Technology Blogs by SAP
Learn how to extend and personalize SAP applications. Follow the SAP technology blog for insights into SAP BTP, ABAP, SAP Analytics Cloud, SAP HANA, and more.
Showing results for 
Search instead for 
Did you mean: 
Active Contributor

Traditions can be as dangerous as they are comforting. Sure, it’s fine to enjoy spectacular fireworks every New Year’s Eve, or just blow out some candles on every birthday.

But do you know why a bride cuts her wedding cake? Or why she goes on to cut each end off of a roast before cooking it?

“I never realized how much of the way we work every single day in finance is actually formed and driven by the limitations of the technology platforms that we use,” SAP’s Thack Brown said at SAPinsider in Nice, France on Wednesday.

“While traditions might be nice in a family setting, they can be disastrous in the business world,” according to Inc. “With fierce global competition, you need to deeply question the traditions of the past and focus on reinventing the future.”

So it is with finance’s month-end close, the original intention of which was to find small accounting problems before they got too big, as well as gauge performance in closer-to-real-time than is possible with quarterly reports. All of this was great in the age of paper balance sheets and massive ledgers.

But this is the age of interactive digital dashboards.

Out With the Old

Nothing magical happens at the end of the month that suddenly bestows a supernatural power to close the books, according to thack.brown, general manager and global head for SAP’s Line of Business Finance. The only thing keeping organizations from ending accounting periods every day is their technology platform.

“SAP platforms, our competitor platforms, they’re all very good platforms,” Brown said during his Spotlight Session at Financials 2015 (#Financials2015) in Nice, France on Wednesday. “But all of those platforms were designed in the ‘70s and ‘80s; they’re based off of technology from the ‘70s and ‘80s; and they all work around the limitations that were built into those technologies in the ‘70s and the ‘80s.”

When SAP wrote its core financial applications three to four decades ago, only 10 to 20 percent of the code addressed the business challenge, according to Brown; the other 80 to 90 percent dealt with performance limitations in the relational database. Every other finance software company did the same thing; otherwise the systems would run too slowly.

Case in point is the sub-ledger, which only exists to improve performance by storing the data somewhere else. Users totaled their information into aggregates, which sped up data processing -- but sacrificed visibility into underlying details.

A desire to drill down into those details led to the next-generation business platform, SAP HANA.

In With the New

“We get it all in one place,” Brown said of enterprise data. “And then we make sure that the system is powerful enough so that we could look at the very most summarized view of the business all the way down to the most granular view in any way that we wanted to.”

SAP knew that the solution must:

  • Provide Instant Insight: The capability to examine and work with information as it exists right now. “It’s about analysis, and it’s about running financial processes in real time,” Brown said.
  • Offer Updated User Interface and User Experience: Bringing the UX into the 21st Century with UIs similar to consumer interfaces. “We can get somewhere between 30 to 40 percent reduction in the time it takes to complete transactions through enhancing the user experience,” Brown said. “On a single transaction you save maybe a minute -- but if I take that over a ... 5,000-person shared services organization, that’s very significant productivity improvement and gain for the organization.”
  • Be Non-disruptive: Give customers the flexibility to upgrade on premise, in the cloud or as a hybrid. “With the assurance of 43 years’ worth of intellectual property that SAP has in managing finance across, small companies, big companies, one country, multiple countries, 26 industries ... the core of your organization and your financial information is being dealt with in the best way possible,” Brown said.

This in-memory revolution enables organizations to jettison the traditional month-end close in favor of something much more nimble and empowering, according to Brown.

Month-End Close Binned

“We’ve got a number of customers who’ve gotten down to the two-day mark,” Brown said. “And now we’re working with them for the next step: to get down to a one-day closing.”

Organizations capable of a one- or two-day closing are only confined to their month-end close if they can’t remember why they started doing it in the first place: to get an up-to-date view of their numbers. The month-end close might be a comfortable exercise, but it might be better to start a new tradition of conducting fast, accurate and secure data analytics.

“Why can’t we do that per the requirements of the business,” Brown asked the audience in Nice, “as opposed to the some sort of fictitious deadline that we’ve set at the month’s end?”

Here’s a hint: “Because it’s tradition” is the wrong answer.

Financials 2015, GRC 2015 (#GRC2015) and other events make up a larger SAPinsider conference running from Tuesday through Thursday at the Palais des Congrès Acropolis convention center in Nice, France. WIS Publishing, which produces SAPinsider magazine, is hosting the conference.

Follow Derek on Twitter: @DKlobucher

More From SAP Business Trends:

Screen Your Partners or Risk Guilt by Association @SAPinsider 2015

Why Paranoia Is Good for Business @SAPinsider 2015

Nipping Fraud in the Bud @SAPinsider 2015