Central Finance, Simple Finance or S/4HANA Finance?

Anyone interested in SAP's solutions for finance will sooner or later stumble upon the terms SAP Simple Finance, SAP S/4HANA Finance, and SAP Central Finance. Due to the similar terminology, the solutions are often confused.

A brief overview of the main differences

• SAP Simple Finance is the predecessor product of SAP S/4HANA Finance. SAP Simple Finance was replaced at the end of 2015.
• SAP S/4HANA Finance is the current ERP financial software from SAP and part of SAP S/4HANA. The ERP solution runs on the SAP HANA in-memory database.
• SAP Central Finance is a platform based on SAP S/4HANA. It enables a centralized financial system. This solution can be used as an initial entry point for a later full implementation of SAP S/4HANA.

1. What is SAP Simple Finance?

With the introduction of the HANA database 2011, SAP laid the foundation for the SAP S/4HANA Business Suite. In 2014, the company announced SAP Simple Finance - the first business application developed by SAP for finance functions on the HANA platform.

SAP Simple Finance was also made available as an add-on via the EHP 7 enhancement package for SAP ERP 6.0. The solution was based on a simplified architecture, delivered new solutions for finance and accounting and provided a modern user experience.

Above all, the application technically combined financial accounting with controlling for the first time - the basis for shorter processing times and faster analyses.

SAP changed the product name at the end of 2015: SAP Simple Finance became SAP S/4HANA Finance.

2. What is SAP S/4HANA Finance?

SAP S/4HANA Finance is part of the SAP S/4HANA Business Suite. The current version is SAP S4 HANA Finance 1909.

With the ERP financial software, SAP provides companies with a comprehensive solution for the entire financial management - from financial planning and analysis, accounting, risk and compliance management to receivables management.

SAP S/4HANA Finance is available on-premise or for the cloud. The solution provides companies with a uniform view of all financial and operational data. It ensures optimized business processes and enables real-time analysis.

3. What is SAP Central Finance?

SAP Central Finance is a platform based on SAP S/4HANA. It enables a centralized financial system. Data from heterogeneous SAP and non-SAP ERP systems with different data structures can be transferred to this system and harmonized. This does not involve any intervention in the operative systems.

It is not necessary to convert the ERP landscape used. The existing systems and system landscapes remain unchanged. They will only be connected to the SAP central finance system. This creates a "single-point-of-truth" with which current figures can be provided across different group companies.

SAP Central Finance also gives companies the opportunity to benefit from the key advantages of SAP S/4HANA - but without having to switch directly to SAP S/4HANA in its entirety. SAP Central Finance is also referred to as the "ideal door opener" for SAP S/4HANA.

The finance-first approach as the royal road to SAP S/4HANA

According to the motto "Finance first", SAP Central Finance can pave the way to SAP S/4HANA. SAP writes: "For internationally active companies with very heterogeneous landscapes, Central Finance is today considered the royal road to SAP S/4HANA."

If companies decide to use SAP Central Finance, then all existing systems are first consolidated with the help of SAP Central Finance.

The existing SAP and non-SAP systems are connected to SAP Central Finance and can continue to be used. The conversion of the other individual ERP instances to SAP S/4HANA takes place - in a second step - later and usually successively.

Those who follow this path not only receive a modern financial controlling and reporting platform very quickly - they also benefit directly from SAP S/4HANA in one of the core areas of companies, finance.

In addition, the process allows a lot to be learned for further projects - such as the subsequent implementation of SAP S/4HANA.

What are the advantages of this approach?

One of the biggest advantages is that the introduction of SAP S/4HANA - via the starting point of SAP Central Finance - is gradual and agile.

Compared to the traditional waterfall methodology with "big bang", such a project is easier and faster to execute and plan. The complexity of the overall project is reduced, and the risk is also lower.

This approach gives companies time and space for further planning. During the Central Finance project, they can deal with the desired target architecture for SAP S/4HANA and the planning of the system conversion of further instances in parallel.

Above all, companies benefit earlier from the advantages of SAP S/4HANA: The solution's finance and reporting functions - such as the Universal Journal or Cash Management - are available to them much faster than in a traditional project implementation.

The same applies to many other SAP S/4HANA innovations, such as real-time reporting and analytics, which lay the foundation for better decision-making. Companies can leverage such business benefits of SAP S/4HANA more quickly via Central Finance than with the classic, direct implementation.

The advantages at a glance:

• Rapid entry into the world of SAP S/4HANA
• Less complexity in the implementation of SAP S/4HANA
• Agile, step-by-step approach - no "big bang".
• Lower risk by equalizing the scope of the project and dividing it into subprojects
• Faster access to SAP S/4HANA innovations
• Gathering of experience for further projects and the implementation of SAP S/4HANA

For whom is this path suitable?

The path to SAP S/4HANA via SAP Central Finance is particularly suitable for companies that have a distributed IT and SAP system landscape (comprising SAP and non-SAP systems).

As a rule, these tend to be larger, internationally active companies and groups that want to centralize and harmonize their system landscape. It is also often a question of being able to benefit quickly from the advantages and innovations of SAP S/4HANA - and to achieve a rapid aromatization of investments.

When does the direct path to SAP S/4HANA make more sense?

For example, if a company already has a comparatively homogeneous system landscape and, for example, only a single ERP instance, this does not speak in favor of the path via Central Finance.

SAP Central Finance is also not an option for smaller, fast-growing midmarket companies - here, direct implementation of SAP S/4HANA with a greenfield approach would be more appropriate. This also applies to new SAP customers who do not yet use an SAP system.

However, whether the route via Central Finance is worthwhile or the direct route to SAP S/4HANA makes more sense depends on many, often very individual factors. Every company is different and the options must therefore be examined on a case-by-case basis. Appropriate preliminary studies ("proof of concept") provide clarity.