What’s different and better about SAP S/4HANA?

Traditional ERP systems are optimised for transaction processing, with data stored in many different tables. SAP S/4HANA uses its Universal Journal to store all financial transaction details in one table. Availability and access to all that data can happen with near-zero latency. The new system also brings a simplified data model that lets you record once, use many times, and create a single source of truth. So analytics and insights that were historically unfeasible or very time consuming now process quickly.

SAP S/4HANA enables more speed and better insights in almost every area of Finance. It’s also a platform for real-time analytics—with no more waiting for separate reporting systems, batch jobs, and long processing times. Yes, it can be expensive, and yes, there may be implementation risks, but defining a Digital Transformation roadmap upfront, driven by prioritised capabilities that drive value for the business, can help address both cost and risk in a positive way.

Factors to consider

As you weigh the decision when and how to implement SAP S/4HANA, consider these factors:

• Do you have a reconciliation process that seems to go on forever at the end of each month? SAP S/4HANA provides an additional level of detail through its Universal Journal capabilities, allowing complete transparency to a reconciled ledger that enables accounting and corporate shared services to manage an “anytime” close, and possibly eradicate the need for a month-end close altogether.
• Can you look at true product cost without the noise of messy intercompany transactions and markups? SAP S/4HANA’s valuation process allows you to “see through” your cost to the underlying components.
• Does your team struggle with time-consuming forecasting that is out of touch with actuals—and which leaves little time for analysis? SAP S/4HANA’s embedded planning offers a unified information model with prebuilt forecasting methods.
• Do you have one source of record to support consolidated, management, and statutory reporting? SAP S/4HANA lets you drill down from your consolidated financial statements to the business transaction.

Are you ready for this?

Will every company using SAP today step up to SAP S/4HANA? Probably not every company, but this is a watershed moment for SAP customers. Among organisations sticking with SAP, four factors seem to be shaping their decisions:

• The first factor is competitive risk. Companies already moving to SAP S/4HANA will get the benefits sooner, and those benefits can be substantial. There also are risks in waiting, as SAP will end support of legacy versions at the end of 2025.
• A second factor is the degree of growth and business complexity you foresee. If your future includes acquisitions, divestitures, and evolving business models, SAP S/4HANA can help make life easier.
• A third factor is the quality of your current SAP installation and other enterprise systems. Companies that have their SAP house in order and their systems fully integrated may not feel immediate pressure to get onboard the SAP S/4HANA train.
• A fourth factor is data quality. Many companies are still struggling to get their data acts together. For those with multiple instances of SAP or other ERP systems, SAP S/4HANA is an opportunity to pull the entire enterprise into financial alignment around a tested set of simplified processes.

Things you can do now

Start building the business case.

SAP S/4HANA is a great solution to many finance challenges, but a business case based only on cost reduction may not be enough. Ask yourself, what’s possible with all this power? How could SAP S/4HANA improve business partnering? What other innovations will it enable?

Plan ahead.

SAP S/4HANA implementation and configuration processes are complex and time consuming. Your top talent could be tied up for years. Plus, you’ll need specialised integration knowledge that you may have to go outside for. As 2025 approaches, the best people will be in high demand.

Stay focussed.

SAP S/4HANA is designed to support integrated financial and management reporting. While it can also support other kinds of operational reports—for example, tracking social media or IoT sensor data—the additional storage requirements for massive non-transactional data can get costly.

Know your options.

Large enterprise clients currently tend to choose on-premise technology for their SAP S/4HANA implementations, an approach that lets them use existing infrastructure investments while maintaining the option for a cloud migration in the future. A cloud-first deployment, on the other hand, could allow a faster implementation, but may not provide the flexibility to adapt the technology to your needs.

Final thoughts

Companies committed to SAP will likely find themselves grappling with SAP S/4HANA decisions over the next five years. Making choices earlier—building in time for your teams to influence both the overall vision and the implementation options—should increase the odds of getting things right.

For many CFOs, deciding when and how to implement SAP S/4HANA could be the most significant technology investment choices of their career. It’s a big deal.