data structures. Existing PCA (profit center) and SL (special ledger) functions and features can remain in place. Subsequent optimization (like adoption of parallel ledger or document split) is a recommended later option. SAP plans to add respective optimization functionality in 2H 2015 (subject to change). Customers running a migration project to new G/L in SAP ERP with a planned go live in Jan 2016 should continue this project. 2015 SAP SE or an SAP affiliate company. All rights reserved. 41
SAP Accounting Details
SAP Accounting powered by SAP HANA Insight from a single source of truth flexible and harmonized One source for financial and management accounting Real time reporting without replication to a data warehouse Fast and flexible reporting Self-service analytics Continuous intra-month processes Soft close better insight at any time Hard close accelerated month-end closing tasks Simulations * Line item based and extensible Not limited by totals or pre-configuration Intuitive user experience Availability on multiple devices * planned 2015 SAP SE or an SAP affiliate company. All rights reserved. 44
SAP Accounting powered by SAP HANA Single Source of Truth & Highest Granularity
Aligned Single Source of Truth INCLUDED IN THE SAME IN-MEMORY BASED SYSTEM Both transactions, operational reporting and planning are available in the same system. Data is stored at the lowest level of detail and being aggregated on the fly SAP SIMPLE FINANCE PROCESSES Interfaces stay the same Business planning processes Analytical processes (BI, predictive) Transactional processes (FI and CO) Harmonized line-item data available in real-time Fixed Assets Material Ledger Accounts Payable General Ledger Mgmt. Accounting Public Sector Accounts Receivable Profitability Analysis Joint Venture Custom specific Universal Journal Legacy ERP Legacy ERP Legacy ERP 2015 SAP AE or an SAP affiliate company. All rights reserved. 46
Universal Journal Content Planned Content Concept: Take the best of all worlds (e.g. ledger, market segment, coding block, etc.) ONE line item table with full detail for all applications - for instant insight & extensibility This replaces the logical document of release 1.0. Secondary cost elements are G/L accounts. Data stored only once: no reconciliation needed by design Reduction of memory footprint through elimination of redundancy. Fast multi-dimensional reporting possible without replicating data to business warehouse (BW). If BW is in place anyway, only one single BI extractor needed (instead of many today). 2015 SAP AE or an SAP affiliate company. All rights reserved. 47
Enhancements of Profitability Analysis SAP Accounting focuses on the integration of account-based CO-PA Account-Based CO-PA Several enhancements delivered making it more powerful. It is planned to continue into this direction. Split of cost-of-goods-sold posting on multiple accounts (by cost component) Split of production variance posting on multiple accounts (differentiation of price / quantity effects) Three new quantity fields in CO line items + BAdI for conversion of logistic quantities to common quantities (e.g. products sold in different box sizes but KPI in Finance is calculated on tons/kg of products) Costing-Based CO-PA Product continues to exist and be supported, but no enhancements with SAP Accounting. Customers can run account-based and costing-based CO-PA in parallel. Customers should assess their valuation in FI versus valuation in costing-based CO-PA If different, continue using costing-based CO-PA If the same, customer may consider switching to account-based CO-PA. 2015 SAP SE or an SAP affiliate company. All rights reserved. 48
Significantly Reduced Reconciliation Effort Obsolete FI versus CO and sub-ledgers Obsolete FI versus CO-PA * Obsolete Reconciliation of multiple ledgers ** Obsolete Reconciliation Ledger ** Obsolete Reconciliation of ERP and data warehouse Obsolete Reconciliation of totals vs. line items Faster financial close and lower costs due to universal journal due to universal journal due to universal journal due to universal journal due to real-time analytics on SAP Accounting because totals are dropped * for account-based CO-PA ** already available with New G/L in SAP ERP 2015 SAP SE or an SAP affiliate company. All rights reserved. 49
Universal Journal Uniform Extensibility with Customer Fields Universal Journal Standard Field x Standard Field x+1 zzcust01 zzcust02 wwprof01 wwprof02 Coding Block extensibility CO-PA extensibility Capabilities The Universal Journal can be extended with customer fields. Simplified extensibility by enhancing just this ONE line item table. No technical limitation on the number of dimensions (though performance to be considered) P&L line extension using CO-PA capabilities, i.e. field definition incl. rich derivation tools. Coding Block extensibility like in SAP ERP. The SAP HANA based reporting can use both kinds of customer fields. 2015 SAP AE or an SAP affiliate company. All rights reserved. 51
Non-Disruptive Approach Tables are Virtualized Custom program or report Select GLT0 FAGLFLEXT COEP Redirect Compatibility Views Read Universal Journal Read access from custom ABAP programs or reports to prior tables will work as before Read access is automatically re-directed to the universal journal as the new single source of truth. Advantage of the new architecture: no more reconciliation and reduction of memory footprint. 2015 SAP SE or an SAP affiliate company. All rights reserved. 52
Significantly Reduced Memory Consumption Universal journal entries Significant smaller data footprint observed based on real customer data HANA data base compression No more persistent indices and aggregates/totals No more redundant repositories No replication to data warehouse system for operational reporting Lower TCO and higher through-put 2015 SAP SE or an SAP affiliate company. All rights reserved. 53
SAP Accounting powered by SAP HANA Reporting and Analysis & Intuitive User Experience
Harmonized Internal and External Reporting Financial Reporting Management Reporting Traditional Financial Reporting Scope FI Or CO Or CO-PA ERP Financials Unified Reporting including Profitability FI + CO + CO-PA Dimensions SAP Accounting powered by SAP HANA Comprehensive Reporting incl. CO and CO-PA detail with SAP Accounting powered by SAP HANA Reporting is not limited by application boundaries Run one report (e.g. P&L) and drill-down to any dimension available in the financial documents 2015 SAP AE or an SAP affiliate company. All rights reserved. 58
Financial Statement Flexible Drill-down to Any Dimension 2015 SAP SE or an SAP affiliate company. All rights reserved. 60
Flexible Journal Entry Analyzer 2015 SAP SE or an SAP affiliate company. All rights reserved. 61
Reporting and Analysis Flexibility with Analysis for Office * User-defined reporting Users can explore data on the fly by restricting financial statements to self-defined data sub-segments SAP will continue to provide standard reports but with focus on frequently used reports Available information All record dimensions can be used for segmentation Unrestricted selection of multiple dimensions for segmentation Customer-specific dimensions can be added and are available for segmentation * SAP BusinessObjects Analysis Edition for Microsoft Office 2015 SAP SE or an SAP affiliate company. All rights reserved. 62
Universal Journal Multi-Dimensional Reporting in the Balance Sheet Balance Sheet Fixed Asset by Assets Receivables by Customer Payables by Vendor Carry forward can be configured to keep detail for selected dimensions 2015 SAP AE or an SAP affiliate company. All rights reserved. 63
SAP Smart Business Cockpits A new information experience for decision makers. Financial Close Receivables Manager Payables Manager Cash Manager Finance for Managers 2015 SAP SE or an SAP affiliate company. All rights reserved. 65
SAP Smart Business Executive Edition * Innovations ŸFramework for corporate decision management based on realtime information from SAP HANA Data modelers (IT) can define suitable data views / data sets, define KPIs, and visualization components Dashboard composers (business experts) can create dashboards, adjust components, define global filters Dashboard consumers (end users) can set personal filters and thresholds, arrange screens, analyze KPIs, collaborate to get insight (planned), finally trigger actions (planned) Key benefits ŸFlexible cockpits for executives, managers and business experts putting business into the driver seat Common KPI repository throughout a company Supports a corporate information design for intuitive and consistent visualization High performance analytics Insight to action and collaboration Leverages SAP HANA content for finance * separate shipment program 2015 SAP SE or an SAP affiliate company. All rights reserved. 67
Fiori Launchpad Customer Benefits Intuitive user experience Personalizable dashboard Launchpad for activities Combines transactional and analytical work Access to master data Includes collaboration functionality Works seamlessly across multiple devices App to app navigation 2015 SAP SE or an SAP affiliate company. All rights reserved. 68
SAP Accounting powered by SAP HANA Accelerated Financial Close
Accelerated Financial Close Soft Close Better Insight within the Period Real-time profitability by earlier derivation (time of primary posting) of cost centers, internal orders, and customer projects Correct asset acquisition values at any time - no more periodic posting run required Analysis of costs across multiple cost objects types Asset depreciation re-calculated by asset for B/S and P/L Hard Close Elimination of Closing Tasks Elimination of period-end closing tasks for deriving segment information No cost center allocations to profitability Elimination of multiple reconciliation tasks due to the universal journal No more reconciliation effort with G/L and within asset accounting itself Hard Close Acceleration of Closing Tasks Significant speed-up of asset depreciation run the depreciation amounts are re-calculated with every master data change or asset transaction, and no longer at period-end as part of the depreciation run 2015 SAP AE or an SAP affiliate company. All rights reserved. 73
Acceleration of Period-End Processes Code Push-Down to SAP HANA Functionality Old transaction New transaction Settlement (plant selection) CO88 CO88H Settlement (make-to-order sales orders) VA88 VA88H Settlement (internal orders) KO8G KO8GH Settlement (projects) CJ8G CJ8GH Results Analysis (POC method or revenue-based) KKAK KKAKH WIP Calculation at Actual Costs KKAO KKAOH Variance Calculation with Full Settlement KKS1 KKS1H Variance Calculation for Cost Centers KSS1 KSS1H 2015 SAP SE or an SAP affiliate company. All rights reserved. 74
Demonstration HANA Live and Analysis for Office
Thank You Contact details: Lars Fleminggard Solution Advisor lars.fleminggard@sap.com +46 70 356 62 17
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