If you are an SAP S/4 HANA user or are on the roadmap to deploy S/4 HANA, then SAP S/4HANA Finance for Group Reporting is SAP’s new strategic product for financial consolidation and management reporting.

Available for both SAP S/4HANA and SAP S/4HANA Cloud, SAP’s new consolidation software unifies an organisation’s entity close and group close processes on a single system, facilitating drill-down directly to the document level for fast analysis, better decision-making and accelerated financial close process.

Enterprises that use SAP BPC today will carry on using this consolidation system until their changeover to Group Reporting. Given that many companies have decided to delay their S/4 adoption, BPC will be used for longer than originally planned. This may present a problem if the equipment hosting their BPC is nearing end of life.

Organisations will need reliable use of BPC over the next few years, however there will be no appetite to invest in new infrastructure that will only be wasted when their future S/4 is rolled out.

Businesses should consider moving BPC to a Managed Service with an SAP BPC provider, to deliver the reliability needed today, resources and expertise to manage for the next few years, and the flexibility to protect any investment towards S/4 in the future.

Sap bpc road to group reporting

Many large organisations – especially global enterprises that have multiple subsidiaries or operate in multiple countries, regions or markets – will be considering Group Reporting to consolidate data that comes from various entities. If the company has grown through several mergers or acquisitions, it is likely they will be trying to consolidate financial data that is from a multitude of different source ERP or finance systems.

Some parts of the group may have already moved to the newer S/4HANA platform, which can seamlessly integrate with their desired Group Reporting. However, it’s more likely that to be that many parts of the organisation have not yet moved to S/4HANA and will still be operating with predecessors, like ECC6. There may also be non-SAP systems in the mix, especially if the business has grown through acquisition rather than from organic growth.

Given the impact of COVID-19 and SAP’s extension to the End of Support dates of the pre-HANA suite from 2025 to 2027/2030 in February this year, any current appetite to move to S/4HANA is likely to be much less than it was back in 2019, before these significant and disruptive realities. For organisations planning to adopt SAP Group Reporting as their end goal for delivering fully consolidated accounts across their businesses, this delay may cause significant challenges as they will need to use their existing consolidation system like SAP BPC for more years than was originally planned.

Until all parts of the business have moved from their legacy transactional systems to a single, unified system on S/4HANA, the only way to allow S/4HANA Group Reporting to provide summarised information – extracted from multiple transactional data sources – is through individual interfaces with each source.

When all the legacy transactional systems have been migrated to S/4HANA, then Group Reporting will seamlessly integrate with all sources, but if the business needs a consolidation solution before this they will need these individual interfaces. Enterprises can build these interfaces from their non-S/4HANA transactional systems whether they are ECC 6 or even non-SAP systems. However, these interfaces are expensive and time consuming to implement as they require the building of new templates, managing the process of applying them, testing, revising and finally implementing for production.

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SAP BPC (Business Planning & Consolidation) is a very mature product and is widely used today by many global organisations. SAP BPC HANA was the first SAP product to take advantage of the powerful capabilities and features of HANA when launched back in 2012. SAP BPC has an even longer history of providing consolidation solutions under the SAP brand and prior to that under the name of OutlookSoft, which SAP acquired in 2007. There have been several versions of SAP BPC, utilising different types of databases over the years, including Microsoft SQL and NetWeaver, as well as the latest version which runs on BW/4HANA.

Today SAP BPC is relied on by many large enterprises not just for planning, budgeting and consolidation but for all types of analytics. However, it is the consolidation functionality that is essential for the production of statutory accounts, and submissions to investors and stock markets, with huge compliance implications for failure. With significant investment already made in these systems and their staff training and competence over the years, SAP BPC has remained the reliable option used by many in group finance and subsidiary departments.

Newer solutions like SAP Analytics Cloud (SAC) will play a centre role in the future SAP portfolio as the key analytics engine for Intelligent Enterprises, however SAC doesn’t support technical consolidation and so will not replace any of the versions of SAP BPC. This was recently confirmed by SAP’s Vice President Solution Management & Product Strategy and Head of Product Management SAP Analytics.

Many organisations that have adopted, or will be adopting, S/4HANA across their businesses are likely to adopt SAC to provide their analytics and Group Reporting for their financial consolidation.

Existing SAP BPC users will need to carry on consolidating their data sources with this system until there is a unified S/4HANA environment in order to switch over to the newer S/4HANA Group Reporting system. Implementing Group Reporting before this time will require the costs of developing these individual interfaces mentioned earlier, only to be discarded when they do move over to S/4HANA. Using BPC until that time eliminates these unnecessary costs.

However, as these extra years for the BPC system were not planned for, many organisations may have concerns about running the system for longer, especially if running on old infra-structure and worried about the reliability. Companies in this situation can now consider other alternative options that do not require big investment or long commitments.

Extending use of their BPC system for another year or even a few years, knowing that a changeover to S/4HANA is in the pipeline, there will be no desire to waste investment by purchasing new equipment, any more than spend extra cash to build short term interfaces for a Group Reporting system. These users should consider migrating their BPC system from on-premises to cloud. Cloud will give them the reliability they need and the flexibility to extend the use of the system over an unknown time period.

Hosting servers

Unlike on-premises equipment, which can only serve the current need, cloud offers the flexibility to change to newer systems like S/4HANA as and when companies are ready to move over. BPC hosting providers can not only manage their cloud infra-structure, but also take away some of the day-to-day headaches associated with running their BPC system. An SAP Platform that comes with a managed service will take care of all the elements required to run the application at the SAP middleware and all layers below. There will also be different types of cloud options such as private or public clouds.

Some Enterprises will have also made strategic decisions to use particular vendors – such as Microsoft Azure – and the preferences, priorities and policies on future cloud adoption can affect which solution is adopted. Critical services like platform continuity, as well as routine maintenance services, could be provided by a BPC MSP who will have considerable expertise and experience in managing this application. Some providers will also allow users to bring their own application licenses, to protect their previous investment on perpetual licenses already purchased.

Continuing to use SAP BPC until the new S/4HANA system is available to each business/market will reduce the risk of transition, whilst providing an incentive to businesses to move forward with their S/4HANA journey. Platform services from an MSP proficient in hosting SAP BPC can provide a way to extend the use of the current BPC system until this time and protect investments made now and in the future as the business transitions to S/4HANA. The business community would use or continue to use the BPC system as the interim solution, reducing change and training requirements and supporting a stable management control environment which will be a more cost effective and less risky approach towards Group Reporting.