There are risks in undertaking any big treasury transformation project, but the risks of not adjusting to the changing world around you can be far bigger. Recognizing the potential pitfalls of relying on an outdated (and soon to be unsupported) SAP ECC system, Alliander embarked on a large-scale, business-wide transition to SAP S/4HANA. Zanders advised on the Central Payments and Treasury phase of this project, which completed in May 2024.

A future-focused perspective

Network company, Alliander, is the Netherlands’ biggest decentralized grid operator, responsible for transporting energy to households and businesses, 24 hours a day, 7 days a week. As a driving force behind the energy transition, the business is committed to investing in innovation - and this extends to how they are future-proofing their business operations as well as their contribution to shaping the sustainable energy agenda.

With their SAP ECC system approaching end of life, Alliander embarked on a company-wide switch to SAP S/4HANA. However, transitioning to SAP’s newest ERP platform is not just another simple upgrade, it’s a completely new system built on top of the software company’s own in-memory database HANA. For a business of Alliander’s size and complexity, this is a huge undertaking and a lengthy process. In order to minimize the disruption and potential risks to mission-critical business systems, Alliander has started the transition early, breaking down the implementation into a series of logically ordered phases. This means individual business areas are migrated to S/4HANA as separate projects.

“In finance, this transition started about four years ago with the transition of Central Finance to S/4—that was the first stepping stone,” says Thijs Lender, Financial Controller and Alliander’s Project Owner for SAP S/4HANA in Finance. “The second major project was Central Payments and Treasury. From a business point of view, this was the first real business finance process that we implemented on S/4.”

Central Payments and Treasury was selected as a critical gateway to moving other business areas to the new target infrastructure, for example, purchasing. It was also an ideal test ground for the migration process from ECC to S/4HANA as Alliander’s cash management processes operate in relative isolation, therefore presenting a lower risk of collateral damage across other business operations when the department moved to the new system. ''Treasury and Central Payments is at end of the of the source-to-pay and order-to-cash process—it’s paying our invoices and collecting money,” explains Guido Tabor, Digital Lead Finance at Alliander. “This means it could be moved to the target architecture without impacting other areas.”

Greenfield or brownfield?

The two most common pathways to SAP S/4HANA are a greenfield approach and a brownfield approach. For a brownfield migration a company’s existing processes are converted into the new architecture. In contrast, the greenfield alternative involves abandoning all existing architecture and starting from scratch. The second is a far more extensive process, requiring a business to often make wide-ranging changes to work practices, reengineering processes in order to optimally standardize their workflows. As Alliander’s business had changed significantly over the period of running SAP ECC, they recognized the benefit of starting from a clean slate, building their new ERP system from scratch to meet their future business needs rather than trying to retro fit their existing system into a new environment.

“We really wanted to bring it back to best practices, challenging them and standardizing our processes in the new system,” adds Thijs. “In the old way, we had some ways of working that were not standard. So, there were sometimes tough discussions, and we had to make choices in order to achieve standard processes.”

A collaborative approach

While the potential benefits of greenfield migrations are substantial, untangling legacy processes and building a new S/4HANA system from scratch is a complex undertaking. Success hinges on the collaboration of various stakeholders, including experts with understanding of the inner workings of the SAP architecture.

“From the very beginning, we didn't see this as an IT project,” Guido says. “IT was involved but also the business - in this case, finance from a functional perspective, and also Zanders and the Alliander technical team. It was really a joint collaboration.”

Zanders worked alongside Alliander right from the early stages of the Central Payments and Treasury project. ­From helping them to strategically assess their treasury processes through to planning and implementing the transition to SAP S/4HANA. Having worked with the business previously on the ECC implementation for Central Payments and Treasury, Zanders’ knowledge of Alliander’s current environments combined with their specialist knowledge of both treasury and SAP S/4HANA meant the team were well placed to guide the team through the migration process. The strength of the partnership was particularly important when the timing of the deployment was brought forward.  

“Initially we wanted to go live shortly before quarter close” Guido recalls “Then at the beginning of January, we had a discussion with our CFO about the deployment. With June 1 being very close to June 30 half year close, we decided we didn't want to take the risk of going live on this date, and he challenged us to move it back to the middle of May.”

What became really important was having a partner [Zanders] who helps you think out of the box. What's the possibility? How can you deal with it? While also being agile in supporting on fast changes and even faster solutions.

Guido Tabor, Digital Lead Finance at Alliander.

Adopting a 'Fix It' mindset

With the new deadline set, the team were encouraged by the CFO to adopt a ‘fix it’ mindset. This empowered them to take a bold, no compromises approach to implementation. For example, they were resolute in insisting on a week-long payment freeze ahead of the transition, despite pleas for leniency from some areas of the business. This confident, no exceptions approach (driven by the ‘fix it’ mentality) ensured the transition was concluded on time leading to a seamless transition of Central Payments and Treasury to the new S/4HANA system.

“This was a totally new perspective for us,” says Guido. “With go live processes or transitions like this, there will be some issues. But it didn't matter what, it didn't matter how, we just had to fix it. What became really important was having a partner [Zanders] who helps you think out of the box. What's the possibility? How can you deal with it? While also being agile in supporting on fast changes and even faster solutions.”

Central Payments and Treasury project went live on S/4HANA in May 2024, on time and with a smooth transition to the new system.

“I was really happy on the first Monday after go-live and in that early week that there weren't big issues,” Guido says. “We had some hiccups, that's normal, but it was manageable and that's what is important.”

This project represented an important milestone in Alliander’s transition to SAP S/4HANA. Successfully and smoothly shifting a core business process into the new architecture clearly progressed the company past the point of turning back. This reinforced momentum for the wider project, laying robust foundations for future phases.

To find out how Zanders could help your treasury make the transition from SAP ECC to SAP S/4HANA, contact our Director Marieke Spenkelink.

SAP highlighted their public vs. private cloud offerings, RISE and GROW products, new AI chatbot applications, and their SAP Analytics Cloud solution. In addition to SAP's insights, several clients showcased their treasury transformation journeys with a focus on in-house banking, FX hedge management, and payment factory implementation. This article provides a brief overview of SAP's RISE and GROW offerings, with a larger focus on SAP’s public vs. private cloud offerings and their new AI virtual assistant, Joule.

SAP RISE and GROW

The SAP RISE solution seeks to help companies transition to cloud-based services. It is designed as a comprehensive offering that combines software, services, and support into a single package, including the core components of SAP S/4HANA cloud, Business Process Intelligence (BPI), SAP Business Network, and SAP Business Technology Platform (BTP). On the other hand, SAP GROW is a program that facilitates the implementation and organization of SAP solutions. This offering is more tailored towards optimizing, rather than transitioning, company processes. SAP GROW still includes S/4HANA public cloud solution, enabling growing companies to manage their operations without requiring extensive on-site infrastructure.

Ultimately, companies experiencing significant growth and seeking scalable, efficient solutions would benefit most from the SAP GROW offering, while SAP RISE is more suited for companies looking to accelerate their digital transformation with a focus on agility, rapid innovation, and business resilience.

Public Cloud vs. Private Cloud

SAP systems can be hosted both on the public and private cloud. The public cloud delivers greater scalability, whereas the private cloud provides enhanced security and complete control of data and governance. Often the choice between SAP public or private cloud is driven by business requirements, budget, compliance needs, and desired levels of customization. These variables, along with other important factors, are compared in Figure 1.

Figure 1: SAP Public Cloud vs. SAP Private Cloud

In summary, organizations considering SAP should carefully weigh these differences when choosing between public and private cloud. SAP is actively developing the functionality within its public cloud offering, making it an increasingly suitable option for both small-to-medium enterprises seeking rapid deployment and cost efficiency, as well as larger enterprises that require powerful solutions with limited customization needs. On the other hand, SAP private cloud remains a preferred choice for larger enterprises with complex, unique process requirements, extensive customization needs, and strict data compliance regulations.

Joule's Virtual Assistant

SAP's Business AI solutions initiative is introducing its newest member, the Joule Copilot. Similar to OpenAI's ChatGPT, the Joule virtual assistant is available at the user's command. Users simply need to ask the copilot questions or explain a particular issue, and Joule will provide intelligent answers drawn from the vast amount of business data stored across the SAP systems and third-party sources.

Joule Key Features
Contextual Recommendations
Provide personalized, context-specific suggestions based on the user's role and activities. Joule can help users by suggesting possible next steps, identifying potential issues, and offering insights that can be actioned upon by users.

Enhanced User Experience
Offers an intuitive, interactive interface designed to simplify user interaction with SAP applications. Joule aims to reduce complexity and streamline workflows, allowing users to simplify their daily processes.

Real-Time Insights
Artificial Intelligence and Machine Learning capabilities enable Joule to analyze vast amounts of data in real-time, providing predictive insights and analytics to support the user's decision-making process.

Integration with SAP Ecosystem
Joule is fully integrated with SAP’s existing products, such as S/4HANA and SAP Business Technology Platform (BTP), ensuring seamless data flow and interconnectivity across various SAP solutions.

Customization and Extensibility
Joule can be tailored to the specific needs of different industries and business processes. It also accounts for the specific role of the user when providing recommendations and can be customized to align with a company’s organizational requirements and workflows within their system.

Applications of Joule in Finance
SAP Joule can significantly enhance financial operations by leveraging AI-driven insights, automation, and predictive analytics. Joule has many applications within finance, the most important being:

Automated Financial Reporting
SAP Joule can automatically generate and distribute financial reports, offering insights based on real-time data. Joule uses its AI and ML capabilities to identify trends, flag anomalies, and provide explanations for variances, ultimately helping finance teams to make informed decisions quickly. Not only does Joule provide insight, but it also increases operational efficiency, allowing finance professionals to focus on strategic activities rather than report gathering and distribution.

Predictive Analytics and Forecasting
SAP Joules embedded ML capabilities enable the prediction of future financial outcomes based on historical data and current trends. Whether you are forecasting revenues, cash flows, or expenses, Joule provides the ideal tools for an accurate forecast. Alongside the forecasting capabilities, Joule can also assess financial risks by analyzing market conditions, historical data, and other relevant factors, which allows risk management to take a proactive approach to risk mitigation.

Accounts Receivable and Payable Management
Joule can predict payment behaviors, which can help organizations optimize their cash flows by forecasting when payments are likely to be received or when outgoing payments will occur. In addition to this, Joule has automatic invoice processing capabilities, which can reduce errors and speed up the accounts payable process.

Investment Analysis
For organizations managing investments, Joule can analyze portfolio performance and suggest adjustments to maximize return while still complying with risk limits. Embedded scenario analysis capabilities assist finance teams to assess the potential impact of various investment decisions on their portfolio.

Real-Time Financial Monitoring
Finance teams can use Joule to create real-time dashboards that provide an overview of key financial metrics, enabling quick responses to emerging issues or opportunities. Joule can set up alerts for critical financial thresholds, such as reserves dropping below a certain level, to ensure timely intervention.

All in all, SAP Joule represents a significant step forward in SAP’s strategy to embed AI and ML into its core products, empowering business users with smarter, data-driven capabilities.

Conclusion

This conference summary briefly highlights SAP’s RISE and GROW offerings, with RISE driving cloud-based digital transformation and GROW striving to optimize operations. It contrasts the scalability and cost-efficiency of the public cloud with the control and customization offered by the private cloud. Lastly, it introduces SAP’s new virtual assistant seeking to enhance financial operations through AI-driven insights, automation, and scalability to improve productivity while still maintaining user control over decisions and data security. If you have any further questions regarding the SAP conference or any information in this article, please contact j.vinson@zandersgroup.com.

SAP In-House Cash (IHC) has enabled corporates to centralize cash, streamline payment processes, and recording of intercompany positions via the deployment of an internal bank. S/4 HANA In-House Banking (IHB) , released in 2022, in combination with Advanced Payment Management (APM), is SAP’s revamped internal banking solution.

This article will introduce IHB for corporates planning a new implementation and highlight some key considerations for those looking to transition from IHC.

IHB is embedded in APM and included in the same license. It leverages APM’s payment engine functionality and benefits from direct integration for end-to-end processing, monitoring/reporting, and exception handling.

Figure 1: Solution architecture / Integration of In-House Banking (SAP, 2023)

IHC and IHB share several core functionalities, including a focus on managing intercompany financial transactions and balances effectively and ensuring compliance with regulatory requirements. Both solutions also integrate seamlessly with the broader SAP ecosystem and offer robust reporting capabilities.

However, there are significant differences between the two. While IHC relies on the traditional SAP GUI interface, IHB runs on the more modern and intuitive SAP Fiori interface, offering a better user experience. IHB overcomes limitations of IHC, namely in areas such as cut-off times and payment approval workflows and provides native support for withholding tax. Moreover, it also offers tools for managing master data, including the mass download and upload of IHB accounts, features that are otherwise missing in IHC.

Two key distinctions exist in payment routing flexibility and the closing process. IHB, when deployed with APM, manages payment routing entirely as master data, enabling organizations to more easily adapt to evolving business requirements, whereas IT involvement for configuration changes is required for those running IHC exclusively. Lastly, IHB supports multiple updates throughout the day, such as cash concentration, statement reporting, and transfers to FI, and is hence more in tune with the move towards real-time information, whereas IHC is restricted to a rigid end-of-day closing process.

Intrigued? Continue reading to delve deeper into how IHB compares with IHC.

Master data

2.1 Business Partners

The Business Partner (BP) continues to be a pre-requisite for the opening of IHB accounts, but new roles have been introduced.

Tax codes for withholding tax applicable to credit or debit interest can now be maintained at the BP level and feed into the standard account balancing process for IHB. The Withholding Tax set up under FI is leveraged and hence avoids the need for custom development as currently required for IHC.

2.2 In-House Bank Accounts

Relative to IHC, the process of maintaining accounts in IHB is simplified and more intuitive.

Statements can be sent to various recipients and in different formats (e.g., CAMT.53, PDF) based on settings maintained at account level. Intraday statement reporting functionality is included, as well as PDF notifications for balances on accounts and interest calculated as part of the account balancing process.

Figure 2: Maintaining IHB Account Correspondence

IHB offers native functionality for mass account download/upload, a feature that is missing in IHC. The mass download option allows data to be exported to Excel, adjusted offline, and subsequently loaded into BAM .

In the upcoming release, the bank account subledger concept will also be supported for IHB accounts managed in BAM.

2.3 Conditions

The underlying setup has been simplified and can now be performed entirely as master data, unlike for IHC, which in comparison requires some customization to be done as part of the implementation.

IHC technically offers slightly more interest conditions (e.g., commitment interest), but IHB covers the fundamentals for account balancing. More importantly, average/linear compound interest calculation methodology is available with IHB to support risk-free rates.

2.4 Workflows

Unlike IHC, which only offers the option of activating “dual control” for some processes (e.g., closure of IHC accounts), IHB introduces flexible workflows for all core master data attributes (e.g., accounts, conditions, limits, etc.).

IHB's flexible workflows allow for multiple approval steps and dynamic workflow recipient determination based on predefined conditions.

Transactional Data

3.1 Scenarios & payment integration/routing

The following set of scenarios are in scope for IHB:

• Intercompany payments
• Payments On-Behalf-Of (POBO)
• Central Incoming
• Cash Pooling

Payment integration is achieved via APM and supports several options, namely IDocs, connectors for Multi-Bank Connectivity (MBC ), file uploads, etc. Moreover, the connector for MBC can be used to support more elaborate integration scenarios, such as connecting decentralized AP systems or a public cloud instance to APM.

More noteworthy is that the flexible payment routing in APM is used to handle the routing of payments and is managed entirely according to business needs as master data. This is particularly relevant for corporates running IHC as a “payment factory” who are considering the adoption of APM & IHB, as routing is entirely configuration-based when using IHC exclusively. There are additional advantages of using APM as a payment factory, especially in terms of payment cut-offs and approval workflows. However, these benefits can be obtained by using APM in conjunction with IHB or IHC.

3.2 Foreign Currency Payments

A distinct set of bid/offer rates can be assigned per transaction type and used to convert between payment currency and IHC account currency at provisional and final posting stages. In contrast, for IHB, a single exchange rate type is maintained at the IHB Bank Area level and drives the FX conversion.

Compared to IHC, applying different rates depending on the payment scenario will require a different design, and special consideration is needed for corporates running complex multilateral netting processes in IHC that are planning to transition to IHB.

Intraday/End of Day Processing

4.1 End of Day Sequence

The end-of-day closing concept applies to IHB as well. Unlike IHC, IHB allows many of the related steps, such as intraday statement reporting, cash concentration, and transfers to FI, to be triggered throughout the day.

A dedicated app further streamlines processing by enabling the scheduling and management of jobs via pre-delivered templates.

4.2 Bank Statements

APM converters are leveraged to produce messages in the desired format (MT940, CAMT.53, or PDF ). Unlike IHC, FINSTA IDocs are no longer supported, which is an important factor to consider when migrating participants that are still on legacy ERP systems.

The settings maintained under the bank statement section of the IHB account drive the format and distribution method (e.g., delivery via MBC or email) to the participants.

4.3 General Ledger Transfer

The new Accounting Business Transaction Interface (ABTI) supports general ledger transfers from IHB to FI several times a day, unlike IHC, which is triggered only once at the end of the day.

Overall, the accounting schemas are more straightforward, which is reflected in the underlying setup required to support IHB. However, relative to IHC, there is technically less flexibility in determining the relevant G/Ls for end-of-day transfers to FI. Due diligence is recommended for corporates moving from IHC to ensure that existing processes are adapted to the new ways of working.

Conclusion

There is no official end-of-life support date for IHC, so corporates can still implement it with or without APM, though this approach presents challenges. Key considerations include
the lack of ongoing development for IHC, SAP’s focus on ensuring IHB matches IHC’s capabilities, and the fact that IHB is already included in the APM license, while IHC requires a separate license.

Initial issues with IHB are expected but will likely be resolved as more companies adopt the functionality and additional features are rolled out. For corporates with moderately complex requirements or those willing to align their processes with standard functionality, IHB is ultimately easier to implement and manage operationally.

To ensure a smooth transition to or adoption of IHB, Zanders offers expert implementation services. If your organization is contemplating IHB or transitioning from IHC, contact Zanders for guidance and support with any questions you may have.

References

SAP, 2023. Solution architecture - Integration of In-House Banking [Online] SAP. Available from: https://help.sap.com/docs/SAP_S4HANA_ON-PREMISE/e200555127f24878bed8d1481c9d5a0b/3dbe688b4c8840da8567f811be2bc1b4.html?locale=en-US&version=2023.001

Historically, SAP faced limitations in this area, but recent innovations have addressed these challenges. This article explores how the XML framework within SAP’s Advanced Payment Management (APM) now effectively handles complex payment formats, streamlining and optimizing treasury functions.

SAP Bank Communication Management (BCM) has been SAP’s solution for integrating a corporate’s SAP system with their banks. It is offering a seamless and secure connection to either a payment network or directly to the bank’s host-to-host solution. Payment and collection files generated from the Payment Medium Workbench can be transferred directly to the external systems, and status messages and bank statements can be received and processed into the SAP application.

The BCM solution has proven to be successful, and corporates wanted to leverage the solution also for transferring messages that do not have their origin in the SAP itself. For example, payment files coming from an HR system or from a legacy ERP system need to be transferred via the same connection that has been established with the BCM setup. For this requirement, SAP introduced the SAP Bank Communication Management option for multisystem payment consolidation, more commonly referred to as the BCM Connector. This add-on made it possible to process payment files generated in external modules or systems into SAP BCM.

However, the BCM Connector has an important limitation: it can only forward the exact format received to external parties. This means that if a legacy system provides a payment file in a proprietary format, it cannot be converted to a more commonly accepted (e.g., XML) format. As a result, compliance with bank requirements regarding payment formats lies with the originating application, limiting the ability to manage payment formats centrally from within the SAP system.

SAP has recognized this limitation and has been focusing on developing a new module to support organizations with a need for centralized payment processing. This solution is called SAP Advanced Payment Management (APM) and offers support for several scenarios for managing payments and payment formats in a centralized environment.

One of the main features of the APM solution is the file handling, which is implemented through an XML Framework. In short, this means that all payment files that need to be processed are handled as an XML message in a canonical data model.  This allows for standardized payment processing across various incoming formats.

The main advantages of the XML framework are:

• Parsing into easy formats
  • Complex message structures are mapped into generic XML structures that are aligned to the most used message standards (ISO20022). These structures also match to a large extent to the internal data structure of the business objects within SAP APM.
• Embedded XML schema validation
  • The XSD schema files for the input structures can be loaded into APM to be used for validation of incoming messages. This takes a way the burden of defining and implementing custom-built validations for these files.
• Interface for easy implementation
  • Transferring the data elements from the incoming messages into the canonical data structures can be achieved via predefined Badi's and using several easy-to-use methods for retrieving and analyzing the source message.
• Parallel processing for large messages
  • The XML Framework offers functionality to divide large messages into smaller building blocks and process them in parallel. This makes APM a very powerful solution that is able to process large numbers of payments in a timely manner.
    

The solution can also be used for non-XML messages. This requires a preprocessing step where the source file is converted to an XML representation of the file. After this step, the message can be processed like any other XML file including the validation and parallel processing options.

Implementing this solution for XML and non-XML formats is a technical exercise that requires ABAP-skills and knowledge of the SAP enhancement framework . However, SAP has made it easier to implement custom formats with the framework while fully utilizing the capabilities of the APM module.

For organizations seeking to enhance their payment processing capabilities through centralized management and innovative solutions like SAP Advanced Payment Management, our team is equipped to provide expert guidance. To explore how APM can support your treasury operations and ensure seamless financial integration, please reach out to us at r.claassen@zandersgroup.com.

On the 22^nd of August, SAP and Zanders hosted a webinar on the topic of optimizing your treasury processes with SAP S/4HANA, with the focus on how to benefit from S/4HANA for the cash & banking processes at a corporate. In this article, we summarize the main topics discussed during this webinar. The speakers came from both SAP, the software supplier of SAP S/4HANA, and from Zanders, which is providing advisory services in Treasury, Risk and Finance. 

The ever-evolving Treasury landscape demands modern solutions to address complex challenges such as real-time visibility, regulatory compliance, and efficient cash management. Recognizing this need, the webinar offered an informative platform to discuss how SAP S/4HANA can be a game-changer for Treasury operations and, in specific, to bring efficiency and security to cash & banking processes. 

To set the stage, the pressing issues faced by today's Treasury departments are navigating an increasingly complex regulatory environment, achieving real-time cash visibility, automating repetitive tasks, and managing banking communications efficiently. This introduction underscored the indispensable role that a robust technology platform like SAP S/4HANA can play in overcoming these challenges. The maintenance of consistent bank master data was given as an example of how challenging this management can be with a scattered ERP landscape.

Available below: Webinar Slides & Recording.

SAP S/4HANA: A New Era in Treasury Management

SAP S/4HANA, a next-generation enterprise resource planning (ERP) suite, stands out by offering integrated modules designed to handle various facets of treasury management, thus providing a consolidated view of financial data and enabling a single source of truth. 

SAP S/4HANA's Treasury and Risk Management capabilities encompass cash management, financial risk management, payment processing, and liquidity forecasting. These tools are critical for a contemporary Treasury function looking to enhance visibility and control over financial operations. 

Streamlined Cash Management 

The core of the webinar focused on how SAP S/4HANA revolutionizes cash management. Real-time data analytics and predictive modelling were emphasized as the cornerstones of the platform’s cash management capabilities. The session elaborated on: 

• Enhanced Cash Positioning: SAP S/4HANA provides real-time cash positioning, allowing Treasury departments to track cash flows across multiple bank accounts instantly.  With the development of the new Fiori app, instant balances can be retrieved directly into the Cash Management Dashboard. This immediate visibility helps in making informed decisions regarding investments or borrowing needs. 

• Liquidity Planning and Forecasting: By leveraging historical data and machine learning algorithms, SAP S/4HANA can provide accurate liquidity forecasts. The use of advanced analytics ensures you can anticipate cash shortages and surpluses well ahead of time, thereby optimizing working capital. 

Efficient Banking Communications & Payment Processing 

Managing communications with multiple banking partners can be a daunting task. SAP S/4HANA’s capabilities in automating and streamlining these communications through seamless integration. In addition to this integration, SAP S/4HANA facilitates efficient payment processing by consolidating payment requests and transmitting them to relevant banks through secure channels. This integration not only accelerates transaction execution but also ensures compliance with global payment standards. 

Security and Compliance 

Data security and compliance with regulatory standards are pivotal in Treasury operations. The experts detailed SAP S/4HANA’s robust security protocols and compliance tools designed to safeguard sensitive financial information. The features highlighted were: 

• Data Encryption: End-to-end data encryption ensures that financial data remains secure both in transit and at rest. This is critical for protecting against data breaches and unauthorized access. 

• Compliance Monitoring: The platform includes built-in compliance monitoring tools that help organizations adhere to regulatory requirements. Automated compliance checks and audit trails ensure that all Treasury activities are conducted within the legal framework. 

S/4HANA sidecar for C&B processes 

But how to make use of all these new functionalities in a scattered landscape corporates often have and how to efficiently execute such a project. By integrating with existing ERP systems, the sidecar facilitates centralized bank statement processing, automatic reconciliation, and efficient payment processing. Without disrupting the core functionality in the underlying ERP systems, it supports bank account and cash management, as well as Treasury operations. The sidecar's scalability and enhanced data insights help businesses optimize cash utilization, maintain compliance, and make informed financial decisions, ultimately leading to more streamlined and efficient cash and banking operations. The sidecar allows for a step-stone approach supporting an ultimate full migration to S/4HANA. This was explained again by a business case on how users can now update the posting rules themselves in S/4HANA, supported by AI, running in the background, making suggestions for an improved posting rule. 

Conclusion & Next Steps 

The webinar concluded with a strong message: SAP S/4HANA provides a transformative solution for Treasury departments striving to enhance their cash and banking processes. By leveraging its comprehensive suite of tools, organizations can achieve greater efficiency, enhanced security, and improved strategic insight into their financial operations. 

To explore further how SAP S/4HANA can support your Treasury processes, we encourage you to reach out for personalized consultations. Embrace the future of treasury management with SAP S/4HANA and elevate your cash and banking operations to unprecedented levels of efficiency and control. If you want to further discuss how to make use of SAP S/4HANA or to discuss deployment options and how to get there, please contact Eliane Eysackers.

As organizations continue to adapt to the rapidly changing business landscape, one of the most pivotal shifts is the migration of enterprise resource planning (ERP) systems to the cloud. The evolution of treasury operations is a prime example of how cloud-based solutions are revolutionizing the way businesses manage their financial assets. This article dives into the nuances between SAP’s GROW (public cloud) and RISE (private cloud) products, particularly focusing on their impact on treasury operations. 

The "GROW" product targets new clients who want to quickly leverage the public cloud's scalability and standard processes. In contrast, the "RISE" product is designed for existing SAP clients aiming to migrate their current systems efficiently into the private cloud. 

Public Cloud vs. Private Cloud 

The public cloud, exemplified by SAP's "GROW" package, operates on a shared infrastructure hosted by providers such as SAP, Alibaba, or AWS. Public cloud services are scalable, reliable, and flexible, offering key business applications and storage managed by the cloud service providers. Upgrades are mandatory and occur on a six-month release cycle. All configuration is conducted through SAP Fiori, making this solution particularly appealing to upper mid-market net new customers seeking to operate using industry-standard processes and maintain scalable operations. 

In contrast, the private cloud model, exemplified by the “RISE” package, is used exclusively by a single business or organization and must be hosted at SAP or an SAP-approved hyperscaler of their choice. The private cloud offers enhanced control and security, catering to specific business needs with personalized services and infrastructure according to customer preferences. It provides configuration flexibility through both SAP Fiori and the SAP GUI. This solution is mostly preferred by large enterprises, and many customers are moving from ECC to S/4HANA due to its customizability and heightened security. 

Key Differences in Cloud Approaches 

Distinguishing between public and private cloud methodologies involves examining factors like control, cost, security, scalability, upgrades, configuration & customization, and migration. Each factor plays a crucial role in determining which cloud strategy aligns with an organization's vision for treasury operations. 

1. Control: The private cloud model emphasizes control, giving organizations exclusive command over security and data configurations. The public cloud is managed by external providers, offering less control but relieving the organization from day-to-day cloud management. 
2. Cost: Both the public and private cloud operate on a subscription model. However, managing a private cloud infrastructure requires significant upfront investment and a dedicated IT team for ongoing maintenance, updates, and monitoring, making it a time-consuming and resource-intensive option. Making the public cloud potentially a more cost-effective option for organizations. 
3. Security: Both GROW and RISE are hosted by SAP or hyperscalers, offering strong security measures. There is no significant difference in security levels between the two models. 
4. Scalability: The public cloud offers unmatched scalability, allowing businesses to respond quickly to increased demands without the need for physical hardware changes. Private clouds can also be scaled, but this usually requires additional hardware or software and IT support, making them less dynamic. 
5. Upgrades: the public cloud requires mandatory upgrades every six months, whereas the private cloud allows organizations to dictate the cadence of system updates, such as opting for upgrades every five years or as needed. 
6. Configuration and Customization: in the public cloud configuration is more limited with fewer BAdIs and APIs available, and no modifications allowed. The private cloud allows for extensive configuration through IMG and permits SAP code modification, providing greater flexibility and control. 
7. Migration: the public cloud supports only greenfield implementation, which means only current positions can be migrated, not historical transactions. The private cloud offers migration programs from ECC, allowing historical data to be transferred. 

Impact on Treasury Operations 

The impact of SAP’s GROW (public cloud) and RISE (private cloud) solutions on treasury operations largely hinges on the degree of tailoring required by an organization’s treasury processes. If your treasury processes require minimal or no tailoring, both public and private cloud options could be suitable. However, if your treasury processes are tailored and structured around specific needs, only the private cloud remains a viable option.

In the private cloud, you can add custom code, modify SAP code, and access a wider range of configuration options, providing greater flexibility and control. In contrast, the public cloud does not allow for SAP code modification but does offer limited custom code through cloud BADI and extensibility. Additionally, the public cloud emphasizes efficiency and user accessibility through a unified interface (SAP Fiori), simplifying setup with self-service elements and expert oversight. The private cloud, on the other hand, employs a detailed system customization approach (using SAP Fiori & GUI), appealing to companies seeking granular control. 

Another important consideration is the mandatory upgrades in the public cloud every six months, requiring you to test SAP functionalities for each activated scope item where an update has occurred, which could be strenuous. The advantage is that your system will always run on the latest functionality. This is not the case in the private cloud, where you have more control over system updates. With the private cloud, organizations can dictate the cadence of system updates (e.g., opting for yearly upgrades), the type of updates (e.g., focusing on security patches or functional upgrades), and the level of updates (e.g., maintaining the system one level below the latest is often used). 

To accurately assess the impact on your treasury activities, consider the current stage of your company's lifecycle and identify where and when customization is needed for your treasury operations. For example, legacy companies with entrenched processes may find the rigidity of public cloud functionality challenging. In contrast, new companies without established processes can greatly benefit  from the pre-delivered set of best practices in the public cloud, providing an excellent starting point to accelerate implementation. 

Factors Influencing Choices 

Organizations choose between public and private cloud options based on factors like size, compliance, operational complexity, and the degree of entrenched processes. Larger companies may prefer private clouds for enhanced security and customization capabilities. Startups to mid-size enterprises may favor the flexibility and cost-effectiveness of public clouds during rapid growth. Additionally, companies might opt for a hybrid approach, incorporating elements of both cloud models. For instance, a Treasury Sidecar might be deployed on the public cloud to leverage scalability and innovation while maintaining the main ERP system on-premise or on the private cloud for greater control and customization. This hybrid strategy allows organizations to tailor their infrastructure to meet specific operational needs while maximizing the advantages of both cloud environments. 

Conclusion 

Migrating ERP systems to the cloud can significantly enhance treasury operations with distinct options through SAP's public and private cloud solutions. Public clouds offer scalable, cost-effective solutions ideal for medium-to upper-medium-market enterprises with standard processes or without pre-existing processes. They emphasize efficiency, user accessibility, and mandatory upgrades every six months. In contrast, private clouds provide enhanced control, security, and customization, catering to larger enterprises with specific regulatory needs and the ability to modify SAP code. 

Choosing the right cloud model for treasury operations depends on an organization's current and future customization needs. If minimal customization is required, either option could be suitable. However, for customized treasury processes, the private cloud is preferable. The decision should consider the company's lifecycle stage, with public clouds favoring rapid growth and cost efficiency and private clouds offering long-term control and security.

It is also important to note that SAP continues to offer on-premise solutions for organizations that require or prefer traditional deployment methods. This article focuses on cloud solutions, but on-premises remains a viable option for businesses that prioritize complete control over their infrastructure and have the necessary resources to manage it independently.

If you need help thinking through your decision, we at Zanders would be happy to assist you. 

While many business and SAP users are familiar with its core functionalities, such as limit management applying different limit types and the core functionality of attributable amount determination, several less known SAP standard features can enhance your credit risk management processes.

In this article, we will explore these hidden gems, such as Group Business Partners and the ways to manage the limit utilizations using manual reservations and collateral. 

Group Business Partner Use

One of the powerful yet often overlooked features of the SAP Credit Risk Analyzer is the ability to use Group Business Partners (BP). This functionality allows you to manage credit and settlement risk at a bank group level rather than at an individual transactional BP level. By consolidating credit and settlement exposure for related entities under a single group business partner, you can gain a holistic view of the risks associated with an entire banking group. This is particularly beneficial for organizations dealing with banking corporations globally and allocating a certain amount of credit/settlement exposure to banking groups. It is important to note that credit ratings are often reflected at the group bank level. Therefore, the use of Group BPs can be extended even further with the inclusion of credit ratings, such as S&P, Fitch, etc. 

Configuration: Define the business partner relationship by selecting the proper relationship category (e.g., Subsidiary of) and setting the Attribute Direction to "Also count transactions from Partner 1 towards Partner 2," where Partner 2 is the group BP. 

Master Data: Group BPs can be defined in the SAP Business Partner master data (t-code BP). Ensure that all related local transactional BPs are added in the relationship to the appropriate group business partner. Make sure the validity period of the BP relationship is valid. Risk limits are created using the group BP instead of the transactional BP. 

Reporting: Limit utilization (t-code TBLB) is consolidated at the group BP level. Detailed utilization lines show the transactional BP, which can be used to build multiple report variants to break down the limit utilization by transactional BP (per country, region, etc.). 

Having explored the benefits of using Group Business Partners, another feature that offers significant flexibility in managing credit risk is the use of manual reservations and collateral contracts. 

Use of Manual Reservations 

Manual reservations in the SAP Credit Risk Analyzer provide an additional layer of flexibility in managing limit utilization. This feature allows risk managers to manually add a portion of the credit/settlement utilization for specific purposes or transactions, ensuring that critical operations are not hindered by unexpected credit or settlement exposure. It is often used as a workaround for issues such as market data problems, when SAP is not able to calculate the NPV, or for complex financial instruments not yet supported in the Treasury Risk Management (TRM) or Credit Risk Analyzer (CRA) settings. 

Configuration: Apart from basic settings in the limit management, no extra settings are required in SAP standard, making the use of reservations simpler. 

Master data: Use transaction codes such as TLR1 to TLR3 to create, change, and display the reservations, and TLR4 to collectively process them. Define the reservation amount, specify the validity period, and assign it to the relevant business partner, transaction, limit product group, portfolio, etc. Prior to saving the reservation, check in which limits your reservation will be reflected to avoid having any idle or misused reservations in SAP. 

While manual reservations provide a significant boost to flexibility in limit management, another critical aspect of credit risk management is the handling of collateral. 

Collateral 

Collateral agreements are a fundamental aspect of credit risk management, providing security against potential defaults. The SAP Credit Risk Analyzer offers functionality for managing collateral agreements, enabling corporates to track and value collateral effectively. This ensures that the collateral provided is sufficient to cover the exposure, thus reducing the risk of loss.  

SAP TRM supports two levels of collateral agreements:  

1. Single-transaction-related collateral 
2. Collateral agreements.  

Both levels are used to reduce the risk at the level of attributable amounts, thereby reducing the utilization of limits. 

Single-transaction-related collateral: SAP distinguishes three types of collateral value categories: 

• Percentual collateralization 
• Collateralization using a collateral amount 
• Collateralization using securities 

Configuration: configure collateral types and collateral priorities, define collateral valuation rules, and set up the netting group. 

Master Data: Use t-code KLSI01_CFM to create collateral provisions at the appropriate level and value. Then, this provision ID can be added to the financial object. 

Reporting: both manual reservations and collateral agreements are visible in the limit utilization report as stand- alone utilization items. 

By leveraging these advanced features, businesses can significantly enhance their risk management processes. 

Conclusion

The SAP Credit Risk Analyzer is a comprehensive tool that offers much more than meets the eye. By leveraging its hidden functionalities, such as Group Business Partner use, manual reservations, and collateral agreements, businesses can significantly enhance their credit risk management processes. These features not only provide greater flexibility and control but also ensure a more holistic and robust approach to managing credit risk. As organizations continue to navigate the complexities of the financial landscape, unlocking the full potential of the SAP Credit Risk Analyzer can be a game-changer in achieving effective risk management. 

If you have questions or are keen to see the functionality in our Zanders SAP Demo system, please feel free to contact Aleksei Abakumov or any Zanders SAP consultant. 

In the first half of 2024, European treasurers are confronted with a new item on their agenda: the updated EMIR Refit. The new EMIR reporting rules will be implemented in the EU on the 29^th of April 2024, and in the UK on the 30^th of September 2024.  

The Updated EMIR Refit introduces the following main changes: 

• Harmonizing the reporting formats to ISO 20022 XML 
• Increasing the number of reporting fields from 129 to 203 (204 in the UK) 
• Introducing new fields: UPI (Unique product identifier) and RTN (Report Tracking Number) 

For more details about these changes, refer to this article on the implications of the EMIR Refit. 

Trade repository reporting in SAP Treasury and Risk management 

SAP Treasury users inquire on how to deal with the changes in their solution, what comes out of the box, what adjustments are necessary,and where the challenges are.  

Since the introduction of the original EMIR reporting in 2012, SAP has covered the requirements for EMIR reporting in the component Trade repository reporting. It is a robust functionality fully integrated into the SAP Transaction manager environment. Due to varying requirements among the various trade repositories, SAP has ceased to enhance the solution and referred clients to the partner solution of Virtusa. However, the SAP Trade repository solution (“TARO”) is still supported on all current releases in the existing functional extend and can be used and adopted by in-house developments and consulting partners (SAP Note 2384289). Using the Virtusa solution or a custom solution, with EMIR Refit, a number of new required fields needed to be incorporated into the deal management data model.  

The following changes have been provided by individual SAPNotes over the course of the past months: 

• Unique Product Identifier (ISO 4914 UPI) and Report Tracking Number (RTN) have been introduced. They are available under the tab “Administration” in the deal data. 
• These fields have been introduced to the relevant BAPIs, mirror deal functionality, as well as to the SAP TPI interface.  

New reporting fields 

The EMIR Refit solution utilizes fields, which have already been made available earlier, over the course of the original EMIR Refit in 2018 (Switch FIN_TRM_FX_HMGMT_3), and are present also under the tab “Administration” for the relevant product categories:  

• CFI Code (Classification of Financial Instruments, ISO 10692 Classification) 
• ISIN on the deal level for OTC deals 
• Market Identification Code (MIC) 

The recently introduced field is the UPI, which is a classification assigned by ANNA Derivatives Service Bureau. It consists of 12 characters and reflects both the Asset class, Instrument type, Product and the CFI. The CFI itself is an instrument classification which is 6 characters long. 

 The next consideration is how to populate these fields. In case of external trades, the CFI and UPI can be delivered by the trading platform. SAP Trade platform integration (TPI) covers the transfer of these fields from the trading platforms.  

Since 2019, in case of OTC deals, EMIR Refit made financial counterparties (FC) solely responsible and legally liable for reporting on behalf of both counterparties, provided the non-financial counterparty is below the clearing threshold (NFC-). Therefore, this option would be necessary only for large financial entities, as smaller corporates are not obliged to report external OTC deals, as the counterparty reports on their behalf.  

Corporates are obligated  to report their intercompany deals, under the condition that they cannot apply for an opt out with their regulator. In that case, the CFI and UPI need to be derived in-house.  

For that purpose, there are enhancements (BAdIs) available, to implement one's own derivation logic.  

The reporting format has been standardized with ISO 20022 based XML. XML output can be easily generated based on a DMEE structure. Unlike the original version from 2012, SAP does not deliver the new report structures needed for the EMIR Refit. This part needs to be set up in a project.  

The impact of the EMIR Refit in the trade repository reporting of your organisation can bring up many specific questions. We are happy to help you answer them from both the advisory as well as the technical implementation point of view. Examples on how Zanders can assist is: 

• Implementing the new Emir Refit requirements in SAP Treasury 
• Assisting in applying for the exemption of reporting internal trades with the various regulators 

Reach out to Michal Šárnik to receive assistance on this topic. 

Our technology partnerships are core, foundational elements of our risk and treasury transformations at Zanders. For us to guide our clients through their digitalization journeys and keep pace with technology advancements relies on the right relationships (non-commercial of course, so we maintain our independence) with the best solution providers in our field. To stand the test of time, these relationships need to be mutually advantageous, and this takes both parties to be engaged, committed to continual learning, and driven by a shared vision. Our work with SAP embodies these qualities. And in demonstration of the success of this alliance, in 2024 we’re celebrating 25 years of partnership with the market-leading technology platform.  

To mark this anniversary milestone, we invited Christian Mnich, VP, Head of Solution Management, Treasury and Working Capital Management at SAP to join Zanders partners Judith van Paassen and Laura Koekkoek to reflect on how the relationship has developed in this time. As they shared anecdotes and considered the unique characteristics that have shaped this partnership, three key themes emerged – collaboration, trust, and growth.  

1. Collaboration: A meeting of minds 

From day one, there was an enthusiasm from both companies to collaborate and share expertise. Zanders’ first encounter with SAP was at a trade fair in 1998. Back then, Zanders was four years young and a relative newcomer to the treasury advisory world. SAP was an established standard in business processing software but at this point still a single-product, ERP solution. As the modern technologies lead for Zanders, Judith van Paassen visited the SAP stand at the exhibition curious to see how the platform could extend to support the work Zanders was doing with corporate treasury departments.  

“SAP was present at that fair with an early version (2.2F) of the system,” Judith recounts. “I asked some in depth questions at the time about functionalities. Can SAP do this? Can SAP do that? After some further discussion and exchange of knowledge, the idea to join forces was brought up.” 

On the basis of this trade fair encounter, SAP and Zanders together started looking into how the system could be customised for treasury, specifically at the time for the Dutch market. 

2. Trust: The backbone of successful partnership 

The partnership initially focused on the Netherlands, with Judith regularly spending time with SAP colleagues, working with the team on how to position the treasury system to the market and helping them to demonstrate the potential of the solution to support corporate treasury processes.  

“It was a very close partnership between the Netherlands and Zanders – where Zanders and SAP worked closely together and were organizing seminars to inform the market on the capabilities in SAP,” Christian remembers. “This model was very unique back then and the partnership model is still working very well for SAP and their partners.”  

These early days formed a backbone for the partnership, embedding a commitment to honest and open collaboration into the core of the relationship.  

“It’s all been built from trust,” Christian emphasizes. “When building a long-lasting partnership, you need to have open dialogue – on both sides. It’s very important to us as a solution provider that when we roll out new solutions, we get honest feedback. We’ve had lots of sessions with Zanders over the years where you’ve provided this honest feedback. By doing this, you’ve helped us to scale our solutions, develop new solutions and increase the adoption of our services.” “This also comes back in our co-development of regional solutions for local requirements like the connectivity between eBAgent and MBC in the APJ region” says Laura. 

3. Growth: Pioneering new environments

As the partnership has expanded from the Netherlands and Benelux to the UK, parts of the DACH region, the US and APJ, it has provided a launchpad for important growth opportunities for both businesses. For Zanders, it’s empowered our team with a much deeper understanding of the role and potential of innovation in our market, enabling us to take a proactive role in guiding our clients through transformation projects.  

“We’re consultants – we like to give advice to our clients – but we also really want to implement solutions with our clients,” says Judith. “To do this, we need to not only look at the little details within treasury, but at the end-to-end process and architecture. Our knowledge of treasury in combination with our experience with SAP technology has definitely made us more attractive to expand our services to clients in Asia, the US and APJ. It’s has also allowed us to take a more proactive role in driving large-scale treasury transformations for our clients.” 

Christian agreed that the partnership has also been an enabler of growth for SAP, highlighting three transformation projects undertaken jointly by the partnership as key moments:

• Firstly, AkzoNobel. It was the first treasury transformation the partnership worked on where SAP was implemented to replace a best of breed TMS system in the European environment. The size and complexity of this project made it a blueprint for future transformations. In particular, demonstrating the benefits of breaking down product siloes to add treasury capabilities to the SAP ERP system in a more integrated way.  
• Secondly, BP. Although not as large and extensive as other projects, it’s notable for its strategic importance. This project represented the first entry into the UK for SAP, paving the way into an important growth market and opening up new opportunities in other regions. 
• Thirdly, the implementation of the SAP S/4HANA treasury system for Sony. As a truly global transformation project, the scale and nature of the project (especially given the timing with the pandemic) meant there were many challenges. The success of the deployment is a testament to the strength of the partnership, with the teams working together closely to develop the best solution for the client.

Together, these projects show the relentless commitment from both partners to challenge boundaries, see the bigger picture and prioritize client needs.  

“We’ve seen a willingness from Zanders to expand their view from core treasury into other areas,” Christian explains. “This is very important for us from an SAP point of view. Smaller, niche or more boutique partners – they don't leave their comfort zone, whereas there's always interest from Zanders to learn new things. We appreciate how you try to understand the challenges before your customers run into these challenges.”  

25 years – A celebration of collaboration, trust, and growth 

What our 25 years working with SAP shows us is the success of our partnership comes down to how we work together as a team. This means trusting each other, being collaborative, and relies on both parties being willing to challenge the status quo to pursue ambitious growth. What SAP and Zanders have accomplished together already may have been ground-breaking, but it feels like we’ve still only just scratched the surface of what we can potentially achieve together. For this reason, our journey together will continue long into the future – at pace. 

But what happens after implementation, when the project team has packed up and handed over the reins to the employees and support staff? 

The first months after a system implementation can be some of the most challenging to a business and its people. Learning a new system is like learning any new skill – it requires time and effort to become familiar with the new ways of working, and to be completely comfortable again performing tasks. Previous processes, even if they were not the most efficient, were no doubt second nature to system users and many would have been experts in working their way through what needed to be done to get accurate results. New, improved processes can initially take longer as the user learns how to step through the unfamiliar system. This is a normal part of adopting a new landscape and can be expected. However, employee frustration is often high during this period, as more mental effort is required to perform day-to-day tasks and avoid errors. And when mistakes are made, it often takes more time to resolve them because the process for doing so is unfamiliar. 

High-risk period for the company 

With an SAP system, the complexity is often great, given the flexibility and available options that it offers. New users of SAP Treasury Management Software may take on average around 12 – 18 months to feel comfortable enough to perform their day-to-day operations, with minimal errors made. This can be a high-risk period for the company, both in terms of staff retention as well as in the mistakes made. Staff morale can dip due to the changes, frustrations and steep learning curve and errors can be difficult to work through and correct. 

In-house support staff are often also still learning the new technology and are generally not able to provide the quick turnaround times required for efficient error management right from the start. When the issue is a critical one, the cost of a slow support cycle can be high, and business reputation may even be at stake. 

While the benefits of a new implementation are absolutely worthwhile, businesses need to ensure that they do not underestimate the challenges that arise during the months after a system go-live. 

Experts to reduce risks 

What we have seen is that especially during the critical post-implementation period – and even long afterward – companies can benefit and reduce risks by having experts at their disposal to offer support, and even additional training. This provides a level of relief to staff as they know that they can reach out to someone who has the knowledge needed to move forward and help them resolve errors effectively. 

Noticing these challenges regularly across our clients has led Zanders to set up a dedicated support desk. Our Treasury Technology Support (TTS) service can meet your needs and help reduce the risks faced. While we have a large number of highly skilled SAP professionals as part of the Zanders group, we are not just SAP experts. We have a wide pool of treasury experts with both functional & technical knowledge. This is important because it means we are able to offer support across your entire treasury system landscape. So whether it be your businesses inbound services, the multitude of interfaces that you run, the SAP processes that take place, or the delivery of messages and payments to third parties and customers, the Zanders TTS team can help you. We don’t just offer vendor support, but rather are ready to support and resolve whatever the issue is, at any point in your treasury landscape. 

As the leading independent treasury consultancy globally, we can fill the gaps where your company demands it and help to mitigate that key person risk. If you are experiencing these challenges or can see how these risks may impact your business that is already in the midst of a treasury system implementation, contact Warren Epstein for a chat about how we can work together to ensure the long-term success of your system investment.