Third party integration SAP central finance

Third Party Integration for SAP Central Finance

The allure of SAP Central Finance for Finance organizations to completely reimagine business processes for the digital age is compelling. SAP rightly claims some significant benefits from Central Finance and the impact of pulling together all financial information as a single source of truth is strategic and powerful.

In moving forward with your Central Finance implementation, you will quickly discover that SAP does not provide source system connectors for non-SAP data so the question of how to integrate ‘external’ source data quickly becomes a hot topic. Any company considering Central Finance has certainly done many system integration projects before, and at first glance it may seem natural to tackle this project as a typical in-house (or system integrator-led) custom development effort, but with a little consideration, you will see that is it not so simple, and that in fact, custom development is fraught with risk.

Why internal development is a problem

A common conclusion amongst companies that have tried to build custom connectors to non-SAP data sources is that IT IS NOT EASY! In fact, in many cases, it has proven to be non-viable. Let’s look at the most common reasons why:

  • Source system complexity: Most companies have multiple source systems (Oracle EBS, JD Edwards, PeopleSoft, QAD, BPCS, and many more). Each requires an automated connector to identify relevant journal entries, extract them, transform them into the required SAP SLT format and then load them into the SAP SLT staging area for load into Central Finance. This requires an intimate knowledge of the source system – the physical and logical way transactions are stored in the system as well as how they are managed and updated over time. Furthermore, all this may change with software version updates, which will require connector rewrites when new releases are implemented.
  • Multiple transaction types: To the layman, a journal entry is a journal entry – right? In reality, there is a range of journal transaction types that must be supported – from sales invoices to purchase invoices, from materials transactions to transfers, depreciation to retirement and revaluation and a whole lot more. Each has its own nuances in how they are recorded and represented in each source system, and each must be correctly mapped into the required SAP format. We have found that on average, there are 23 transaction types that must be understood, developed and tested per source system.
  • Target system (SAP) evolution: SAP Central Finance is a relatively young product that is still growing and changing, so changes to the load formats are by no means unheard of. This means that connectors must change too, in order to deliver the right information in the right format.
  • Specialized skills: Clearly, building all this requires some specialized skills, not only in integration work, but in source and target system knowledge, in addition to knowledge of the financial transactions and how to interpret them. Most companies do not have IT talent with these skills, and if they do, they already have a job, so cannot be immediately reassigned to this project. New hiring takes time and is an added cost.
  • Real-time: Most financial people want this information in real-time, especially at month-end. Understanding how to leverage SAP’s technology to bring all the transactions over immediately to S/4HANA is also a unique skill.

Developing these integrations is not easy work, and some early companies who have tried to do so, have learned the hard way that the 4 to 6 month development task that they had anticipated was actually much more – a reality that not only inflated costs, but also pushed out go-live dates. This realization only reaffirmed what these companies already knew – that they didn’t really want to be in the software development business in the first place!

Why buying is the right choice

The good news is that SAP anticipated these issues and reached out to Magnitude Software to co-innovate a solution. Leveraging our 20 years of experience in system connectivity for financial reporting, we’ve developed Magnitude Source Connect for SAP – one of a family of solutions designed to solve the problem of integrating non-SAP source systems and data.

Buying an off-the-shelf solution that’s built on architecture validated and supported by SAP assures that you will achieve the fastest, lowest cost, and lowest risk implementations of SAP S/4HANA Central Finance.

Most importantly, it lets you focus on implementing and using Central Finance to drive your business – not getting distracted by getting into the software development business!

Future blog posts will look at the other solutions in this product family that tackle multi-source data harmonization and transaction caching for drill-down and archive.