Finance First. To SAP S/4HANA via SAP Central Finance

“The extensive SAP Central Finance project was just a tiny part of the gigantic transformation and restructuring project at the BayWa Group. But without it, the migration to SAP S/4HANA would not have been feasible,” says Holger Turanskyj, Senior Project Manager at GAMBIT Consulting. “It is only by using the finance-first approach that migration becomes possible in the first place.”

The BayWa Group is one of the largest companies in Germany and is active internationally in various sectors, including agriculture, energy, construction and mobility. The Munich-based company had been using SAP solutions for many decades and had an evolved, highly complex system landscape. Its monolithic SAP ECC landscape was highly customized.

In addition, BayWa’s retail system is one of the biggest systems in Europe, with around 100,000 financial documents alone being posted in the Group every day.

A big bang is not an option

To position itself for the future, the BayWa Group was planning a move to SAP S/4HANA, with a new greenfield implementation as close as possible to the standard SAP system. However, BayWa’s experts and managers knew from the outset that a big bang migration was not feasible due to the complexity and size of the BayWa system landscape.

And that is why the company initially commissioned the experts at GAMBIT to perform a Quick Scan to check whether a migration via SAP Central Finance was an option. The finance-first approach via SAP Central Finance enables large companies and corporate groups with highly heterogeneous system landscapes to switch to SAP S/4HANA with greater agility and less risk.

The methodology involves transitioning to SAP S/4HANA in two steps, with finance and financial processes moving first, followed by logistics. This allows companies to spread the migration effort, reduce the risks and make the complexity of the implementation more manageable.

The ideal way to open the door to SAP S/4HANA

Although this alternative approach to implementing SAP S/4HANA is not entirely new, it is gaining ground on the market. In fact, specialists regard it as the ideal way to open the door to SAP S/4HANA.

When SAP Central Finance is installed, all of a company’s financial documents are replicated in real time from the SAP ECC system and all connected SAP and non-SAP systems to SAP S/4HANA. During the changeover period, the central platform serves as a posting interface between the previous legacy system and the new SAP S/4HANA system.

In this way, SAP S/4HANA can be used as the main financial system while the project is underway, meaning that processes such as financial closing, asset accounting and payments already take place in SAP S/4HANA. Once the first phase has been completed, all of the enterprise’s companies then migrate to SAP S/4HANA – following “any pattern,” according to Holger Turanskyj.

Roadmap to the right target architecture

Once the Quick Scan at BayWa had demonstrated that the finance-first approach was feasible, the Group commissioned the GAMBIT specialists to draw up a roadmap in 2022. The purpose of the roadmap was to prepare the project in detail. “Our question for the GAMBIT experts was initially quite simple,” says Markus Lobinger, CIO of BayWa AG. “We asked them to build us a path to SAP S/4HANA that we could then follow. And the GAMBIT experts gave us the results we wanted and the answers we needed.”

As part of the roadmap, the experts at GAMBIT examined and evaluated the impact the finance-first approach would have on the subsequent SAP S/4HANA architecture model. They also drafted a detailed recommendation for a target architecture.

BayWa had two main conditions for the move to SAP S/4HANA: First, the migration to the new SAP S/4HANA system should take place gradually, per division. Second, the individual company codes maintained in the ECC system for the divisions should be merged into a single company code in the new SAP S/4HANA system.

“With that in mind, we worked out the migration path in all its diversity as part of the roadmap project,” explains Holger Turanskyj. “We knew that a project like this would be an immense challenge due to the size of the system landscape, but we also knew that we were well able to handle it. At GAMBIT, we are not satisfied with simply presenting our solutions and proposals on fancy slides: We are committed to putting our solutions into practice.”

A single central company code

This methodology also makes it possible to merge individual company codes into a single central company code, for example. By using transformation and mapping rules in the replication, the postings of the individual divisions converge in the new central company code.

Following the completion of the roadmap, the implementation phase finally began at the end of 2022. This included building the system architecture, the delta design, and the implementation of SAP Central Finance with training, tests, and the cutover.

Since BayWa is not only changing its company code structure as part of the greenfield implementation but is also restructuring large parts of controlling and introducing the business partner and the new general ledger, a lot of data has to be mapped, enriched, or logically derived during the replication.

The fact that the Group transforms, harmonizes, and replicates around one billion line items every year shows how important it is to have an SAP Central Finance platform that runs flawlessly. “Given the complexity of the project, the detailed work that went into preparing these processes, right down to field level, was outstanding in my view,” says Holger Turanskyj.

The foundation is in place

After little more than a year, the SAP Central Finance implementation finally went live at the end of January 2024. “As part of the initial load, we successfully posted well over 4.5 million documents during the go-live weekend alone. The live replication has been running since then – almost 100 per cent error-free!” says Christian Neuschiel, project manager for the project at GAMBIT.

For BayWa, the go-live was the starting point for the second phase of the SAP S/4HANA implementation – during which the Group’s own highly experienced SAP specialists are now migrating the individual divisions to the new solution. “We are building on the foundation that was laid by GAMBIT together with our internal project team. They achieved a really excellent, impressive result, which we are now using to take the next steps toward SAP S/4HANA,” says Markus Lobinger.