Delta from SAP ERP Financials to SAP S/4HANA Finance

2.1 Background

SAP ECC 6.0 and earlier versions of SAP were made up of a number of separate modules such as financial accounting, controlling, purchasing, sales and distribution, manufacturing, plant maintenance, asset accounting, and so on. Most modules had their own tables and own data and although most of them eventually posted into the financial accounting (FI) module, they did not always post in real time; things could be missed, and a lot of batch postings and checking took place.

Primary costs were posted to FI, but not secondary costs, which stayed in CO. This could lead to different profit figures for management reporting and for financial reporting and even profitability analysis reports sometimes included or excluded items that were or were not in financial and management accounting.

In addition, if you still had the classical general ledger (G/L) and wanted to report figures according to different accounting principles, such as local generally accepted accounting principles (GAAP) or International Financial Reporting Standard (IFRS) reporting, it could be quite complicated to extend the chart of accounts to cover both, adjust the configuration and financial statement versions accordingly, and then reconcile the two figures.

At the end of each period, a considerable amount of time could be spent checking that everything was posted through to the G/L, running reports from different sources, and performing reconciliations between the different modules and different accounting principles. There were also a number of tasks which could only be performed at the period end, making the period closing a long and complicated process.

With the advent of the New General Ledger in 2004, things became slightly easier, as you could then create additional ledgers for the different accounting principles. You could post most items automatically to one or more ledgers at the same time, with additional adjustments to individual ledgers where values were different.

In some cases, for example in asset accounting, not all transactions could be posted in real time, and transactions to additional depreciation areas had to be posted separately to the parallel ledgers at the end of the month.

The most important changes in finance in SAP S/4HANA revolve around the concept of a single source of truth, which we will explain in the next section.