SAP Central Finance Architecture Explained

Many large organisations have various ERP systems both within and outside of their organisations. Certain parts of the organisation could be SAP ECC, while other areas of the business could be SAP S/4HANA – or even a non SAP ERP system. This landscape of multiple ERP systems causes many challenges in financial reporting, reconciliation and general ledger management.

SAP Central Finance is a solution for bringing together financial data from source systems into one centralized SAP S/4HANA system. SAP Central Finance Architecture enables finance professionals and SAP consultants to understand the process of centralising data replication, mapping and processing and monitoring within the landscape.

What Is SAP Central Finance Architecture?

SAP Central Finance Architecture is the technical and functional architecture that facilitates the replication of financial transactions from source systems to a central SAP S/4HANA Finance system.

Financial consolidation Central Finance enables an organisation to have one financial reporting environment in place without the need to replace all of their ERP systems straight away. Financial transactions from source systems such as SAP or other non-SAP supported systems can be replicated and then loaded into the Central Finance system.

This approach will allow a staged move to SAP S/4HANA while running your existing operational systems.

What Are the Main Components of SAP Central Finance Architecture?

In a typical SAP Central Finance landscape, there are three main parts: the SAP source systems, the SAP Landscape Transformation Replication Server, and the SAP Central Finance target system.

1. Source Systems

Source systems – ERP systems in which business transactions are first created and posted. These include SAP ECC, SAP S/4HANA and supported non-SAP ERP systems.

For instance, the company has three SAP systems (as described in the previous section): one each for their South African, Indian and UK businesses. Each business has one integrated set of books. These are the sources of financial data feeding into the Central Finance system.

2. SAP Landscape Transformation Replication Server (SLT)

SAP SLT (SAP Landscape Transformation Replication Server) is a critical technical component of a standard Central Finance architecture.

It facilitates the replication of relevant data from source systems to the Central Finance target system. SLT uses database triggers and replication technology to detect the changes and replicate the relevant data.

This is to aid continued replication of the financial transactions following the data load.

3. Central Finance Target System

The target system of Central Finance is SAP S/4HANA. It is the central system in which financial transactions originating from source systems are received and processed.

The target system offers a common financial structure for reporting and analysis. SAP S/4HANA functions, such as the Universal Journal, are employed to unify financial accounting and controlling data.

How Does SAP Central Finance Data Replication Work?

Data Replication is one of the most critical activities within SAP Central Finance Architecture. It enables the flow of financial data from heterogeneous source systems to the central SAP S/4HANA.

The process generally involves the following steps:

• Data is copied from the source to the final target system (Central Finance).
• Data Replication SAP SLT can propagate the continuous change data and financial transactions from the connected source system.
• Data Mapping: Mapping the source data to the relevant master data and structure in the Central Finance system.
• Document Processing: The Central Finance system handles incoming the financial data and generates the related accounting documents.
• Error Monitoring: Errors and failed postings can be checked, and remedied, via the relevant monitoring tools.

The exact replication infrastructure is based on the Source system, SAP Release, Integration scenario and project requirements.

What Is the Role of Data Mapping in SAP Central Finance?

An ERP system from a different vendor may have different account numbers, company codes, cost centres, profit centres and so forth in its master data. These must be harmonized before the information can be centrally processed.

In SAP Central Finance, you use mapping features to map the source-system values to the target-system values.

For instance, two subsidiaries may use different general ledger accounts numbers to record similar types of business expenses. The mapping links the source accounts to the correct target accounts in the global reporting structure.

Business mapping may involve:

• General ledger accounts.
• Company codes.
• Cost centres.
• Profit centres.
• Other relevant financial master data.

SAP Master Data Governance (MDG) can facilitate for central master data management (MDM) and mapping, when working within a Central Finance landscape.

What Is the Role of SAP Application Interface Framework (AIF)?

SAP Application Interface Framework (AIF) enables interface monitoring and error handling in the Central Finance scenario.

During initial data loading and continued replication, a transaction fails. This can be caused by missing master data, mapping issues, setup or configuration issues, or general processing errors.

AIF supports users in detecting the errors, in viewing the messages and in tracing why they were unable to post. Financial and technical teams can resolve the issues and reprocess the affected data where that is possible.

This ability to monitor will ensure there can be accurate financial data replication between connected systems.

How Does SAP Central Finance Support SAP S/4HANA Finance?

SAP Central Finance offers a solution for organisations to federate financial data while still leveraging their current ERP landscape.

In summary, injecting relevant financial transactions into SAP S/4HANA enables organisations to create a unified structure of reporting and provide greater transparency across operational areas.

The Central Finance solution makes use of SAP S/4HANA Universal Journal to marry up financial accounting and controlling data in a single journal entry.

This will facilitate core financial reporting, analysis and some financial processes. It may also provide the foundation to enable a wider SAP S/4HANA transformation.

Who Should Learn SAP Central Finance Architecture?

Overview of SAP Central Finance Architecture will enable any individual working in SAP finance implementation, integration and transformation projects.

This might be pertinent:

• SAP FICO and SAP S/4HANA Finance consultants.
• SAP Central Finance consultants.
• SAP technical and integration consultants.
• Financial accountants and reporting specialists.
• SAP implementation and support professionals.
• Finance transformation and ERP project teams.

Some knowledge of SAP FI, SAP CO, financial accounting and ERP integration provides learners with an insight into its architecture.

Learn SAP S/4HANA Finance with Prompt Edify

Gain an overview of SAP Central Finance Architecture as we give an explanation of how financial data is transferred between systems and is consumed within the central SAP S/4HANA landscape.

Prompt Edify provides SAP training and learning support to professionals seeking SAP Finance, SAP FICO and other ERP solutions. Reach out to our team to learn more about SAP courses & learning options.