The Future of Finance

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In today’s volatile world CFOs need to make better educated decisions in much shorter time frames. Technology innovations like in memory computing will allow them to do so by finally enabling real, Real Time Finance. For this purpose, SAP plans to release a significantly renewed solution portfolio on the basis of the SAP HANA platform.

While the impact of Real Time Finance will be revolutionary for the business, customers will be able to migrate to this new paradigm in a non-disruptive, evolutionary manner. This presentation will provide you with an outlook on SAP’s development roadmap in the area of Finance.

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  • Ever since the Financial Crisis, the world has become a very volatile world. Challenges that Finance departments are facing include:Unprecedented volatility in economic conditions in both financial and real marketsIncreased focus on risk including operational and legal risksOn-going changes to regulatory requirements like the planned IFRS/US-GAAP convergence or EMIR/Dodd Frank actsIncreasing globalization that requires Finance to rapidly extend their services to new geographies but also offers new opportunities to move towards global business servicesContinued pressure on margins that forces Finance departments to do more with lessInnovative business models like the trend from product to solution businesses that pose new challenges for both accounting and performance managementCompanies are looking more than ever to their CFOs to guide them through these troubled waters. In this context, the role of the CFO is further evolving.While in the past there has been a long debate about how CFOs are moving up from being a steward towards becoming a strategist, the discussion has further developed in recent years.
  • These leading CFOs drive change by systematically transforming their own Finance organization. In the course of this transformation the scope and role of their organization is significantly changing. When in the past it was sufficient to provide required information to regulatory authorities and requested paper reports to management, it was acceptable to do so with manual local processes.This is no longer the case.The circle of stakeholders who need proper information is widening and Finance organizations need to be much more pre-emptive in managing risks and controls.The most important change is happening with regards to report generation. The big change is from preconceiving the reporting needs of the business and producing a continuously growing “flood” of static reports towards providing a self service information platform that allows business users to generate these reports themselves whenever and wherever they need them. This requires Finance to put much more attention on data governance to ensure consistent data quality in the central system rather than post-processing data manually in local Excel spreadsheets. Once such data quality has been established the freed up time can be utilized for better strategic advisory.All of this is only possible, if today’s manual processes are being replaced by global business processes with consistently high service quality and an equally high degree of collaboration.
  • Technology is a critical enabler of the described Finance transformation.The keyword in this context is “Real Time”. In a highly volatile world, businesses need to be able to respond to changes in their economic environment much more dynamically than it was necessary in the past. Coincidentally, we are witnessing the emergence of a number of disruptive technologies like in-memory, mobile, and cloud computing that all aim to support the same goal: Making enterprises real, Real Time Enterprises.
  • What do we mean with real time? The same level of “real time-ness” that is already a reality in our private lives.Let’s take the example of a family day trip with our car.The dashboard in the car shows speed, fuel level and other critical information in real time.The navigation system proposes a new route with predicted time of arrival based on a new traffic situation in real time.When we arrive at our destination, our smartphone provides us with all relevant information on the history of the site, nearby restaurants and many other things in real time.Do you have the same level of “real time-ness” in your company? In most customers we are seeing, this is not the case.[Remark: This slide has turned out to be one of the most powerful slides of the entire presentation. Without a lot ado, the audience understands intuitively what level of aspiration is meant with “real time” and how much room for improvement they still have in their professional live.]
  • Today’s system landscapes have grown over many years to become a heterogeneous mix of “silo-ed” applications that don’t provide full data transparency to each other.The applications themselves are often not high performing enough in order to process information in real time.But a significant number of customers simply don’t leverage what is already possible today. Either because they are not aware of the possibilities that state-of-the-art Finance solutions are offering or because they are shooting too high in what they believe is necessary in order to substantially improve their current situation.
  • SAP is offering already today a rich and comprehensive portfolio of Finance solutions that all make significant steps in the direction of real time. We are providing integrated end-to-end solutions for five major Finance processes.Further information on SAP’s current Finances solutions are available in other places, for example in our Finance overview presentation.
  • Let’s now direct our view to the future.The envisioned paradigm of the future will be the Real Time Finance organization.We see three major characteristics of a Real Time Finance organization. Real Time Finance organizations need to be Aligned, Agile, and Predictive.Aligned means that they need to work from a transparent single source of truth, at least for reporting purposes, to make sure everyone is working with the same information and no time is lost with reconciling information manually.Agile requires real time finance processes that support instant reactions to changing external conditions.Predictive means gaining unmatched insight and foresight in order to preempt potential future changes of the conditions before such changes become a reality.
  • The main breakthrough innovation that will enable Real Time Finance is in-memory computing, in particular SAP’s new SAP HANA platform.With SAP HANA, it is now possible to store ALL transactional data of even the largest enterprises entirely in main memory and to abolish the need for physically rotating, and therefore slow, hard disks. This change, together with a different way of organizing data in main memory, is providing performance gains of several orders of magnitude.But SAP HANA is more than just an in-memory database. It is in addition:An entire application and integration platformA library of shared business functions that are optimized for use with SAP HANAAn innovation platform for SAP, partners, customers, and startups
  • Alignment is a key prerequisite forany real time organization. An organization can only act in real-time if everyone is “sitting in the same boat, rowing in the same direction”. In our context, this means that everyone is working from a common set of information, provided by a single source of truth. Such a single source of truthcomprises three major elements:First, it provides seamless access to all data, not only financial data, from a single access point. HANA Live, a virtual semantic data model on top of SAP HANA is providing this capabilitySecond, it is about ensuring data consistency across all solutions. This consistency is being provided by SAP HANA as the single repository of shared data and shared methods across all Finance solutionsLast not least, in order to ensure data consistency, Finance solutions have to support all personalized analytics within the system of record. Otherwise, users will continue to extract and maintain data in local spreadsheets. This change requires an unprecedented flexibility and adaptability in reporting as provided by SAP ERP when powered by SAP HANA.
  • Today there are several barriers that prevent realization of a single source of truth, e.g., Several copies of dataIn different data modelsInherent data latencySeparate cashes for performance optimizationIn recent years, computer systems have increased the number of processing cores with large integrated caches. Main memory space has become practically unlimited with the ability to hold all the business data of enterprises of any size. Falling prices have moved processing from Disk/SSD to In-Memory.Memory access is 1M – 10M times faster than disk. Disk-centric computing was also one of the major factors that forced separation of transactional and analytical workloads. Moving data to various locations was necessary for reporting to circumvent network issues. Pre-processing of data then became the necessity to optimize linear data transfers. We do not have to live with those limitations any more.Through advances in data sciences combined with relevant hardware trends, SAP is leading the real-time computing revolution… leveraging the power of in-memory computing to bringing analytics and transactional processingback in one database.This transforms how we construct business applications and our expectations in consuming them.
  • Realization of the single source of truth will occur in up to three stack layers:All accounting records from existing backend systems can be replicated in real time into a single SAP HANA database. Of course it is also possible to consolidate existing backend systems in one SAP ERP system on top of SAP HANA without any replication.Thereby, SAP HANA becomes the single place of storage for all accounting records, essentially a Central Journal. It provides shared data and shared methods to all Finance solutions in higher stack layers.SAP HANA provides seamless access all stored data through SAP HANA Live, a semantic virtual data model.All transactional processing (OLTP) and reporting (OLAP) is performed by SAP’s Finance solutions like SAP ERP, SAP BPC, SAP BW, and SBOP BI on the fly from this shared source of information without creating additional instances or pre-calculated aggregates.The benefits of this approach are not only higher data consistency and significantly reduced reconciliation effort. It also supports a much more flexible and adaptable personalized reporting. End users can configure their own data views on the fly anyway they want them. They can drill-down to line item level and can retain all existing data fields in transaction processing and reporting. They can even flexibly add their own customer-specific dimensions and preserve such additional information in transaction processing and reporting.
  • One of the most important planned innovations for 2014 is the introduction of SAP Smart Accounting. It is essentially an entirely new architecture for SAP ERP Financials. Its main characteristics are:Convergence of FI and CO. There will be one logical document that is the common basis for both regulatory and managerial accounting. Thereby a much higher degree of consistency between FI and CO has been created abolishing the need for time consuming and error prone manual reconciliation.Abolishment of pre-defined aggregates. All aggregation and transaction processing is now performed on the fly based on HANA Live views. The totals and indices in FI and CO will be a matter of the past. This fact is a further move to preserve data consistency throughout the entire technology stack.More flexible reporting. As a beneficial side effect, reports can now be configured by the end user in a very flexible way without requiring any assistance from IT.
  • To summarize, SAP has invested or plans to invest in three major areas in order to implement the idea of a single source of truth:Central journal: Several customer live implementations or proof of concepts have validated the possibility of replicating all accounting records into a SAP HANA-based central journal. This central journal is the basis of all further transaction processing and reporting.Shared data and methods: The SAP HANA platform acts as a central repository of both shared data and shared methods that are being accessed by the various Finance solutions. The first Finance solutions that are fully leveraging this central repository are SAP ERP, SAP BW, and SAP BPC. In the near future, SAP plans to optimize further Finance solutions to make use of these capabilities.New accounting architecture: SAP Smart Accounting will be SAP’s next generation accounting solution, as part of SAP ERP and powered by SAP HANA, with unprecedented data consistency and reporting flexibility
  • Presumably the most important characteristic of acting in real time is agility. The skiing lady in the picture is a great example of what it takes to be agile. First, you need fast gear, in this case fast skiing equipmentHowever, without the ability to recognize bumps in the slope instantly and being able to change the course without delay it is not very likely that the skiing person will reach the finishing line within a competitive timeLast not least, in the case of an unavoidable crash it is necessary to wear protective gear like the helmet to prevent serious damageThe same applies to real time finance processes. Real time processes are about speed and you need to be able to execute transactional processes in real timeBut you also need to provide instant insight to action to the business to respond to changed economic conditions without delayFinally, you better have real time process oversight and risk management capabilities in place to make sure that the impact of potential process failures is limited as much as possible
  • The migration to real time Finance processes, based on SAP HANA, will constitute no less than a next process revolution. Sequential processes of today may be replaced by continuous processes where activities are happening simultaneously, driven only by events rather than being driven by an orchestrated sequence of process steps.This is only possible if any process execution, transactional or analytical, is happening in real-time and if the associated insight to action is made available to decision makers in real time as well. We also believe that novel mechanisms for real-time process oversight will be necessary to ensure compliance and mitigate risks in such novel real-time processes.As you can see from the diagram, acceleration of process bottleneck steps will be an important element and the starting point of the evolution towards real-time processes. But many more enhancements will be necessary and are in fact on SAP’s innovation agenda. These include further process automation as well as new analytical user interfaces in order to make sure that the processed information reaches the end user in real time, anytime, anywhere.
  • Just imagine what such real-time processes could mean for your Finance organization. Here are some examples of real-time innovation for the major Finance processes that SAP is supporting today.We will show in the next slides how planned or already available innovation from SAP will enable the described real-time Finance processes.
  • A major investment focus is the establishment of the (near) real-time period end close. We are referring here only to the preparation of the financial information that is typically being collected and calculated at the month end close. The additional activities that are needed to prepare a full blown quarterly or annual report will still require several days of additional work.Accelerating the month end close substantially will bring several business benefits. It can provideMore timely information for managerial reportingThe ability to forecast the period end close more often and with higher accuracyThe ability to simulate accounting decisions on the flyThe transition to a continuous (soft) close also helps the Finance organization to better balance their workload throughout the entire period avoiding today’s stressful and error prone month end crunch.
  • One important example of real-time acceleration within the period end close is intercompany reconciliation. Intercompany reconciliation is often one of the most labor intensive and time consuming activities at period end. SAP has released new enhancements for SAP ERP that turn intercompany reconciliation from a batch process at period end into a continuous process that can be executed on the fly intra-period.For this purpose SAP has not only accelerated the processing of information and eliminated several batch jobs, it is also providing new user interfaces. The new intercompany reconciliation capabilities require SAP HANA and can be run side-by-side to a current SAP ERP installation.
  • To further improve and accelerate the consumption of information by business users, SAP plans to release a number of Smart Business Cockpits. These new cockpits aim to provide key decision managers in the Finance organization with a 360 overview on their relevant financial data. It is planned to release initially five new cockpits that address the CFO, the Financial Close Manager (first version already available), the Cash Manager as well as Receivables (already available) and Payables Managers. These end user configurable cockpits provide real-time visualization of the most important KPIs for these roles. They also support drill down to several layers of additional information.The new cockpits will require SAP HANA and in most cases also SAP Smart Accounting.
  • We have seen in previous slides how important the right user interfaces are in providing real-time information to end users anytime anywhere.However, SAP is also investing significantly in renewing the entire usability of SAP ERP as part of the Fiori program. SAP plans to release a renewed user experience of SAP ERP Financials initially for the roles of theGeneral Ledger AccountantCost Center Manager (as successor to SAP RealSpend)Collection SpecialistCredit ManagerFurther renewed roles are planned to follow in the mid-term.
  • One of the most significant planned innovations is the release of SAP Smart Cash Management, a newly developed cash management solution.The new solution is not tied to a single SAP ERP system and is able to provide consolidated global cash positions in real time even in the presence of heterogeneous backend systems.It provides new functional capabilities, e.g., in the areas of liquidity forecasting and bank account management, as well as new data visualization capabilities through a dedicated smart business cockpit for cash managers.SAP Smart Cash Management is powered by SAP HANA and can be run side-by-side to an existing SAP ERP solution.
  • Another good example for the transition to continuous processes is the area of receivables management, in particular the collections process.Today, the collections process has a periodic character and consists of several consecutive process steps. First, collection relevant information is being extracted from the back end system. After a review of open cases, a collections work list is produced for a dedicated team of collection specialists. These specialists are working in the back office and contact their assigned customers in order to resolve open collection cases.The downside of this approach is that a separate team of collection specialists is required. These specialists are lacking customer proximity and may even work on the basis of outdated information.It would be much better to involve sales representatives directly in the collections process. However, this is only advisable if they can be equipped with always up-to-date information about the collection status of their customer. There is hardly anything more embarrassing for a sales rep than to complain wrongly about an unpaid invoice based on outdated information.With SAP’s latest innovation, such a direct involvement of sales reps in the collections process has now become a possibility. With real-time information in the hand of sales reps and receivables managers anytime anywhere, the collection process can be turned into a continuous process without the need for periodic data extraction and quality review steps.
  • SAP offers with SAP Receivables Manager and SAP Customer Financial Fact Sheet, both powered by SAP HANA, the necessary tools to support the transition of the collections process from a sequential into a continuous process with direct involvement of the sales agents.SAP Customer Financial Fact Sheet equips sales agents with a real-time, always up-to-date 360° overview of the payment status of their customers. This information is made available on multiple mobile devices ranging from smart phones to tablets. With this information at their fingertips, sales agents have the right tools in their hand to engage with their customers to resolve an open collections case.On the other hand, SAP Receivables Manager provides the receivables with an up-to-date overview on the overall status of open collection cases. This enables the receivables manager to continuously steer the overall collections process without the need for a periodic review of open collection cases.
  • In addition, SAP has released in 2013 an entirely new solution for real-time process oversight, SAP Fraud Management powered by SAP HANA. This new solution leverages predictive algorithms in order to detect potential fraud incidents. It supports the definition of customer-specific fraud identification strategies incl. a simulation of customer-defined strategies based on historic data.SAP Fraud Management also provides new visualization capabilities in order to display all relevant information that is needed in order to assess a potential fraud incident.
  • For the mid-term future, SAP plans to focus development predominantly on three areas in order to make real-time Finance processes a reality:Further process acceleration and automation to reach the goal of the real-time month end close.Additional analytical front-ends in order to facilitate the real-time access of information by business users.Generally, a user experience renewal of existing roles as part of the Fiori development program.
  • The ultimate characteristic of being a real-time Finance organization is the ability to predict the possibilities of the future better than the competition can do. This requires unmatched insight and foresight. Practically, it means that you need to Deeply understand the drivers of your business and develop a quantitative model of your organization based on these driversRecognize trends and anticipate future risks that may affect these drivers and lead to a better forecast of the near-term futureAlign around a joint plan and adapt dynamically to changing economic conditionsIn more technical terms, technology innovations will enable Finance organizations to be more predictive by providing advanced analytics as well as novel ways of planning, modeling, simulation, and forecasting.
  • One particular challenge in this context is the ability for entire organizations to plan dynamically. As a consequence of the “new normal”, real world conditions are changing faster and more disruptively than ever before. Examples are the rapidly changing demand in consumer-oriented industries or rapidly changing commodity prices that are relevant for many producing industries.On the other hand, business models of companies are also getting more complex than ever before. This means that the impact of changing economic conditions on company plans will often be very complex too.Companies therefore need much more flexible ways to adapt their plans. This means to move away from the traditional, rigid annual planning and budgeting cycle towards an integrated rolling plan for the entire company that is adapted periodically within the fiscal year. In order to speed up the planning cycle it is necessary to link the independent plans of the individual business units into the rolling plan for the entire group in real-time.
  • There are a number of functional requirements for a planning solution to fully support integrated business planning (see list on the slide). These requirements are driven by the need to simultaneously provideStrong governance and integration mechanisms for the owner of the central plan andFar reaching planning autonomy for the owners of the individual plans withSeamless integration to SAP ERP in order to accelerate the development of planning models by re-using existing data and data structuresIt is a market reality that there is today no single planning solution in the market that is supporting all of these requirements simultaneously. That’s the main reason why many SAP customers are still utilizing hybrid planning landscapes consisting of SAP Business Planning and Consolidation, SAP BW-IP, and planning capabilities in SAP ERP. While there exist integration points between these planning solutions and with SAP ERP, the depth of integration still leaves significant room for improvement. Obviously, this situation is not getting any better when employing 3rd party planning solutions.
  • This situation will completely change with the release of SAP Business Planning and Consolidation 10.1 and the planned release of SAP Smart Accounting.SAP Business Planning and Consolidation 10.1 will provide all necessary capabilities for integrated business planning in one single solution which will give it a strong differentiation in the market. It will do so by providing a new unified planning model that combines the strengths of both current SAP Business Planning and Consolidation and SAP BW-IP in one single solution. By virtue of a tight embedding in SAP Smart Accounting it will also replace the current planning capabilities in SAP ERP.Functional HighlightsUnified models based on BW meta-data for enterprise wide planning scenariosRich set of pre-defined planning functions and reporting capabilities, e.g. disaggregation, repost, revaluation, currency translation, unit conversion, inverse formula calculationsHighly flexible session based simulations, including e.g. master data planning Unified user interface for planning and reportingKey DifferentiatorsBW data warehousing capabilities provide well established and proven data consolidation and harmonization services Best-of-breed data extraction for SAP Business Suite increases flexibility, reduces maintenance and lowers TCODeep integration with SAP ERP for closed loop scenarios, e.g. extraction of actuals and write-back of planning resultsHigh performance due to the use of dedicated EPM operators within HANAPlatform for various planning applications, e.g. SAP CRM-TPM and Planning for Retail
  • This particular example demonstrates how group level P&L planning (that used to be the domain of SAP BPC) and operational cost center planning (that used to be the domain of SAP ERP) will be supported by a single, very user-friendly planning environment, SAP Business Planning and Consolidation 10.1.The general ledger accounts are the structural dimension that ensure alignment between top-level P&L planning and bottom-level cost center planning. Updated plan data from departmental plans can roll up into group plans in real-time without the need for any batch updates.
  • To summarize, SAP has defined three next generation development areas for the near- to mid-term future in order to help customers to reach an unmatched level of insight and foresight.With SAP Business Planning and Consolidation 10.1 and the planned release of SAP Smart Accounting, SAP will support an unprecedented level of integrated business planning. It is also planned to connect existing special purpose planning solutions from SAP with this new generic planning environment.Another focus area will be to embed next generation capabilities for dynamic business planning in SAP BPC to better support, e.g., driver-based planning, easy-to-use simulation models and predictive forecasting.Finally, it is planned to evolve SAP Business Planning and Consolidation into a single analytical solution that seamlessly supports planning, real-time consolidation, profitability analysis and reporting.
  • SAP offers multiple choices for adopting the presented new innovation that is powered by SAP HANA. You canRun many of the presented innovation scenarios side-by-side to an existing SAP ERP system. In this case, only the new or enhanced capabilities are run on a SAP HANA platform that replicates to the existing databaseYou can also establish a new virtual ERP system (central journal) that fully runs on SAP HANA and replicates in real time against the existing traditional ERP systemsMigrate your entire SAP Business Suite to run on SAP HANA. In this scenario you will likely want to consolidate existing ERP systems in one instance of SAP ERP
  • There are several good starting points for your journey towards a Real Time Finance organization. Most of them provide an acceleration of central reporting capabilities on the basis of a side-by-side deployment of SAP HANA. In these scenarios, SAP ERP will continue to run on a classic database. SAP offers a number of side-by-side deployable accelerators for SAP ERP, e.g., acceleration of profitability analysis (CO-PA) or intercompany reconciliation.In addition, you can run SAP HANA-optimized releases ofSAP NetWeaver Business WarehouseSAP Business Planning and ConsolidationSAP Governance Risk and Compliance
  • A next step would be to migrate your entire SAP ERP system to SAP HANA. SAP has launched SAP Business Suite powered by SAP HANA in January 2013. Since then, many customers have successfully migrated their SAP Business Suite systems to run on SAP HANA. Here are the names of a few customers with an implementation of SAP ERP powered by SPA HANA that can be referenced publicly. There are already many more customers live and there is a significant pipeline of ongoing or planned migration projects.Since August 2013, SAP is running its entire operational system landscape, both transactional and for reporting, successfully on SAP HANA, incl. SAP ERP and SAP CRM. We have seen already a number of very convincing benefits and expect many more as we are optimizing our Finance processes to make use of the new system capabilities.
  • SAP plans to release a number of very significant innovations in the near-term that aim to capture the full potential of SAP HANA in Finance.The most important release will be SAP Smart Accounting, the next generation accounting architecture of SAP ERP. It will also include a much tighter integration with SAP Business Planning and Consolidation.SAP Smart Cash Management is an entirely new cash management solution that also leverages the next gen architecture principles of SAP Smart Accounting.Last not least, SAP plans to provide a fully renewed user experience for SAP ERP. The first renewed roles in Finance are planned to be released in the near term.
  • You can adopt SAP’s next generation architecture for Finance in an evolutionary, non-disruptive way leveraging past investments like in the outlined five step approach. This sets SAP’s next gen approach apart from our competitors (like Workday or Oracle Fusion) that require an entirely new ERP implementation or that forces customers to sacrifice critical industry-specific capabilities of their current systems.The presented maturity steps are only an illustrative example. You can start with several side-by-side implementation steps to minimize the risk and migrate SAP ERP to SAP HANA at a later point in time. But you can also change the sequence of these adoption steps in many different ways. For example, you can start with migrating your entire SAP ERP system technically to SAP HANA to simplify the architecture and then optimize gradually on the basis of a common SAP HANA platform.
  • Last not least, we are also offering a broad choice of deployment options. All innovations that were shown in this presentation can be deployed On Premise. However, they can also be deployed in the new SAP HANA Enterprise Cloud. In fact, SAP is running its own ERP on HANA in the SAP HANA Enterprise Cloud. The main advantage of the SAP HANA Enterprise Cloud is that you don’t have to invest in new hardware or establish new platform management skills in your IT organization. But you will retain the possibility to manage your Finance solutions individually.There is also a growing number of public cloud solutions for Finance that are fully managed by SAP. Currently, these areSAP Cloud for Travel and ExpenseAriba NetworkSAP Financial Services NetworkWe also have a new public cloud Endorsed Business Solution from our partner Blackline that supports account reconciliation and other financial close activities.
  • Let’s come briefly back to our day trip example that has shown how real-time information is already a reality in our personal lives.This presentation has shown how Real Time will soon become a reality in Finance too. Like in the personal life example, it will provide A single source of truth, or at least a single source of information available anytime and anywhereReal time finance processes with real-time and often continuous process execution, instant insight to action and real time process oversightUnmatched insight and foresightAll of this will have a profound impact on the daily work of the employees in a Finance organization. It will make life easier but also profoundly shift the focus of work. We leave it to you to imagine what this transformation may mean for you and your colleagues personally.
  • In a nutshell, there are three key take aways from this presentation:Technology innovations like in memory computing will trigger a new process revolution, enabling Real Time FinanceFor this purpose, SAP is providing a renewed Finance solution portfolio on the basis of the SAP HANA platformSAP supports customers to flexibly choose their own non-disruptive evolutionary path towards real time
  • The Future of Finance

    1. 1. #AribaLIVE The Future of Finance Dr. Martin Naraschewski, Vice President, SAP AG Wednesday 9th April, 2014 © 2014 Ariba – an SAP company. All rights reserved. @ariba
    2. 2. © 2013 SAP AG or an SAP affiliate company. All rights reserved. 2 The information in this presentation is confidential and proprietary to SAP and may not be disclosed without the permission of SAP. This presentation is not subject to your license agreement or any other service or subscription agreement with SAP. SAP has no obligation to pursue any course of business outlined in this document or any related presentation, or to develop or release any functionality mentioned therein. This document, or any related presentation and SAP's strategy and possible future developments, products and or platforms directions and functionality are all subject to change and may be changed by SAP at any time for any reason without notice. The information in this document is not a commitment, promise or legal obligation to deliver any material, code or functionality. This document is provided without a warranty of any kind, either express or implied, including but not limited to, the implied warranties of merchantability, fitness for a particular purpose, or non-infringement. This document is for informational purposes and may not be incorporated into a contract. SAP assumes no responsibility for errors or omissions in this document, except if such damages were caused by SAP´s willful misconduct or gross negligence. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates, and they should not be relied upon in making purchasing decisions. Legal Disclaimer © 2014 SAP AG or an SAP affiliate company. All rights reserved. 2
    3. 3. CFO Today’s Volatile World Needs Strong CFOs Steward Operator Strategist 3© 2014 SAP AG or an SAP affiliate company. All rights reserved. 3
    4. 4. 4 Regulatory Compliance Report Generation Manual local Processes Stakeholder Needs Internal Controls Risk Management Data Governance Information Self Service Strategic Advisory Global Processes Collaboration Service Quality Strong CFOs Transform Their Own Organization © 2014 SAP AG or an SAP affiliate company. All rights reserved. 4
    5. 5. Real Time – Paradigm for a Volatile World © 2014 SAP AG or an SAP affiliate company. All rights reserved. 5
    6. 6. Our Private Lives Happen in Real Time 6© 2014 SAP AG or an SAP affiliate company. All rights reserved. 6
    7. 7. © 2014 SAP AG or an SAP affiliate company. All rights reserved. 7 Legacy platforms and ‘silo’ applications Today’s Barriers ‘Slow pedaling’ business applications Need to understand the ‘art of the possible’ © 2014 SAP AG or an SAP affiliate company. All rights reserved. 7
    8. 8. Do You Understand the Art of the Possible? Accounting and Financial Close Financial Planning and Analysis Treasury and Financial Risk Management Collaborative Finance Operations Enterprise Risk and Compliance Management Collaborative Invoice to Pay Travel Management Receivables Management Enterprise Governance, Risk, and Compliance Access Risk Management Global Trade Compliance Accounting Entity Close Corporate Close Develop and Translate Strategy Planning, Budgeting and Forecasting Profitability and Cost Analysis Payments and Bank Communications Cash and Liquidity Management Debt and Investment Management Monitoring and Reporting Reporting and Disclosure Financial Close Governance Commodity Risk Management Shared Services Framework Financial Risk Management Sustainability Reporting © 2014 SAP AG or an SAP affiliate company. All rights reserved. 8
    9. 9. © 2014 SAP AG or an SAP affiliate company. All rights reserved. 9 ALIGNED, AGILE, PREDICTIVE • Single source of truth • Real-time finance processes • Unmatched insight and foresight Real-Time Finance © 2014 SAP AG or an SAP affiliate company. All rights reserved. 9
    10. 10. © 2014 SAP AG or an SAP affiliate company. All rights reserved. 10 In-Memory Computing Is a Key Enabler of Real-Time Finance SAP HANA PLATFORM Business and Processing Engine Events Stream | Planning | Calculation | Predictive Analytics Application Services Application Server | UI Integration Services | Web Server Database Services Transactions | Analytics | Partitioning Compression | Availability | Encryption | Virtualization Integration Services Mobile | XaaS | High-volume Replication | Real-time Replication | Hadoop Rules | Text Mining | Search | Application Function Libraries Developers Data Scientists Business Users CustomersExecutives Applications & Tools Industry | LoB | Consumer | Analytics | Social | Cloud | Mobile
    11. 11. © 2013 SAP AG or an SAP affiliate company. All rights reserved. 11 Aligned Single Source of Truth Provide seamless access to all your financial data Ensure data consistency across all Finance solutions Support personalized analytics within the system of record © 2014 SAP AG or an SAP affiliate company. All rights reserved. 11
    12. 12. © 2014 SAP AG or an SAP affiliate company. All rights reserved. 12 One data instance as common basis for Transactions, Analysis, and Reporting • A single data copy in a shared data model • Aggregation of elementary records in real time • From serial processes to event driven collaboration • Various copies of data in different data models • Inherent data latency and alignment issues • Serial processes to ensure data quality Separation of Transactions, Analysis, and Accelerated Reporting SAP HANA (DRAM) Transact Analyze Accelerate Cache SAP HANA Enables a Single Source of Truth © 2014 SAP AG or an SAP affiliate company. All rights reserved. 12
    13. 13. © 2014 SAP AG or an SAP affiliate company. All rights reserved. 13 Customer Benefits of Single Source of Truth SAP ERP SAP HANA Platform Single source of truth SAP BPC SAP BW, BI Legacy ERP Legacy ERP Legacy ERP Corporate alignment • Fully harmonized data • Reduced reconciliation effort Personalized analytics • User-defined data views • Drill-down to line item level • All relevant dimensions • Customer-specific dimensions Aggregation on the fly Central Journal
    14. 14. © 2014 SAP AG or an SAP affiliate company. All rights reserved. 14 SAP Smart Accounting, SAP’s Next Gen Accounting Solution Logistics Document CO Document FI Document Totals & Indices Financial Accounting Totals & Indices Management Account. From … Stability Processing Analytics CO Document FI Document Flexibility HANA views on the fly Pre-Defined Aggregates Flexibility Stability Processing Analytics Logical document Logistics Document … To Customer benefits • Harmonized internal and external reporting • Account-driven data model • Significantly reduced reconciliation effort • Higher flexibility in reporting and data customization • Significantly reduced memory consumption
    15. 15. Single Source of Truth Central journal Replicate accounting records from legacy systems in real-time into a virtual central journal Shared data and methods Share data, data models, and methods that are stored within SAP HANA across solutions New accounting architecture Reporting on the fly based on individual records with one logical document for both FI and CO © 2014 SAP AG or an SAP affiliate company. All rights reserved. 15
    16. 16. © 2013 SAP AG or an SAP affiliate company. All rights reserved. 16 Agile Real-time finance processes Run adaptable end-to-end processes with real-time execution Provide instant insight to action based on real-time data Support real-time process oversight and risk management © 2014 SAP AG or an SAP affiliate company. All rights reserved. 16
    17. 17. © 2014 SAP AG or an SAP affiliate company. All rights reserved. 17 The Real-Time Process Revolution Process status analytics Transaction monitoring Control and risk analytics Real-time process oversight Personal analytics Elimination of batch execution Real-time reporting Intra-period simulations Continuous intra- period execution Acceleration of bottleneck steps Instant insight to action Real-time process execution Continuous Process
    18. 18. © 2014 SAP AG or an SAP affiliate company. All rights reserved. 18 Imagine – Finance Processes in Real Time Intra-period soft closes with pre-close simulation, eliminating dependency on batch jobs at month end Real-time visibility into cash and risks related to financial assets and counterparties across entire group Continuous monitoring of customer payments and automated invoice reconciliation with real-time process analytics Real-time controls and predictive risk analytics to identify areas of increased risk and to detect potential fraud events Instant performance insight to action based on real-time information, provided on desktop and mobile devices Accounting and Financial Close Financial Insight to Action Treasury and Financial Risk Collaborative Finance Operations Enterprise Risk and Compliance
    19. 19. © 2014 SAP AG or an SAP affiliate company. All rights reserved. 19 Period End Close: Transition to Continuous Processing Processes designed for real-time operations eliminate close bottlenecks Real-time analytics for process oversight Local close processes involve >100 tasks with multiple batch bottlenecks Benefit Drivers • Eliminate end of period batch bottlenecks • Continuous intercompany reconciliation • Continuous financial reporting visibility • CO-PA & line item detail reconciliation • Automation for routine tasks • Full management visibility of close tasks Challenges • Multiple batch run dependencies • Batch bottlenecks delay downstream activities • High error correction efforts • Complex issues delayed till post close • Time-pressured resolutions • Delayed visibility to reporting Expected Benefits 50% Reduction in GL posting corrections 60% Reduction in time to reconcile revenue recognition issues 70% Reduction in time to resolve allocations Close Batches Consolidatio n Batches Close & Consolidation Initial Period Traditional Close Close & Consolidation Initial Period Reporting on-demand Close enclosed by HANA
    20. 20. © 2014 SAP AG or an SAP affiliate company. All rights reserved. 20 Period End Close: Intercompany Reconciliation on the Fly FBICR3 Reconcile Documents FBICS3 Select Documents FBICA3 Assign Documents Automatically New user experience Improved data drill down Reduced time to close books • Improved and accelerated automated matching • No more batch jobs, real- time analysis supports continuous intra-period process execution • Improved user experience and enhanced data drill down reduce manual reconciliation effort • Better process oversight through new management dashboard
    21. 21. Smart Business Cockpits Planned Cockpits • Chief Financial Officer • Financial Close Manager • Cash Manager • Receivables Manager • Payables Manager © 2014 SAP AG or an SAP affiliate company. All rights reserved. 21
    22. 22. Next Gen User Experience Fully Renewed User Roles • General Ledger Accountant • Cost Center Manager • Collection Specialist • Credit Manager More roles planned to follow © 2014 SAP AG or an SAP affiliate company. All rights reserved. 22
    23. 23. © 2014 SAP AG or an SAP affiliate company. All rights reserved. 23 Treasury and Financial Risk: SAP Smart Cash Management • Analyzing global bank balances and cash positions based on data from SAP and non-SAP systems • Integrated liquidity forecasting including cash flow analysis using multi dimensional real-time analytics • Central Bank Account Management including overdraft limit analysis, bank risk analysis, signatory management and workflow support • Smart Business for Cash Managers, a cockpit to monitor critical KPIs, also on a mobile device
    24. 24. © 2014 SAP AG or an SAP affiliate company. All rights reserved. 24 Receivables Management: Transition to Continuous Process Challenges • Resource intense • Manual preparation • High error rate • Multiple process flows • No situation context for resolution • Low resolution rate Benefit Drivers • Executive management cockpit • Field alerts & payment status in real-time • Integrated field & AR team collaboration • Proactive field resolution • Automated payment matching Expected Benefits 25% Lower DSO 10% Lower Overdue A/R 22% Lower A/R Write-offs 35% Reduction in FTE's for A/R Preparation Clarification with customer Review open cases Monthly1 2 3 4 Automated AR processing Resolution with customer Continuous and alert driven
    25. 25. © 2014 SAP AG or an SAP affiliate company. All rights reserved. 25 Receivables: System Support for Continuous Process SAP Receivables Manager supporting the Receivables Manager in Finance to monitor a continuous process SAP Customer Financial Fact Sheet enabling sales representatives to resolve open issues directly with the customer Real time
    26. 26. Process Oversight: SAP Fraud Management Prevent fraud through multi-rule strategies to calculate risk scores, and stopping transactions Detect fraud online and real time within business processes, and by mass detection Investigate fraudulent transactions efficiently with alert management capabilities and network analyzer tool Optimize detection strategies through real-time calibration and simulation on current and historical data © 2014 SAP AG or an SAP affiliate company. All rights reserved. 26
    27. 27. © 2013 SAP AG or an SAP affiliate company. All rights reserved. 27 Real Time Finance Processes Real-time month end close Accelerated close with intra-month reconciliation for real-time reporting and pre-close simulation Real-time personal analytics Flexible analytics for instant data access with drill-down along any dimension down to line item level Next gen user experience New role-based user interfaces with embedded real-time analytics and mobile access for business users © 2014 SAP AG or an SAP affiliate company. All rights reserved. 27
    28. 28. © 2013 SAP AG or an SAP affiliate company. All rights reserved. 28 Predictive Unmatched insight and foresight Deeply understand the drivers of your business Recognize trends and anticipate future risks Align around a joint plan and adapt dynamically 28© 2014 SAP AG or an SAP affiliate company. All rights reserved. 28
    29. 29. © 2013 SAP AG or an SAP affiliate company. All rights reserved. 29 One rolling plan for the entire group Plan autonomy for the businesses Demand signals and smart forecasts Update of the group plan on the fly Dynamic Planning Rapidly changing customer demand High volatility of market prices Disruptive external shocks New untested business models Volatile World © 2014 SAP AG or an SAP affiliate company. All rights reserved. 29
    30. 30. OperationalPlanning StrategicPlanning ProfitabilityPlanning Procurement Planning Cost Planning Production Planning Revenue Planning Marketing Planning Investment Planning Price Planning BalanceSheetandProfit&Loss Planning Sales Planning Headcount Planning Dynamic Planning through Integrated Business Planning © 2014 SAP AG or an SAP affiliate company. All rights reserved. 30
    31. 31. © 2014 SAP AG or an SAP affiliate company. All rights reserved. 31 System Requirements for Integrated Business Planning Corporate Financial Plan de-central satellites De-central operational plans De-central operational plans Sub-plans Sub-plans LoB Forecast (e.g. Sales) 2 1 3 4 • Central plan governance and process orchestration for group controller • Full planning flexibility and autonomy for owners of departmental plans • Access to master data and actuals from ERP for rapid modeling and planning • Availability of plan data in ERP for variance analysis • Single planning solution for low TCO and high usability
    32. 32. © 2014 SAP AG or an SAP affiliate company. All rights reserved. 32 SAP Business Planning and Consolidation 10.1 • Unification of current BPC and BW capabilities in a single model for planning and consolidation • Unified models based on BW meta-data utilizing proven data harmonization services provided by BW • Seamless integration with SAP ERP • End-user centric plan configuration and planning capabilities (incl. UI) provided by BPC NW 10.0 • Support for integrated business planning, dynamic modeling and simulation • HTML5 UI support for device-independent planning SAP HANA Platform SAP ERP / 3rd party ERP SAP NetWeaver /SAP Business Warehouse EPM Excel Add-in/HTML 5 Web UI SAP Business Planning and Consolidation 10.1, version for SAP NetWeaver BPC NW and BW-IP come together in Unified BW-based model Introducing SAP Business Planning and Consolidation 10.1 BPCBW
    33. 33. © 2014 SAP AG or an SAP affiliate company. All rights reserved. 33 Example: Integrated Financial Planning • Single planning solution for group P&L plan and individual cost center plans, fully embedded in ERP • Real time access to ERP master data and actuals • Planning for years or entire account segments and disaggregation to periods and individual accounts Plan data from departmental plans roll up into group plan in real time, no batch updates required
    34. 34. © 2013 SAP AG or an SAP affiliate company. All rights reserved. 34 Unmatched Insight and Foresight Integrated business planning Facilitate collaborative planning processes, linking departmental plans to a central plan Dynamic business planning Provide new user experience for driver based planning, simulations, and predictive forecasting Single analytical solution Provide single solution for planning, real-time consolidation, profitability analysis, and reporting © 2014 SAP AG or an SAP affiliate company. All rights reserved. 34
    35. 35. Adopt Innovation at Your Own Pace SAP Business Suite powered by SAP HANA SAP ERP SAP HANA SAP Business Suite SAP HANA as side-by-side scenario Any DB SAP ERP SAP HANA SAP Business Suite Central journal on SAP HANA SAP ERP SAP HANA SAP ERP © 2014 SAP AG or an SAP affiliate company. All rights reserved. 35
    36. 36. SAP HANA Accelerators SAP NetWeaver Business Warehouse SAP Governance Risk and Compliance SAP Business Planning and Consolidation Starting Your Journey towards Real Time SAP ERP SAP HANA side-by-side © 2014 SAP AG or an SAP affiliate company. All rights reserved. 36
    37. 37. DRIVES BUSINESS REINVENTION, MODERNIZATION AND ACCELERATION Adopting SAP ERP powered by SAP HANA © 2014 SAP AG or an SAP affiliate company. All rights reserved. 37
    38. 38. Heading to the Next Curve in 2014 © 2014 SAP AG or an SAP affiliate company. All rights reserved. 38 SAP ERP SAP HANA SAP Smart Cash Management Integrated Financial Planning SAP Smart Accounting
    39. 39. © 2014 SAP AG or an SAP affiliate company. All rights reserved. 39 Evolution to Revolution – Possible Migration Path to Real Time Level 1 Level 5 Level 2 Level 3 Level 4 Real Time Reporting • CO-PA, NMA • BW, BPC, GRC First Real Time Processes • HANA Accelerators for month end close • Reconciliations • Receivables New Solutions on SAP HANA • SAP Fraud Management • SAP Smart Cash Management* • SAP BPC 10.1 (unified model) Core Solution on SAP HANA • SAP ERP powered by SAP HANA • SAP Smart Accounting* • Central Journal (optional) • Further acceleration of month end close Fully Real Time Processes* • Near real time month end close • Integrated financial planning • Smart Business Cockpits • New user experience • All processes in real time Side-by-side deployment of SAP HANA SAP ERP powered by SAP HANA * Lab Preview
    40. 40. Your Choice of Deployment Option On Premise SAP HANA Enterprise Cloud Public Cloud SAP Cloud for Travel and Expense Ariba Network SAP Financial Services Network 40© 2014 SAP AG or an SAP affiliate company. All rights reserved. 40
    41. 41. What Will our Professional Lives Be in Real Time? 41© 2014 SAP AG or an SAP affiliate company. All rights reserved. 41
    42. 42. Key Take Aways Technology innovations like in memory computing will trigger a new process revolution, enabling Real Time Finance For this purpose, SAP is providing a renewed Finance solution portfolio on the basis of the SAP HANA platform SAP supports customers to flexibly choose their own non-disruptive evolutionary path towards real time © 2014 SAP AG or an SAP affiliate company. All rights reserved. 42
    43. 43. Thank You Contact details: Dr. Martin Naraschewski Vice President, Finance Solutions Dietmar-Hopp-Allee 16, D-69190 Walldorf +49-6227-7-49602

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