Why Bank Analyzer – AFI is not a sub-ledger anymore? Chapter II.

Dear,
We saw in the last blog the improved integration that comes with the simplification initiative of S4 HANA and the Universal Ledger.

https://www.linkedin.com/pulse/why-bank-analyzer-afi-sub-ledger-anymore-chapter-i-ferran-frances?published=t

Unfortunately Bank Analyzer has not been included, at least for the moment, in the S4 HANA simplification initiative, but this doesn’t mean that we can’t take advantage of the improved capabilities of the Universal Ledger.

Recently, we worked in a Proof of Concept for integrating SAP smart Accounting for Financial Instruments on Banking Services 9 with SAP S/4HANA Finance.

Conceptually, it’s not possible to fully integrate Bank Analyzer with the Universal Journal, as they have been designed for fulfilling different objectives and built on different architectures.

- The Universal Journal of SAP S/4HANA Finance is an Accounting System, whose final objective is providing multidimensional Financial Statements, eliminating the separation between Sub-Ledgers and the General Ledger

- Bank Analyzer is a Capital Optimizer, whose final objective is offering a multidimensional representation of the Accounting Results of a bank’s business segment, the Capital consumed for generating the Result, and the Liquidity generated or consumed in the process. This is the foundation of the Integrated Financial and Risk Architecture.

For that reason the Universal Journal of  SAP S/4HANA Finance generates Accounting Postings, while Bank Analyzer generates Cash-Flow Structures and Financial Position Objects, one of whose potential representations are Accounting Postings.

You probably remember that we discussed briefly about this topic in a previous blog.

https://www.linkedin.com/pulse/why-sap-bank-analyzer-accounting-system-ferran-frances?trk=hb_ntf_MEGAPHONE_ARTICLE_POST

For this reason, when we said that we worked in the integration of Bank Analyzer with the Universal Journal, we must clarify that the objective was limited to integrate the Accounting constellations of Bank Analyzer into the Universal Ledger architecture, and not the Risk and Liquidity ones.

Bank Analyzer was built as a Sub-ledger, with the Fat Sub-Ledger / Thin General Ledger approach.

Without the Universal Journal, accounting entries of Bank Analyzer are extracted from the RDL with the correspondent data-sources, transferred to SAP Business Information Warehouse, and in the standard scenario, reconciled with the General Ledger entries on the Bank Analyzer ERP MultiProvider of the Bank Analyzer Financial Data Mart.

By integrating the Bank Analyzer Accounting (sub-ledger type) Postings in the S4 HANA Universal Ledger we can enjoy some of the reconciliation and simplification advantages that the Universal Journal offers to other Sub-Ledgers (Real Estate, Projects System, Accounts Payable, Accounts Receivable, etc.).

From an Operations perspective, this approach represents several challenges.

1) Bank Analyzer Accounting Entries are available in the Results Data Layer after the Accounting Processes have been finished (PEBT, USBT and KDV), while they’re only available in the General Ledger after the GL-Connector processes have been finalized.

2) Extracting data from separated systems and data structures makes analysis and reconciliation more difficult. In the same way that extracting data from the Projects System Sub-Ledger and the General Ledger requires more effort than extracting all the necessary data from the Universal Journal.

In most of projects, Bank Analyzer and General Ledger reporting teams work in parallel, with duplicated teams mantaining BW Info-cubes ad-hoc reports, not following the final objective of the integration principle, which is providing one “Single Source of Truth”

As an alternative, in our Proof of Concept, the objective was building the Bank Analyzer analytical dimensions, as a subset of the Universal Ledger dimensions, but without adding any Info Object in the Bank Analyzer Accounting Dimensions, which couldn’t be mapped in a 1 to 1 relationship with the Universal Ledger Dimensions.

All the accounting entries of the RDL would be replicated to the Universal Ledger, which would provide both, the detailed (sub-ledger type) and aggregated (General Ledger type) accounting information, eliminating the barriers between the AFI sub-ledger and the General Ledger.

The Operations Plan should formally include the General Ledger-Connector process as part of the Bank Analyzer Accounting Processes.

With this approach, all the accounting entries, including AFI accounting entries, will be posted in the Universal Ledger, facilitating reconciliation and analysis of the information. We will not have to access to separated data-structures (Results Data Layer and General Ledger). All the accounting information will be available from the Universal Ledger.

All the reporting, predictive and analytical functionalities implemented on the Universal Ledger, taking advantage of the HANA capabilities, will be immediately available for the Accounting for Financial Instruments results.

Be aware that it’s technically possible, integrating non-Hana based Bank Analyzer systems, with the Universal Journal of S4 Hana. By following this approach, clients running a non-Hana based Bank Analyzer system, who don’t have short term plans to migrate their Bank Analyzer system, can still enjoy the capabilities of Hana based systems, by integrating their AFI processes in the Universal Journal of S4 HANA.

And Finally, all the Accounting Extractions to the Reporting Systems will have the Universal Journal as the “Single Source of Truth” simplifying the Reporting and Reconciliation requirements.

Let's connect on Twitter: @FerranFrancesGi
Join the SAP Banking Group at: http://www.linkedin.com/e/gis/92860

Looking forward to read your opinions.
Kind Regards,
Ferran.

Why Bank Analyzer – AFI is not a sub-ledger anymore? Chapter I.

Dear,
Since version 5 of Bank Analyzer was released 10 years ago, we've enjoyed a powerful system for the management of the Financial Instruments of an institution, from two perspectives.

- Multi-GAAP, Accounting representation of the financial events, impacting the Bank's portfolio (Bank Analyzer-AFI).

- Capital Consumption and correspondent Capital Requirements of the Bank's Assets (Bank Analyzer-Credit Risk).

This double representation is the foundation of the Integrated Financial Risk Architecture of Bank Analyzer, which was already available in previous versions of the system.

On the other hand, and that was the most relevant improvement of the version 5, the Accounting for Financial Instruments module of Bank Analyzer offered complete Financial Statements of every contract of the Bank, fully integrated and reconcilable with the General Ledger.

This integration was provided with the structure of a sub-ledger. In the AFI sub-ledger we have the detailed statement of every Financial Instrument/Transaction, fully reconcilable on account level, with the aggregated statement of the company, available in the General Ledger.

On the other hand, as the number of entries of the detailed sub-ledger, is far bigger than the aggregated entries of the General Ledger, the final architecture was called Fat-Subledger / Thin-General Ledger.

This was 10 years ago; on 2010 we saw the release of the SAP HANA Database whose performance opened new opportunities in Information Systems simplification, and since 2015 we can enjoy a new concept of Accounting Simplification with the Universal Journal of S4 HANA.

Amongst other advantages, the Universal Journal of S4 HANA has eliminated the separation between the sub-ledgers and the General Ledger.

With the Universal Ledger, the accounting information is not spread in the information system of the company.

We don't have to look for accounting aggregated information in the General Ledger and detailed accounting information in the Sub-ledgers (Accounts Payable, Accounts Receivable, Assets Management, Projects System, Real Estate, Material Ledger, etc.). With the Universal Journal, we have all the accounting information in a single multi-dimensional ledger, with separated but integrated entries, structured on the multiple dimensions of this ledger.

The simplified architecture of the Universal Ledger comes with new capabilities for analyzing and reconciling the accounting information.

For instance, let's imagine that we have to model the business process of a construction company, in which the invested capital is collected in the Projects System module, till the Work in Process is activated in an Asset, that will be managed by the Assets System module of SAP ECC. Finally, the asset will generate profits by lease out contracts, managed with the Real Estate Module.

Without the Universal Journal, accounting information for Projects needs to be recovered from the WBS's tables (PROJ, PRPS, etc.), while the accounting information of the Assets is stored in the Assets System tables (ANLA, ANLB, ANLC, ANEK, etc.), and the Lease Out contracts are stored in the Real Estate tables (VIMIMV, VIMI01, etc.).

With the Universal Journal, the accounting entries of the WBS elements, the Assets and the Lease Out contracts will be posted in the Universal Journal tables (ACDOCA, BKPF, etc) during all phases of the business process, simplifying the reporting and reconciliation requirements.

But let's come back to the Bank Analyzer system; theoretically SAP – AFI is not part of the S4 HANA simplification initiative, and consequently it will not offer the integrated capabilities of the Universal Journal.

Recently, we worked in a proof of concept for taking advantage of the Universal Journal capabilities, integrated with the Accounting for Financial Instruments module of Bank Analyzer version 9.

We'll talk about our conclusions in the next blog.

Looking forward to read your opinions.
Join the SAP Banking Group at: http://www.linkedin.com/e/gis/92860
K. Regards,
Ferran.