New Ways to the Consolidated Financial Statement - A Small Excursion or an Expedition with an Uncertain Outcome?

The financial community is pleasantly surprised! SAP, which has long been known for its technological sobriety in the area of Enterprise Performance Management (EPM), is on the move and is launching a new solution on the market.

S/4HANA Finance for Group Reporting is the first new development from the German market leader in almost two decades for the consolidation of ACTUAL and PLAN and - unlike the established applications SAP EC-CS, SAP BCS, SAP BPC, and SAP FC - is not a tool but actually a platform for end-to-end financial processes. The new member of the SAP family can at least claim to be the first EPM solution to enter into a direct wiring with the financial data from the ERP because it fetches the financial data directly from an accounting table called ACDOCA.

So it's an evolution? Most certainly. But revolution? Probably not. But the specialist discipline of "corporate reporting" is not subject to the expectation of having to change disruptively in order to satisfy internal and external information needs

SAP recently startled its loyal followers with the news that the maintenance period for the currently widespread tools mentioned above will end in 2027 at the latest. In some cases, further technological developments have already been stopped. Even if accounting departments can currently serve their customers - primarily controlling and the CFO - with satisfactory speed and appropriate accuracy, companies preparing consolidated financial statements should use the coming period to orient themselves and make the appropriate entries on the financial roadmap.

Of course, the bar is also raised in terms of content. The needs of corporate management in terms of depth of analysis, real-time access, predictiveness, fast close (known as "continuous accounting" in the SAP vernacular) and transparency/compliance are addressed more clearly than before. Due to the interface-free transfer of financial data from ERP to financial statement preparation, Group Reporting is fundamentally interesting for every S/4HANA Finance customer who is committed to breaking down departmental silos with a platform strategy.

In the future, SAP will also win SMEs (medium-sized enterprises) as customers in the area of EPM due to the finance process orientation made possible by the Universal Journal. The previous belief in the market that SAP EPM tools are geared towards large corporations can no longer be maintained with SAP Group Reporting. The consistency of the finance processes from ERP, financial close, group closing, FP&A and reporting (through to legal financial reporting) is also attractive for SMEs, especially as the Total Costs of Ownership (TCO) should fall (no additional third-party tools, no interfacing, reduction of manual activities) and the operating mode can also be in the cloud.

Consolidation becomes part of the ERP processes and loses its "silo existence" at the end of the financial process in the future. Technologically, this is supported by the cloud operating model, among other things, which is now actually the first choice for Group Reporting. The interface to the non-SAP outside world, recently called "Group Reporting Data Collection App" in the EPM context, is even natively at home in the cloud - an On Prem version is not available.

The ability to generate consolidated closing data at any time without preparatory measures sustainably reduces the creation times for the Group Close and frees the specialist departments from time-consuming data logistics activities. The effects of adjustments and corrections to the source data in ERP are now visible "in real time" in the consolidation. Provided that the Accounting and Controlling departments accept the invitation to integrate and harmonize the financial master data, the increased depth of analysis through drilldowns can also be used for planning data and downstream analysis in the SAP Analytics Cloud. Value-creating closing features, such as matrix consolidation, upstream intercompany reconciliations and the processing of planning data, can be used via programmed logics or individually tailored to the needs of the user via rule-based customizing. On the way to a "single source of truth", web interfaces based on the new Fiori UI and the cloud operating mode can be used to decentralize closing processes more efficiently and consolidate cross-border collaboration.

Certainly, the new S/4HANA Finance for Group Reporting is part of the armamentarium for the process-oriented transformation of the CFO area. Or as SAP puts it in an announcement for a webinar in October 2021 with target group CFO/Finance function: "We will take an Expert Walk under the protection of the base camp and clarify fundamental facets of the possible expedition. " In any case, the direction in Enterprise Performance Management - read Group Reporting - is right. Whether the implementations of the platform are really a walk of the expert department or rather a voyage of discovery will be clarified in our next blog post on the topic.