Pei Ling Hoo - Fotolia
Ask most finance departments to describe their most irksome issues with financial software and topping the list will be poor usability and lack of adequate reporting. Dealing with both issues eats into the time staff could spend analyzing data and forecasting trends. Organizations also tend to try -- and fail -- to resolve these two pain points by throwing more people and best-of-breed software at the problems, which only results in additional costs and integration headaches.
Simple Finance, announced at SAP's SapphireNOW user conference in Orlando, Florida in early June, could be the SAP financial software that answers most of these needs. It could also be the application that enables customers to justify a move to HANA, SAP's in-memory database platform. Simple Finance represents SAP's first overhaul of a large piece of Business Suite with the promise of simplifying access to financial data, making it easier to perform complex financial tasks, and thanks to HANA, combining transactional applications and analytics. The latter benefit eliminates the need to reconcile data from the SAP Finance and Controlling (FICO) modules, thus removing the potential for errors and shrinking the size of the required database. The basis of Simple Finance is the Smart Financials add-on to SAP enhancement package 7 for SAP ERP 6.0 on a HANA installation.
The broader context in which Simple Finance was born is important, too. SAP has been busily reinventing itself as a cloud business applications vendor, using its HANA in-memory database technology as the foundation. The majority of SAP's customers still consume its software on-premises, and so far adoption of HANA has been gradual. Some HANA-based offerings are fairly young. For instance, SAP debuted Business Suite on HANA running on its HANA Enterprise Cloud (HEC) managed hosting service in May 2013, and as of last month, 150 customers were using it. Still, for many firms, what's missing are HANA-based applications with compelling and demonstrable benefits to their operations.
Saga of SAP financial software holds clues to new strategy
SAP has been considering a new take on financials for a number of years, particularly in light of the Software as a Service (SaaS) offerings fielded by the likes of NetSuite, Oracle and Workday. Back in 2012, SAP decided to build Cloud for Financials (formerly known as Financials OnDemand), a SaaS offering aimed at enterprises and based on the financial portion of Business ByDesign, its SaaS midmarket suite.
Fast-forward a year or so and SAP abandoned the project, perhaps because a standalone SaaS financial product might go against its strategic belief that "the suite always wins" over best-of-breed applications. Instead, Cloud for Financials was folded back into Business ByDesign, which is being rewritten to run on HANA, perhaps to be repositioned as a SaaS suite for companies of all sizes.
Simple Finance is aimed at large firms that are eager to simplify and consolidate their finance software. SAP is the first user of Simple Finance and has worked with customers on the product, including Colgate and Zurich Insurance Group.
Simple Finance encompasses a wide range of functions spanning financial planning and analysis; accounting and financial close; treasury and financial risk management; collaborative finance operations; and enterprise risk, compliance, and audit management. Not yet generally available, Simple Finance will initially run on-premises and on SAP's HEC private cloud. SAP has said it might offer Simple Finance in the public cloud at some later date.
For some companies, having SAP or its hosting partners manage Simple Finance may provide added comfort about security . It could also be related to law that requires some data to be stored on local systems, particularly as SAP continues to build out data centers (16 and counting) around the world.
HEC is also a service where SAP can help companies determine which SAP applications to run on HEC and how to integrate them with other on-premises or SaaS applications. HEC can therefore be seen as a way for SAP to gain plenty of insight about customers' cloud needs and perhaps develop and optimize hybrid application environments for specific types of organizations. Subscription pricing for Simple Finance has yet to be set, but the software will be available across all 25 of SAP's industries and in over 50 countries.
Simple Finance will also make use of SAP's new Fiori user interface, with plans for Smart Business Cockpits (dashboards of key performance indicators) for finance roles such as CFO, as well as role-based user experiences for finance experts, including general ledger accountants.
Organizations considering Simple Finance should start by re-examining their core financial processes and identifying customizations to cut back on. They should also think about the costs involved -- both in moving to the latest version of Business Suite (if they're not already there) and in adopting HANA -- and weigh those investments against the potential savings. Those benefits could come from the smaller database of Simple Finance (due to the removal of aggregation tables) and improvements in usability and reporting. Firms should also ensure they have a clear picture from SAP and its partners on how to migrate to Simple Finance and how integrations will work between Simple Finance and the rest of a firm's business software.
SAP plans to take a similar approach to other large chunks of Business Suite, including inventory management, procurement and sales before the end of 2014. So companies might consider waiting until SAP reveals more of its Simple roadmap. In particular, they will want to determine how SAP plans to price the Simple family. For instance, will there be financial incentives to invest in several Simple applications?
It may well be that remaking other elements of Business Suite that have integrations and dependences with Financials will spur additional changes to Simple Finance.
About the author:
China Martens is an independent business applications analyst and freelance writer. Email her at email@example.com follow her on Twitter at @chinamartens.
More on SAP financial software
Understand SAP Financials OnDemand
Read a book chapter on SAP ERP Financials
Learn how financials relate to SAP CRM