SAP S/4HANA for Group Reporting & real-time consolidation

SAP Group Reporting

The business value of real-time consolidation

Last summer, we already wrote an article about SAP S/4HANA for Group Reporting: SAP S/4HANA for Group Reporting is SAP’s newest consolidation solution, running on the S/4HANA platform and is available as cloud and ‘on-premise (running on your local server)’ version. SAP S/4HANA for Group Reporting is directly working on the financial data in the S/4HANA Finance system and enables live consolidation and reporting, without the need to load the data to another system.

Last month we gave an update on the developments in the last six months of SAP S/4HANA for Group Reporting. In that article we discussed the most recent and interesting changes in the last (on-premise) version: 1909.

Now, it is time to focus on one of the unique value propositions of SAP S/4HANA for Group Reporting: real-time data access and consolidation. This means consolidation on real-time plan and actual data both before and after closing. Necessary adjustments can be done locally and results are provided immediately for consolidation.

So how will data flow from source to a consolidated report? How does it incorporate general ledgers from non-SAP source systems and still being able to present real-time consolidated figures? And how does SAP S/4HANA for Group Reporting ensure real-time insight in local and consolidated data in cases of a local adjustment or group / presentation adjustment? And from a business perspective is there really a need for real-time consolidation? Also compared to (real-time) aggregation? In other words, what is the business value of real-time consolidation

How is actual and plan data captured?

ACDOCU (figure 1) is the table that stores all consolidation data and therefore it is the primary table for SAP S/4HANA Group Reporting. It will bring consolidated Actual data coming from ACDOCA and Plan data from ACDOCP together in one table (‘one version of the truth’). This means that all data within a consolidated report originated from SAP S/4HANA Group Reporting are based on the table ACDOCU.Within SAP S/4HANA actual data (e.g. balances for SAP S/4HANA companies) is captured within the table called ACDOCA (figure 1). The table ACDOCA is based on the Universal Journal line items, containing all of the financial fields, as well as a lot of information from other modules. The table called ACDOCP (figure 1 & 2) has the same structure as ACDOCA (Universal Journal). It will be the table to store all planning data; it will cover period-based planning like General Ledger Planning, Cost Center Planning, etc. The object based planning tables also write into ACDOCP (figure 2).

Figure 1: Actual and plan data within S4/HANA .  Figure 2: Period and object based planning.

ACDOCU (figure 1) is the table that stores all consolidation data and therefore it is the primary table for SAP S/4HANA Group Reporting. It will bring consolidated Actual data coming from ACDOCA and Plan data from ACDOCP together in one table (‘one version of the truth’). This means that all data within a consolidated report originated from SAP S/4HANA Group Reporting are based on the table ACDOCU.

How does it incorporate data from outside SAP S/4HANA companies?

As said companies that run on SAP S/4HANA store their Actual and Plan data in ACDOCA and ACDOCP. Companies that run a SAP ERP / ECC system can use the Central Finance solution to ensure that Actual data is also real-time available within SAP S/4HANA.

Figure 3: Overview on how to incorporate data from outside SAP S/4HANA companies.

The Central Finance solution (see figure 4 for a schematic overview) can be made up of a combination of SAP systems of different releases. Financial Accounting (FI) and Management Accounting (CO) postings can be replicated into this Central Finance system. Central Finance allows to create a common reporting structure. To prepare for this common structure, different accounting entities must be mapped (for example, account, profit center, or cost center) in source systems to one common set of master data in the Central Finance system. Then financial accounting (FI) and management accounting (CO) postings can be replicated. These posting are combined into one document – the universal journal entry and this data is stored in the table ACDOCA (figure 4).

Figure 4: Central Finance System Landscape

Since all data is stored in ACDOCA, data is real-time available in S/4HANA for Group Reporting.

To use S/4HANA Group Reporting Data Collection you also have to run SAP Cloud Platform (SAP’s open platform as a service for developing cloud business applications in a fully provisioned environment). Also SAP Analytics Cloud runs within this platform and is the strategic application for Planning & Analytics. This planning application in combination with SAP S/4HANA feeds the table ACDOCP.Companies that do not use a SAP ERP / ECC system and do not want to use the Central Finance solution, can use the S/4 HANA Group Reporting Data Collection option (see figure 5). Data Mapping apps allow you to define mappings between source dimensions from any external system and target dimensions available in SAP S/4HANA. At this moment the source is limited to CSV- files, and the destination is limited to the ACDOCU table of SAP S/4HANA for Group Reporting. The mappings can be directly created in Microsoft Excel files and then uploaded in the data mapping definition. These mapping files are used to transform data and to import the data to ACDOCU (see figure 5 for an simplified diagram). More developments and innovations can be expected.

Figure 5: SAP S/4HANA Group Reporting Data Collection

What is the impact of changes in data flows?

Any local adjustment done on actual or plan (through the use of SAP Analytics Cloud) data within SAP S/4HANA (or within any SAP ERP company using Central Finance) will be real-time available within SAP S/4HANA for Group Reporting in local currency or any other reporting currency that you like. As well as in any structure that you want, consolidated or simply aggregated. Within this configuration the same can be said for presentation or group adjustments that have an impact on single entity level (a subsidiary). The adjusted data will be real-time available at consolidated level but not at local or aggregated (using a reporting hierarchy) level since the adjustment is done in ACDOCU and not in ACDOCA.

Any local adjustment done for any NON SAP ERP company that uses SAP S/4HANA Group Reporting Data Collection will not be real-time available within SAP S/4HANA for Group Reporting, since this local adjustment first has to be loaded to the table ACDOCU. And of course the same can be said for presentation or group adjustments that have an impact on single entity level (a subsidiary).

In conclusion: what is the value of real-time consolidated data?

For all companies that report actual or plan (through the use of SAP Analytics Cloud) data within SAP S/4HANA (or within any SAP ERP company using Central Finance), data will be at all levels (local, consolidated or aggregated) real time available. For NON SAP ERP company that use SAP S/4HANA Group Reporting Data Collection, data will not be real-time available.

So for SAP companies (in many cases) real-time consolidation is possible. But the fact that it is possible does not mean that it is necessary or that it has true business value.

First let us define the difference between local, aggregation and consolidation. Local financial information is related to for example a P&L, Balance Sheet and Cash Flow Statement in local currency or any other reporting currency after currency conversion. Consolidation and aggregation both incorporate currency conversion to ensure that ‘apples are compared with apples’. The difference between consolidation and aggregation is that consolidation incorporates rules for the elimination of equity and intercompany relations within a predefined group of reporting or legal entities. The relations within a group is based on ownership-% or the amount of control one entities has on another (or more) entities. Aggregation is only based on a predefined hierarchy of reporting or legal entities.

From a statutory or GAAP perspective real-time financial consolidation seems irrelevant. For example,  currency conversion at a ‘real-time rate’ makes from a business view more sense, but it is not the basis for IFRS. P&L-items and movements in balance sheet items are converted at average month rate and closing values of balance sheet items are valued at month end rate. So for financial (responsibility) reporting towards any stakeholder it does not seem to have much added value.

From a business perspective real time consolidation seems very interesting. It will accelerate the local month-end close process (intercompany and account reconciliation can be done real-time and data quality can be improved via accurate transaction-level data matching) and therefore also the group reporting process.

In my experience, real-time consolidation in the form of a balance sheet or cash flow statement doesn’t seems likely; these processes are still very much monthly driven. But for real-time financial information like cash position, working capital, gross and net margins there is a true need for instant information due to rapid changing (market or business) circumstances but this is more related to information at local level or (at most) at aggregated level. No financial manager makes daily decisions on a consolidated P&L, balance sheet or cash flow statement. Daily decisions are related to operational processes and any information that comes from or related to those processes. So in conclusion: in my opinion real-time consolidation has business value in the context of shorter monthly reporting cycles and that benefit on its own can be reason enough to invest in real-time consolidation!

As always, we will be following all developments and keep you up-to-date. For more information about SAP Group Reporting or other CPM/EPM software solutions: feel free to contact us. We are happy to help.

 

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