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The Top Two Considerations for Migrating Your SAP Finance Operations to SAP S/4HANA

Andrew Hayden | July 22, 2022

Finance is core to your business, and migrating your finance operations to SAP S/4HANA is among the most crucial transitions you can make.

While a change like this is ultimately the best move for your organization, we recognize that the process can feel overwhelming. Here at Precisely, we talk to many SAP customers that feel apprehensive about this shift – unsure of what’s in store for them, and how best to prepare.

Within these conversations, there are two big considerations that repeatedly come up: implementing the material ledger and moving to account-based profitability analysis.

Let’s examine these considerations in some more detail, and discuss how to tackle them head-on.

Consideration 1: How to approach the material ledger

The material ledger is being absorbed into the Universal Journal, so there is no way for SAP customers to opt out of activating it in SAP S/4HANA. The question – which sparks some debate – is when to implement the material ledger fields and associated data: should this be carried out in SAP ECC before migrating to SAP S/4HANA, or is it best to wait to do it fresh in the new system?

This situation is complicated by the significant number of enterprises that have avoided implementing the material ledger in SAP ECC for any number of reasons. For example, many customers believe that implementing the material ledger means they automatically need to activate actual costing; however, this is not the case. While activation of the material ledger is mandatory in SAP S/4HANA, the use of actual costing is still optional.

On the other hand, if you are already using the material ledger, you’re good to go – although, you might want to archive any data in your material ledger tables that is no longer needed. Archiving old data can help minimize your migration downtime.

So, which side of the debate do we fall on? In our experience at Precisely, many of the companies who implement the material ledger in SAP ECC before moving to SAP S/4HANA have an easier migration path and less work to do to complete the transition. 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.


Consideration 2: When to activate account-based profitability analysis

Another significant change for finance in migrating to SAP S/4HANA is the move from cost-based to account-based profitability analysis (CO-PA). Cost-based CO-PA, the most widely-used method in SAP ECC, is still available in this new system, but it 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 you can get experience with the new method. By doing this, you get another like-for-like comparison to ensure that your reporting is consistent throughout the migration process. It also 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.

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Avoid SAP S/4HANA migration missteps with solutions from Precisely

While we’ve identified the top two considerations to keep in mind as you prepare to migrate your finance teams from SAP ECC to SAP S/4HANA, there are several others that will come into play. Understanding their importance can help you avoid missteps as you go through the process.

Precisely has tools and solutions that can help make your finance migration easier. Our deep integration with SAP software and ability to allow finance teams to manage SAP data effectively, throughout the migration process, have saved customers millions of hours and countless dollars.

Read our eBook Insights from SAP® Master Data Professionals and learn about the benefits your peers are experiencing using Precisely’s industry-leading SAP ERP automation and data management platforms.

Author’s note: this blog post about migrating finance operations to SAP S/4HANA and has been adapted from an article originally published in