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What is SAP Central Finance and How Does It Work?

We will explain what is SAP Central Finance is. It is a central financial system that provides a single source of truth to execute reporting and finance processes across disparate financial applications. This allows you to reap the benefits of SAP S/4HANA without having to migrate your entire data.SAP Central Finance is a financial consolidation solution and reporting tool that allows organizations to consolidate their financial data and provide real-time reports. The functions and features of the central SAP S/4HANA systems drive the Central Finance system. These components include reporting, planning, consolidation, sharing services, etc.

These products were not previously part of the core SAP ERP system or were separately developed or integrated with a core SAP ERP.

What is SAP Central Finance?

SAP Central Finance is a financial consolidation and reporting solution allowing organizations to report on their financial data in real-time. It is designed to help organizations improve the accuracy and speed of their financial reporting and provide a unified view of their financial data.The idea of a central ERP system to use for financial processes has existed for as long as multi-ERP system landscapes. Mostly as a consequence of mergers and acquisitions (M&A) and post-merger integration (PMI) or business consolidation (organic growth initiatives and business model optimizations), many companies find themselves needing to bring together different and diverse ERP systems for centralized financial reporting and process execution.

SAP Central Finance

we’ll begin by describing the evolution of SAP S4 Central Finance, starting with how traditional approaches to financing created the need for a new system.

Evolution of Central Finance

Today’s digital economy requires functional and technological integration with organizations outside the company’s borders, as well as other businesses that are part of business networks. The integration will be necessary for financial capabilities separate from ERP systems and outside of ERP (procurement ,sales, Ariba, etc.).Companies must adapt to the changing business environment and be able to adapt quickly. Complexity created by non integrated systems, redundant applications, and decentralized data storage has proven to be a problem for many.

Traditional central systems were focused on integrating ERP systems with separate finance applications for financial planning, consolidation, and reporting.Traditional approaches were based on a central ERP system custom integrated with source systems. Integration used ETL tools and was batch-oriented. Coding was restricted. Reporting could have been done in separate data warehouses, and planning and consolidation may have been done in parallel outside of the central ERP.

The technology available at the time limited the functionality of traditional central ERP systems for finance. All that was required was the duplication and movement of data to the right place. Therefore, interfaces needed to be updated whenever an organizational or business model changed. Perhaps additional interfaces were added to another system, which could have caused master data to become out of control. Finance information was only sometimes consistent, reliable, and trustworthy due to latency and timing issues.

The centralized financial system of today should be transformed by technological innovations such as in-memory databases, predictive analytics and machine learning.Today’s technology allows a central financial system to in one system regardless of how many records or the size of the coding blocks to be the digital twin of all financial records within your entire organization enterprise-wide across systems and agnostic about business models. In other words, it can be harmonized.

The central system has integrated finance processes so that data can be moved to different applications for financial processes such as reporting, planning, and consolidation.For reporting and process execution, everyone can use the same dataset. There is one source of truth with one process execution layer, one SAP S/4HANA user interface, and one process execution layer. The first layer faces the organization internally, and the second faces the customer. If desired, central process execution may be done via scalable shared service.

SAP’s Central Finance differs from other central systems for financing in that it is built on an intelligent ERP system called SAP S/4HANA. SAP S/4HANA uses many UX technologies that have been mainstreamed since the creation of traditional ERP systems. The next-generation ERP system SAP S/4HANA, is only available every 15 to 20 years. Now is the right time.

Central Finance addresses not only the traditional central process execution aspect in a central ERP system of finance but also assists SAP ERP and non-SAP ERP customers to adapt quickly and take advantage of SAP S/4HANA’s new and innovative capabilities. Central Finance offers an easy path to SAP S/4HANA adoption via a standard SAP solution bundle. It also simplifies and consolidates your IT landscape.

Central Finance Landscape Architecture

SAP Central Finance is a financial consolidation and reporting solution allowing organizations to report on their financial data in real-time. It includes a range of features and capabilities designed to help organizations improve the accuracy and speed of their financial reporting and to provide a single, unified view of their financial data. Some of the key features of SAP Central Finance include.

The SAP Central Finance landscape architecture refers to the overall design and structure of the SAP Central Finance system and its integration with other systems within an organization.In a typical SAP Central Finance landscape,high-level process flowchart as below

CFIN

The SAP Central Finance landscape may also include other systems and components, such as SAP S/4HANA, SAP ERP, or other financial management systems, that provide financial data to the SAP Central Finance system. In addition, the SAP Central Finance landscape may include other methods, such as data warehouses, data lakes, or business intelligence tools, that are used to store, analyze, and report on financial data.

SAP Central finance Overview

Data integration and consolidation

SAP Central Finance is designed to allow organizations to easily integrate and consolidate financial data from multiple sources, including SAP and non-SAP systems. This helps organizations create a unified view of their financial data and improve the accuracy and speed of their financial reporting.

Advanced financial reporting capabilities

SAP Central Finance includes advanced financial reporting capabilities, such as real-time reporting, multi-dimensional analysis, and advanced data visualization. These capabilities help organizations to more easily understand and analyze their financial data, and to make more informed business decisions.

Data governance and security

SAP Central Finance includes robust data governance and security features, such as data masking, data lineage, and data quality monitoring. These features help organizations to ensure the integrity and security of their financial data.

Intuitive user interface

SAP Central Finance (cfin) includes a modern, intuitive user interface that makes it easy for users to access and analyze their financial data. The user experience is designed to be intuitive and easy to use, even for users who are new to financial consolidation and reporting.

the cfin SAP is implemented as a central consolidation hub that receives and consolidates financial data from multiple sources, including SAP and non-SAP systems. This data is then used to support real-time financial reporting and analysis.

Overall, the SAP Central Finance landscape architecture is designed to support the integration and consolidation of financial data from multiple sources and provide a unified view of an organization’s financial data. It is designed to help organizations improve the accuracy and speed of their financial reporting and to make better, more informed business decisions.

Central Finance Technical core components

Central Finance is based on a number of technical core components, each contributing to and providing key capabilities that drive the overall set of functions and features in Central Finance:

SAP HANA:

The in-memory database that stores and provides instant access to datasets of any size on any system with unabbreviated dimensionality across the entire enterpriseThe application layer providing the functions and features available in a Central Finance system

SLT

SAP Landscape Transformation Replication Server (SAP LT Replication Server),The replication mechanism, the way to get financial transactions created in source systems into Central Finance

SAP Application Integration Framework

The error correction and accounting suspension mechanism to postprocess postings that cannot be posted initially

SAP MDG

A user interface to maintain business mappings between source and target systems for key finance master data objects

Business intelligence and analytics

Embedded, adjacent, or complementary capabilities to leverage the single source of truth for financial data from end-user- to boardroom-level reporting

Cloud components

Dedicated functional capabilities enhancing the functional scope of Central Finance outside the core Central Finance system, usually software as a service (SaaS) or platform as a service (PaaS)

Benefits of central finance sap

The following capabilities can be achieved with Central Finance:

Advanced reporting

All transactions in Central Finance are immediately available and without any dimensional omissions. Reporting is also directly accessible via various frontends, including Microsoft Excel.

Segment-level reporting in Central Finance

Reporting can be done at a microsegment or macro level. Custom dimensions, such as the colour of a product or customer’s age, can be added to the SAP S/4HANA system and used in microsegment financial reporting.

Reporting by entity

Central Finance does not contain enterprise-wide financial data. However, this does not mean that only corporate headquarters can run aggregated financial reporting. Central Finance can provide segment-level and entity-level reporting, if required.

Group reporting

Central Finance is able to provide financial reporting for all financial transactions across an entire enterprise, regardless of which source system captured them.

Execution of the central process

These are the key aspects of central finance execution

  • Execution of local processes :The central system can execute traditional processes that were running in the source systems.
  • Execution of central processes: Processes that are executed in different source systems (in parallel, split across systems or in other systems) can be executed together in the same (ERP-central system).
  • Execution of scaleable processes: Central Finance allows the central execution of financial processes, as well as execution within a shared service business model.

Financial transformation platform

 The following are key features of Central Finance as a platform for finance transformation:

  • Common data foundation: Central Finance allows for an integrated single source of truth within a central financial repository that is available to all employees.
  • Common information model: Central Finance offers a single, standardized source of truth in a central repository that is accessible across the enterprise. It also includes microsegment dimension (custom coding block enhancements).
  • Common application stack: Transaction processing and reporting, as well as planning and consolidation, all operate from the same technology stack and do not require data replication or duplicate (master) data maintenance.
  • Single-system, same-system transaction recording, reporting: Financial data in Central Finance is stored in the central financial repository, SAP S/4HANA’s Universal Journal. It can be accessed without transformation or extraction and data loading into external reporting frontends and analytics frontends.

Digital core

Central Finance is based on the SAP S/4HANA system, which has native integration/connectivity (digital core) for business networks and cloud solution beyond the core ERP.

SAP Central Finance Deployment Options

Deploying Central Finance provides puts organizations with multi-ERP system landscapes, whether SAP or non-SAP ERP source systems, in a position to execute finance processes in a central SAP S/4HANA system-enterprise-wide and cross-system.SAP S/4HANA also offers Central Finance as a deployment option. SAP S/4HANA must be deployed in Central Finance, as it is used for business processes.

Central Finance is the implementation of financial innovations in SAP S/4HANA. These innovations are available to all finance users across the enterprise regardless of the source system they used before Central Finance was implemented.

Central Finance allows SAP S/4HANA to be deployed in a non-disruptive manner, ensuring business continuity. This is particularly true when central SAP S/4HANA is used as a side implementation and not as an ERP replacement.

Central Finance is not an upgrade to SAP S/4HANA. Central Finance is based on standard SAP S/4HANA systems at its core, delivering financial reporting and process execution capabilities. You don’t need to upgrade to SAP S/4HANA if you have Central Finance. Instead, you can continue to use SAP S/4HANA.

With a multi-ERP footprint being the target state, although likely with a significantly reduced (consolidated number) ERP source system, Central Finance will still serve as the integration layer in the final state. Although the ultimate goal is for Central Finance to be the sole SAP S/4HANA platform, Central Finance can continue to serve as the integration layer for future and current M&A ERP system integrations.

There are three ways that SAP S/4HANA or Central Finance can be co-deployed,Here are some of the main deployment options for SAP Central Finance:

On-premises deployment

With an on-premises deployment, the SAP Central Finance system is installed and configured on the organization’s own servers and infrastructure. This option allows organizations to have complete control over the hardware and software infrastructure supporting SAP Central Finance and is often used by organizations with large, complex financial systems.

Cloud-based deployment

With a cloud-based deployment, the SAP Central Finance system is hosted by a cloud provider and is accessed over the internet. This option allows organizations to take advantage of the scalability and flexibility of the cloud and is often used by organizations with smaller financial systems or those that want to minimize their IT infrastructure costs.

Hybrid deployment

With a hybrid deployment, the SAP Central Finance system is deployed both on-premises and in the cloud. This option allows organizations to take advantage of the benefits of both on-premises and cloud-based deployment and is often used by organizations with complex financial systems that require a mix of on-premises and cloud-based infrastructure.

Overall, the choice of deployment option for SAP Central Finance will depend on the specific needs and requirements of the organization. It is important to carefully consider the various deployment options and choose the one that best meets the organization’s financial consolidation and reporting needs.

Conclusion

Central Finance is great for starting your journey towards SAP S/4HANA adoption. It allows you to onboard onto the Central Finance platform and decommissions non-SAP ERP sources.

We discussed the fundamental concepts of Central Finance, the evolution and current status of central systems for finance, process execution, and the options available. Overall, SAP Central Finance is a comprehensive financial consolidation and reporting solution that is designed to help organizations improve the accuracy and speed of their financial reporting, and to make better, more informed business decisions. It is an important part of the financial management landscape and is used by organizations around the world to support their financial management needs.

In conclusion, SAP Central Finance is an essential tool for managing finance in your organization. By automating processes and making information accessible, it can help you make smarter decisions and track progress. Plus, it’s easy to use and manage, so you can get started right away.

What is the difference between S 4HANA and central Finance?

SAP S/4HANA and SAP Central Finance are two separate products that are often used together in order to support financial consolidation and reporting.
SAP S/4HANA is a next-generation enterprise resource planning (ERP) system that is designed to support real-time business processes and provide a single source of truth for an organization’s financial data. It includes a range of financial management capabilities, including accounting, financial planning and analysis, and financial reporting.

SAP Central Finance, on the other hand, is a financial consolidation and reporting solution that is designed to allow organizations to consolidate and report on their financial data in real-time. It includes advanced financial reporting capabilities, such as real-time reporting, multi-dimensional analysis, and advanced data visualization, and is designed to help organizations improve the accuracy and speed of their financial reporting.

While SAP S/4HANA and SAP Central Finance are often used together, they are separate products and can be implemented independently of one another. An organization may choose to implement SAP S/4HANA for its core financial management capabilities, and then use SAP Central Finance to consolidate and report on its financial data in real-time. Alternatively, an organization may choose to implement SAP Central Finance to consolidate and report on financial data from multiple sources, including SAP and non-SAP systems.

What is SAP Simple Finance?

SAP Simple Finance is a financial management solution that is designed to support real-time financial processes and provide a single source of truth for an organization’s financial data. It is part of the SAP S/4HANA product family and is designed to be simpler and more intuitive to use than traditional financial management systems.

SAP Simple Finance includes a range of financial management capabilities, including accounting, financial planning and analysis, and financial reporting. It is built on the SAP HANA in-memory database platform, which allows it to support real-time processing and analysis of financial data.

One of the key benefits of SAP Simple Finance is that it is designed to be easier to use and more intuitive than traditional financial management systems. It includes a modern, intuitive user interface that makes it easy for users to access and analyze their financial data, and it is designed to be simple to set up and configure.

Does SAP central Finance requires different license?

Yes, SAP Central Finance is a separate product from SAP’s core financial systems, and it requires a separate license to use. SAP Central Finance is typically licensed on a subscription basis, with different pricing and licensing options available depending on the specific needs of the organization.

In order to use SAP Central Finance, an organization will need to purchase a license and implement the necessary hardware and software infrastructure to support the product. This may include purchasing additional hardware and software licenses, as well as configuring and setting up the SAP Central Finance system to meet the specific needs of the organization.

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