Considerations for Migrating your SAP Finance Operations to SAP S/4HANA

Finance is core to your business and migrating your finance operations to SAP S/4HANA is among the most crucial components of the transition. Let’s focus on two areas that are causing some concern among our customers: Implementing Material Ledger and account-based profitability analysis.

Material Ledger

Material ledger is being absorbed into the Universal Journal, so there is no way to opt-out of activating it in SAP S/4HANA. The question is when to implement the Material Ledger fields and associated data.

There is some debate about whether to implement material ledger in ECC before migrating to S/4HANA or to wait and implement fresh in the new system. This is complicated by the significant number of enterprises who have avoided implementing Material Ledger in ECC for any number of reasons. For example, the belief that implementing Material Ledger means you automatically need to activate Actual Costing - this is not the case; although Material Ledger is mandatory in S/4HANA, Actual Costing is still optional.

On the other hand, if you are already using Material Ledger, you’re good to go, though, you may want to archive any data in your Material Ledger tables that is no longer needed. Archiving old data can help minimize your migration downtime.

In our experience, many of the companies who implement Material Ledger in ECC before moving to S/4HANA have an easier migration path and less work to do to complete their S/4 implementation. It also gives them a like-for-like comparison for reporting and analysis from the old system to the new, helping identify issues with data integrity post-migration.

Account-based profitability analysis

Another significant, if often overlooked, change for finance in SAP S/4HANA is the move from cost-based to account-based profitability analysis (CO-PA). In SAP S/4HANA Finance the default CO-PA method is now account-based, versus cost-based, the latter of which is the most widely used method in ECC. Cost-based CO-PA is still available in S/4HANA but is not integrated with the Universal Journal and will not be enhanced any further by SAP.

If your company is currently using cost-based CO-PA, you should consider activating account-based CO-PA for a few periods before making the transition to SAP S/4HANA so that you can get experience with the new method. By doing this, you again get a like-for-like comparison to ensure that your reporting is consistent throughout the migration process. Also, it gives you time to understand some of the data needed for account-based CO-PA, including tracing factors for assessment cycles, top-down distribution, and cost elements for cost of goods sold.

These are two of the myriad things to consider as you get ready to migrate your finance teams from SAP ECC to SAP S/4HANA but understanding their importance can help you avoid missteps as you go through the process.

Winshuttle has tools and solutions that can help make your finance migration from SAP ECC to SAP S/4HANA easier. Our deep integration with SAP and ability to allow finance teams to manage SAP data effectively, throughout the migration process, have saved customers millions of hours and countless dollars. To learn more about how Winshuttle can help you on your journey to SAP S/4HANA, visit www.winshuttle.com/s4hana.