What is SAP Central Finance? What is SAP Central Finance?

Many organizations still have questions on CFIN while others have already successfully embarked on this journey. In a series of blogs, we want to give you insights on CFIN, its benefits, and address some technical aspects.

• SAP Central Finance is a central SAP S/4HANA system 
  
• This Central Finance system is linked to source ERP systems (SAP and non-SAP) with real-time replication of financial transactions
• The central SAP S/4HANA enables central execution of transactions, business planning, group consolidation, as well as reporting and analytics
• It is an interesting deployment scenario for clients with a complex and heterogeneous landscape without disrupting the existing (local) ERP systems and as a first step towards full S/4HANA adoption

S/4HANA is the next generation of SAP's solutions, engineered around SAP HANA technology. The architecture simplifies the data model and improves business process execution with a new user experience called FIORI. This simplified data model is the key driver to reduce reconciliation efforts and provide greater flexibility in reporting, which is a key benefit for the finance function. SAP Central Finance (as a product) is an SAP S/4HANA system that can be used to receive data centrally from multiple source systems.

We see many organizations that have a fragmented and decentralized system landscape. This as a result from acquisitions, having a decentralized organizational setup or by not having an IT strategy and governance focusing on consolidating the ERP environment. The downside is less visibility for the whole organization, on cross-system information and having limited opportunities for centralized processing, shared services enablement, or centralized reporting and insights. This leads to increased operational costs and sub-optimal decisions, which will at times prove to be very costly.

Therefore, finance organizations are looking for ways to bring all relevant global financial data across various SAP and non-SAP systems into one platform. This enables them to establish and achieve the efficiencies of centralized processing and centralized cross-system reporting without necessarily upgrading their decentralized source systems (yet). 

From a technical perspective, Central Finance is an 'add-on' based on a S/4HANA system. Central Finance receives financial accounting transactions from SAP or non-SAP ERP systems using a toolset of additional functions such as SAP SLT to enable the real-time replication. This direct replication contrasts with a Data Warehouse where data is extracted, transformed and loaded, with no real integration.

SAP Central Finance gives companies' finance function the opportunity to benefit from the key advantages of SAP S/4HANA. SAP Central Finance is therefore described as a steppingstone for a larger SAP S/4HANA transformation. Since it is not necessary to modify the ERP landscape in the short to medium term, the previous systems and system landscapes remain in place. They are connected to the SAP Central Finance system. 

Since Central Finance utilizes the S/4 HANA capabilities in a centralized system, it allows for an organization-wide financial overview in real time. This provides the opportunity to realize multiple advantages in transactional processing, simplified reporting or consolidation. The specific advantages and features within Central Finance for the different finance processes will be discussed in the next blog.