This blog is focused on providing a brief background on the consolidation products offered by SAP and what are the top ten things you need to consider while implementing group reporting. Over the last 2 decades, there have been a number of different products launched by SAP for financial consolidation, and group reporting (GR) is its latest offering. GR was first released as a cloud version, and now, an on premise version has been released as part of 1809 S/4 HANA. In the initial years, EC – CS and SEM – BCS were the main products available for consolidation. However, following a series of acquisitions, SAP expanded its portfolio to include BPC (outlook soft) and BFC (Cartesis) products. To make our lives more interesting, SAP has 2 versions of consolidation solutions i.e. Standard (evolved from outlook soft) and Embedded (which is more tightly integrated with the BW layer). After the introduction of S/4 HANA, SAP has been considering bringing the consolidation process closer to the source. RTC (real time consolidation) was developed not so long ago, but has now been superseded by another product i.e. GR. Considering that there are multiple options within SAP, it is important to choose the right product which fits the requirements of the customers. It is also important to look at the architecture and landscape which may influence the data integration and speed of closing process. Other factors include the extent of ownership of the tools by the business (fully owned or part owned) and data security around manipulation of actuals data in terms of adjustments.
GR has adopted features from existing products, and you will notice commonalities in some of the features as shown in figure 1. It will help in ramping up your skills faster if you have a background in implementing some of the existing products offered by SAP.
Figure 1: Functionality within group reporting
Top 10 design and implementation considerations for SAP Group Reporting
1. To choose on Cloud vs On Premise version
GR can be deployed on Cloud or on premise in a similar way as the S/4 HANA deployment options. Cloud-based GR is a great tool for companies implementing S/4 on the cloud and can be implemented in a quicker manner as there is focus on having a standardised set of processes, but it offers lesser flexibility compared to an on premise option. An on premise version offers higher flexibility but might require a higher initial investment than the Cloud-based option. You can also opt for a hybrid version of deployment in terms of infrastructure.
The 1902 version for Cloud is out in the market and for on premise, you will need to wait until Q3 2019 to get the 1909 version. It would be advisable to wait for the 1909 version for on premise, as it has a lot of new features and the solution is a more mature in terms of the offering.
2. Method of Consolidation
The purchase-based method is available as standard in the GR solution and is the most commonly used. This should cater to most of the fully owned subsidiaries or where the group holds majority of control over subsidiaries. Check the best practice content and map out the requirements for fit/ gap analysis. It is important to remember that for the purchase-based method, there are a number of steps which need to be configured such as ownership structure, share ownership and consolidation of investments. This may require creation of your own methods and sequences within the tool.
Figure 2: Functionality within group reporting
3. Design of chart of accounts
A separate chart of accounts can be configured for the GR solution and mapped to the existing General Ledger (GL) accounts configured in the SAP accounting system. However, harmonisation and uniformity are a must, as this is an area where GR assumes that the structures are already in place in the source side and can be consumed with a single set of mapping. Other architecture and product options will need to be explored in case of non-uniform structures.
4. Source data for actuals and plan
GR is targeted mainly at customers having S/4 HANA, and specifically where most of the companies have GL implemented as part of the S/4. However, you can still use flexible upload and apps designed for data collection at non-SAP companies. The app for data collection offers the ability to input data and also provide some basic transformation capability.
Planning data may exist in a separate module and API options offered by GR may need to be explored for integration of plan data. Standard integration is available for SAP Analytics Cloud (SAC). However, any other planning solution would require some effort in terms of integration with GR.
5. Shared master data with ERP (S/4 HANA)
GR leverages master data already configured in the S/4 HANA such as company code, profit center etc. However, there is flexibility in terms of adding new master data required for GR. Like BPC, you can define your own properties required for a part of the configuration for the consolidation process.
6. Legal and management consolidation
Although the normal consolidation scenarios at legal entity are supported, customers often require additional scenarios i.e. management consolidation or a combination of both legal and management consolidation (matrix consolidation). Matrix consolidation is supported in the 1902 Cloud version, but this feature will eventually be developed into the on premise version.
This is an important feature of the GR, and supports some of the complex consolidation scenarios which would have required significant customisation efforts on the existing products within the SAP portfolio.
7. Level of automation you need for your consolidation adjustments
Provides automation capabilities for almost every adjustment such as goodwill, minority interests and the normal auto elimination entries needed as part of the required accounting standards (mainly IFRS). Customers can choose which features are required to be automated, while the tool offers flexibility.
8. Flexible to cope with ownership structure changes due to acquisitions/ disposals
Functionality for acquisition and divestment is supported and the system can automate the required adjustments without manual interventions. However, user interface is currently being enhanced and will get better in the 1909 version. This will also provide a similar functionality to BPC.
9. Reporting tools and user interface
SAP provides an easy to use UI for consolidation users to navigate across the different steps in the consolidation process. Since the UI is based on FIORI, you can easily create and link some of the processes from the core finance areas within S/4 HANA. GR has a number of FIORI reports available as standard which can be used for most reporting needs. However, you can build your own reports using FIORI or analysis for the office front end. There are a number of analytical objects defined on the ACDOCU i.e. the main data store for consolidation, and this provides the ability to build reports using different BI/BO tools such as AFO, which is available in SAP.
Figure 3: User interface for group reporting
10. Currency translation
Currency translation (CT) is now directly integrated with SAP core finance and has the flexibility to cater to different kinds of CT adjustments and options to use different rate types based on account types and scenarios. There is an option to use the data translated at source, and this provides added flexibility for P&L items. Average and end rates can be configured for balance sheet items, which is similar to the functionality available in SAP BPC.
Also, there is flexibility to define your own rates in case you do not want to use the rates from the SAP S/4 HANA.