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Controlling has to help actively shape the transition to SAP S/4HANA

Bild von Uli Müller, Geschäftsführer bei Linkit Consulting - a valantic company, im Hintergrund ein Gebäude, ein Bild von Post-Its sowie eines Laptopsbildschirmes

Interview with Uli Müller, Managing Director LINKIT Consulting – a valantic company, about controlling questions in connection with SAP S/4HANA

For many companies, the conversion to SAP S/4HANA is a historic opportunity to re-think processes as well as the organizational and data model of the SAP system. In this context, controlling plays a central part since fundamental decisions about corporate management are made here. At the start of the project, it is important to lay the cornerstones for the next few years with the right degree of harmonization and standardization. Uli Müller, Managing Director at LINKIT Consulting – a valantic company, reports from his own consulting practice about which are the critical parameters and which basic decisions influence the success of a S/4 conversion.

Uli, based on your many years’ experience in controlling and corporate management, please tell us about the current controlling situation at many organizations.

Of course controlling as a cross-sectional function is linked to existing logistics processes and it has to support these as well as it can. The core processes of controlling itself are in the record-to-report process (R2R), and this is where many companies are not well-positioned today. This is due on the one hand to technical limitations, but also to lacking standardization and harmonization of corporate structures. Many companies, especially ones that are expanding quickly, have not taken the opportunity in the past to keep a close enough eye on these topics when it comes to acquisitions.

This is how system environments have grown up that can be depicted in a management model only with manual work and compromises. In reporting, there are frequently data models that map existing group requirements poorly and, as a consequence, result in opaque data models with many mapping tables. 

Given the problems you have described, what particular benefits for controlling does an update to S/4HANA bring – also as compared to SAP ERP ECC?

With the radical reorientation of the data model in S/4HANA, many controlling problems from the past solve themselves. The integration of results and market segment calculations into the universal journal alone speeds up the reporting and closing process enormously. But operative corporate planning can also be made more efficient in the new data models. The integration of various reporting and planning dimensions into a data model is the decisive lever for efficiency here. With appropriately good data modeling, all reporting requirements down to the individual item level are fulfilled from both the external and management perspective. Modern reporting interfaces with suitable navigation possibilities are another especially important aspect for controllers. 

And S/4HANA has changed a lot with regard to topics relating to international corporate management – limitations on parallel valuations are a thing of the past, for example. Just as is possible in external accounting, it is now possible in controlling to carry several parallel values.

What are the typical contents of a S/4HANA project in controlling such as the ones that you in the SAP Services Division handle?

As I mentioned before, controlling processes are frequently limited due to lacking harmonization and standardization, a relic of the past. Therefore, an essential task at the beginning of a project is to define the basic parameters and organizational structures so that controlling can generate the relevant KPIs for corporate management. A good example of this is a cost accounting which, due to a 1:1 relationship between controlling group and financial company code, cannot be used for group-wide transparency in calculation. Precisely today, when the topic “international supply chain” plays a large role at many companies, it must be possible to keep a close eye on costs beyond the legal limits and map this in the form of group costing.

With harmonization of the controlling structures, complex reporting processes can also be simplified greatly since particular data transformations are no longer necessary. That’s why it’s important to consider the entire system environment in projects.  

What are your specific recommendations with regard to the optimization of controlling processes with SAP S/4HANA?

Regardless of the specific questions in controlling, you should ask the question about the target image before starting a SAP S/4HANA project and especially formulate the current “pain points.” In the process, you shouldn’t restrict yourself to the digital core of S/4HANA, but rather regard the entire system environment according to end-to-end processes.

In controlling, the concern is in most cases existing solutions in the controlling/reporting and planning sectors.

For the corporate management sector, you should ask yourself whether the current system environment generates the necessary control-relevant KPIs or whether there are reports and KPIs that are not relevant for decision-making. The core question here is: What are the relevant reporting dimensions, and how can I best accommodate these in a data model?

Frequently is is also worthwhile to examine existing planning processes and check for possibilities for modernization. Often planning in this area is marked by a lot of manual steps and in many instances there is a lack of true data integration with the logistics processes. Many companies want integrated planning with simulation possibilities.

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