One of the major challenges of large ERP customers with complex, disintegrated and multi-ERP system landscape is to keep their existing ERP systems up to date and in-sync with each other for a centralized reporting and closing. All the business records / transactions cannot be captured separately in a digital way. Processing huge volume of data and putting predictive analytics on top of it is a very difficult task. Connecting with vendors, suppliers, partners with real time information remained a dream for everyone.
To a great extent, the above challenges can be addressed by moving towards SAP S/4HANA.
There are multiple ways to move on to S/4HANA and one of them is through Central Finance. Formerly called as "Central Journal", it is neither a new product nor a new functionality. This is one of the deployment approaches which will help customers with multiple SAP and Non-SAP systems to achieve immediate benefits of simplicity in finance which comes with S/4HANA Finance. The reason being that migration / upgrade of all the systems to S/4HANA would be a massive, complex, expensive, and most importantly a disruptive endeavor.
Central Finance function is one of the most proficient way to start with, as it does so without disrupting your existing SAP ERP systems. If you are thinking of system simplification, then this is the journey you should follow to achieve quick business benefits and thereby reducing project risk and automatically increasing the readiness toward your target with each step. The real capability of Central Finance function is that, it will replicate all financial transaction from surrounding systems, into one single system, which is S/4HANA. After this, the customers will have the choice to retire/reduce the number of instances over a period of time.
SAP Landscape Transformation Replication Server is used for the replication of data to Central Finance for both Finance and Controlling postings. This replication is not table replication but rather a reposting of transactions into the central system which can be simply traced back. One of the most important business benefit is that the CO postings (both primary costs and secondary costs) are replicated to the Central Finance system, which will allocate costs between cost objects that originate in different source systems. Thus, reporting on overhead costs across the entire group can be done from the central finance system, eliminating the need to pull individual reports from different source systems. All business documents related to the transaction are available in the relationship browser, provided source system is SAP.
Central Finance business mapping uses Master Data Governance (MDG) mapping function and this does not mean that MDG master data governance processes must be set up. It is sufficient to maintain the relevant mapping data in the Central Finance system. With Central Finance, real time group reporting both financial and operational, multi-ERP environment and M&A situations can be done in a seamless manner from the central finance system. While we see a huge benefit from central finance, there are a few challenges in terms of the cost associated with it to maintain two parallel system, though for a short period of time.