Making the Leap: SAP Treasury Solutions That Run on S/4HANA

By March 9, 2023No Comments

PwC insights on corporates using SAP treasury tools and S/4HANA to ease automation and data analytics.

Implementing S/4HANA, the SAP ERP, and using SAP’s growing number of treasury modules is one way to accelerate treasury’s digital transformation—a route being taken by some multinationals that are deciding to forgo the use of a traditional treasury management system (TMS). PwC consultants discussed the benefits of this approach at recent NeuGroup meetings, including one that focused on the role of cloud-based ERPs and in-house banks.

  • It’s a route that makes the most sense for treasury teams at companies adopting S/4HANA across the enterprise—and in some cases having treasury and finance teams implement it first.
  • “If SAP is your main ERP solution, then transitioning to S/4HANA will provide the best capability and experience for treasury needs,” according to a PwC presentation demonstrating that S/4HANA connects to SAP treasury software and also to third-party solutions for functions including trading and working capital management.
  • In a follow-up conversation, Karsten Kohl, principal at PwC, said that adopting SAP treasury solutions can give corporates the ability to better leverage ERP data, including for cash forecasting, balance sheet hedging and payments. SAP, he added, is a reliable vendor, while some “niche [treasury] systems are getting consolidated or lack attention from their respective vendors.”

Roadmap for the future. The treasurer at one NeuGroup member company said that by implementing S/4HANA and adopting SAP treasury software solutions, his company is “buying a roadmap for the future” and expects to benefit by having all its data in one spot.

  • He said by using a data analysis tool like Tableau with just one database—the case with SAP S/4HANA—“you can get the data generally faster, quicker and more up-to-date” than if Tableau is pointed at multiple databases. He also likes having a system that’s cloud-based and offers the company robust support.
  • This company will employ a private cloud that is an individual instance of the ERP with customization options. “This is the solution that most [MNCs] are using and that offers both comprehensive treasury functionality and the option to interface to SaaS TMS solutions,” Mr. Kohl explained. “It also offers flexible connectivity.”
  • Smaller companies may elect to use the public cloud, using “exactly the same instance” of the ERP as other SAP customers, he said.

Evolution of SAP treasury tools. Improvements SAP has made to its treasury and risk management solutions have persuaded more finance teams to use them. For example, SAP responded to pressure it received about its cash management and short-term cash positioning modules, Mr. Kohl said. “The solution has come a long way over the last few years and is a serious competitor in the treasury system market.”

  • PwC’s presentation showed a timeline of the steady development and expansion of SAP treasury technology in three categories since the debut of S/4HANA in 2015:
  1. Banking and payments.
  2. Cash and liquidity management.
  3. Financial risk management.
  • Among other milestones, the timeline displays SAP’s cash flow analyzer and hedge management “cockpit” for FX cash flow hedging coming online before 2018, followed in subsequent years by a payment factory solution, an FX balance sheet hedging tool, a new AI-based cash forecast solution in the last year and a new in-house bank solution in 2023.
  • SAP has also shown a willingness to collaborate with some corporates on standardized treasury solutions that work with S/4HANA that benefit other companies. NeuGroup Insights reported in Nov. 2021 that Google’s treasury team worked with its own engineers and SAP to make multiple enhancements to the software’s hedge management capabilities and exposure management trading interface.

Weighing pros and cons. Some NeuGroup members say that while SAP’s treasury tools have improved, the software is not intuitive and can require multiple keystrokes to do a simple task. They also recommend that treasury teams read SAP contracts very carefully to avoid agreeing to pay for services they don’t need.

  • PwC’s Mr. Kohl says that while SAP’s treasury system will never be as flexible as a standalone solution, adopting S/4HANA and SAP treasury tools allows corporates to achieve a level of integration and transparency that will serve them well on the journey to treasury transformation.
  • Another key benefit to weigh, he says, is the quality of the functionality SAP has built into the software for in-house banks and payment factories, which it redesigned from scratch.
Justin Jones

Author Justin Jones

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