Best Practices For Migrating To SAP S/4HANA

Moving to SAP S/4HANA represents an opportunity for organizations to reimagine their central IT functions for modern business needs. Thousands of SAP customers have already begun the migration to take advantage of the speed of its in-memory database platf

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3 Consequences of Mismanaging E-Invoicing Compliance for SAP Customers

Of all the issues SAP customers have to address when updating IT infrastructures and ultimately moving to SAP S/4HANA, tax compliance, at first blush, seems to be one of the most mundane. There’s not much excitement in making sure financial systems are compliant with global regulations for enforcing value-added tax (VAT) laws.

But mishandling tax compliance could lead to the wrong kind of excitement, the kind that costs money, dents cash flow, leaves companies susceptible to audit, and derails digital transformation and SAP S/4HANA migrations.

Closing the Tax Gap with E-Invoicing

Seeking to close the gap between the revenues a business earns and the VAT amounts it pays along the supply chain, governments are inserting themselves into business-to-business transactions. Mandates for electronic invoicing, or e-invoicing, have existed in Latin America for more than a decade and are now popping up in Europe and Asia as well.

E-invoicing models vary by country and constantly change as governments introduce and evolve mandates. In some countries, such as Brazil, Mexico, and Italy, the government must validate a transaction before a seller and buyer can complete it. In others, the government replaces or supplements monthly VAT returns with requirements to report digital files detailing individual transactions much more frequently.

There are a few consequences that SAP customers face if they mismanage their e-invoicing compliance – such as an inability to simplify their IT architecture, to innovate, and to plan for SAP S/4HANA implementations. Let’s take a deeper look at each of these consequences in turn.

Consequence 1: Inability to Simplify IT Architecture

The splintered nature of e-invoicing mandates provides a prime example of how mishandling e-invoicing compliance can hold back digital transformation efforts for SAP customers. As companies set out to simplify their IT architecture as part of a move to SAP S/4HANA, they will seek to reduce the number of systems they have to build, monitor, and maintain.

But falling out of e-invoicing or digital reporting compliance can lead to invalidated transactions — and then to cash flow problems, damaged relationships with suppliers and customers, and even financial penalties or the shuddering of the business in a particular country. However, many tax and IT leaders think that they can continue the time-honored practice of decentralizing responsibility for local transaction taxes to local subsidiaries — even as requirements shift from periodic to real-time controls.

That kind of piecemeal development of core transactional systems flies in the face of simplifying and streamlining IT. Babysitting multiple tax compliance systems in multiple countries leads to sprawl, not consolidation. It’s impossible to manage sprawling e-invoicing compliance systems and consolidate IT operations at the same time. Mishandled tax compliance, then, can provide a very serious hurdle to the kind of consolidation most SAP customers are likely to seek in moving to SAP S/4HANA.

Consequence 2: Inability to Innovate  

Mismanaging e-invoice compliance can also stifle innovation, which is critical to any successful digital transformation. Managing disparate tax compliance systems leads to an endless process of gluing bits and pieces of systems together. That activity ends up being all-consuming, leaving no room for creativity in rearchitecting and restructuring IT and financial capabilities.

For CIOs, maintaining tax compliance can turn into a never-ending series of fire drills. Global expansions, mergers, and acquisitions bring new challenges in every country into which an SAP customer expands. New tax jurisdictions mean new sets of e-invoicing compliance requirements to follow and keep pace with as requirements shift.

Mandates change constantly, sometimes giving companies only a few months to respond to a major new requirement. For instance, back in November, Peru gave large companies just five months to comply with a requirement to partner with a certified Operator of Electronic Services (OSE) for clearing e-invoices in real time.

Falling out of e-invoicing compliance simply isn’t an option in most countries with e-invoicing mandates. In Italy, for instance, the tax authority recently introduced real-time e-invoicing. If an invoice doesn’t clear the country’s real-time e-invoicing system, no Italian customer is going to pay it. Imagine not being able to invoice a $10 million customer at the end of a quarter. Tax compliance is no afterthought but a precondition for doing business in a growing number of countries.

Consequence 3: Inability to Plan for SAP S/4HANA

In fact, without being compliant, SAP customers won’t be able to roll out new e-commerce systems as part of the move to SAP S/4HANA. They’ll have to continue to manage multiple disparate e-commerce applications rather than deliver on the promise, cost saving, and efficiencies of centralization.

That obviously puts a major dent in plans to move to SAP S/4HANA. The value proposition of SAP’s new offering revolves largely around finally moving all critical financial data from a splintered group of systems provided by different vendors into a central repository, beginning with the central finance system and ultimately moving to SAP S/4HANA.

If an SAP customer has to keep multiple disparate systems in compliance with mandates every day in order to keep doing business in certain countries, the company will have a very hard time consolidating financial data as part of the SAP S/4HANA migration. The migration will fall into the same trap that catches IT innovation: It’s impossible to execute a plan for tomorrow while devoting an outsized number of resources simply to keeping operations going today.

Tax Compliance at the Core of Digital Transformation

SAP customers need to move compliance to the core of their digital transformation strategies and make it an integral consideration as they plan their migrations to SAP S/4HANA. Implementing a single system to manage compliance in multiple countries and dynamically shift as mandates change will remove the barriers noted previously and open up additional opportunities to streamline trading partner data interchange.

Centrally managing e-invoicing with local compliance in all markets removes the burden and risk of sinking resources into chasing mandate changes in different countries across the world. Only by consolidating tax compliance functions can SAP customers safely accomplish their goals of simplifying IT infrastructure, freeing their teams to innovate, and ultimately delivering on the single-source promise of SAP S/4HANA.  

Christiaan Van Der Valk is Vice President, Strategy, at Sovos. Elected a World Economic Forum Global Leader for Tomorrow in 2000, Christiaan is an internationally recognized voice on e-business strategy, law, policy, best practice, and commercial issues.

Automating Fax, Email & EDI Orders Into SAP Systems

If your company wants to eliminate the problems caused by fax, email and EDI orders, there are many factors to consider. This white paper explores those factors, while highlighting how AI-driven automation solutions can deliver cost savings and process ef

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McDermott Talks Xs and Os at SAPPHIRE NOW Keynote

On Tuesday, May 6, SAP CEO Bill McDermott kicked off the 30th edition of SAPPHIRE NOW with a keynote punctuated by practical examples of how SAP is powering innovation, integration, and an improved customer experience. McDermott illustrated his message by sharing details on SAP’s investments in R&D, its own use of SAP technology, and customer adoption statistics for its SAP HANA database, and through live interactions with industry leaders such as Tim Cook, CEO of Apple.

McDermott’s narrative for the 30,000 in attendance at this year’s event was organized around three key questions he posed for the audience:

  • Where are we?
  • Where do we need to go?
  • How do we get there?

Since 2010, SAP has poured over $70 billion into innovation, McDermott reported, with a significant portion of these funds focused on SAP HANA, cloud solutions, and making the intelligent enterprise a reality for the SAP customer base.

“We brought a lot of innovation to you in a short time frame,” said McDermott. “When we listen, understand, and act, we fulfill our potential as your trusted innovator.” He went on to recognize that companies may follow a different pace in their own innovation process, but indicated that SAP will continue to move full steam ahead — particularly when it comes to enabling end-to-end business processes with SAP technology, integrating the front office and back office with Qualtrics technology, and building enhanced mobile enterprise apps for iOS.

Enabling End-to-End Business Processes with SAP Technology

McDermott then brought up SAP’s Chief Operating Officer, Christian Klein, to help share how SAP is leveraging its own technology to run its business. Klein’s message focused on both integration and automation, stressing the need to adopt technology not only for feature and function, but also to generate real business results.

“It’s not just about the number of SAP Leonardo use cases — it’s about the business outcome to you,” said Klein. He went on to talk about how SAP is working to use artificial intelligence (AI) to automate end-to-end business processes with specific objectives by year end. In speaking about manual and resource-intensive processes — such as order management, invoicing, and cash collection — Klein reported that SAP is doing focused work in this area, and he believes that SAP can increase automation levels using AI by over 50% by the end of 2019.

Tighter integration of HR and customer experience business processes are also high on Klein’s 2019 agenda. The move to the cloud is just a first step for customers to offload solution management and gain faster access to the latest functionality. In its next phase of innovation, SAP is working to deliver true end-to-end process automation and efficiency starting with the hire-to-retire process, according to Klein.

Using SAP Cloud Platform as the foundation, SAP will tighten the automation and integration between both data and functions with a unified user interface on top. “End users don’t work within functional siloes — they are working across business processes,” Klein observed. SAP will bring together all key master data objects, integration services, workflows, and security to support key processes. Klein reports that there are 30,000 engineers working on more than 1,000 technical APIs to deliver seamless end-to-end business process integration and aligned data models. SAP is committed to delivering the fully integrated hire-to-retire process by the end of 2019.

Integrating the Front Office and Back Office with Qualtrics Technology

Another priority for SAP is using SAP C/4HANA and SAP S/4HANA to integrate the front-office and back-office when it comes to customer engagement, sales, and experience. McDermott emphasized the combination of operational data (which he defined as “O” data) and customer experience data (which he labeled as “X” data) to give organizations a true picture of what’s going on within their business.

SAP’s acquisition of Qualtrics is the centerpiece of this strategy and McDermott brought Qualtrics CEO Ryan Smith on stage to talk more about the importance of X data to business prosperity. According to Smith, the return on delivering a great customer experience is significant and the risk of failure is equally high. “Organizations are disproportionately rewarded when they deliver a great experience and absolutely punished when they do not,” he stated.

Smith went on to use companies such as Peloton, Uber, Venmo, and Square as examples of companies that have effectively competed and dominated in marketplaces that were previously led by long-standing incumbents. “All of these companies have been started in someone else’s experience gap. The race is on, and only experience brands are surviving,” Smith concluded.

One of the ways current SAP customers will see the impact of the Qualtrics acquisition is through touchpoints — for both customers and employees — within existing SAP ERP business processes. For example, earlier that day SAP announced that it is introducing 10 new offerings that bring together customer experience data with operational data to improve customer, employee, product, and brand experiences. These solutions will embed experience data at various points in HR, CRM, and core SAP ERP processes. The data will be drawn from a combination of action, sentiment analysis, and answers to questions posed to customers and employees directly within a process.

Building Enhanced Mobile Enterprise Apps for iOS

Once the Qualtrics discussion concluded, Apple CEO Tim Cook took the stage in an open conversation with McDermott to discuss the evolution of mobile enterprise applications and to highlight a joint announcement on expanding the function and feature set of SAP’s development environment for iOS. These enhancements include the addition of machine learning to SAP’s iOS development kit on SAP Cloud Platform.

SAP has been aggressively rebuilding mobile apps for iOS for SAP SuccessFactors solutions, SAP Concur solutions, and the SAP Asset Manager application to improve their performance, security, and overall functionality. SAP has also been promoting the mobile apps it has built for professional sports to both improve the customer experience and aid coaches and managers. The portfolio includes an NHL app for coaches that delivers 30 real-time in-game statistics to help them modify their strategy throughout the game.

What Does This Mean for SAPinsiders?

While some of this functionality may be far off for many, we believe that all customers should start thinking about where and how they can use this technology, and start experimenting early. SAP is making many of these solutions the foundation for future applications and enhancements. The bar to piloting many of these solutions and development environments is lower than ever, and the more you know, the better prepared you’ll be to get the most out of your continued investment in SAP technology.

Here are some of our recommendations:

  • Get some experience leveraging SAP Cloud Platform with integration. SAP Cloud Platform is undoubtedly going to become the integration engine for SAP’s on-premise and cloud environments. Start looking at your current foundations of APIs and middleware to determine where your challenges are and how SAP Cloud Platform can help.
  • Identify your critical pain points within your end-to-end processes. How siloed are your critical business processes? Where are you finding delays or disruptions? What’s causing them? By answering these questions, you’ll be able to start identifying the integration headaches and where SAP solutions can help. You will also be able to identify areas where you have siloes that are hampering collaboration and efficiency between departments or business units.
  • Determine where within your business processes you can collect experience data. Think about the current feedback you are receiving from both employees and customers and what’s missing. Are there specific parts of your order management process or logistics processes where you want to collect feedback? Explore solutions that can help you fill these gaps.
  • Experiment with enterprise mobile app development. Most companies have already developed some basic enterprise mobile applications. The technology and capabilities of enterprise mobile environments are expanding rapidly, however, enabling you to integrate modern user interfaces, AI, machine learning, and advanced analytics into your mobile apps. It’s a good idea to start experimenting with these capabilities, as they will be critical to the future of mobile application development. By gaining experience, you will give your organization a competitive advantage. 

SAPinsider and IDG Partner to Bring Educational and Networking Events to SAP Customers Worldwide

With SAP customers spread across the globe, and the need to understand how to optimize technology investments and gain a foothold in a crowded market higher than ever, SAPinsider and International Data Group (IDG) are partnering to bring this knowledge to customers where they are. This global partnership was announced on Monday, May 6, via press release and will bring SAPinsider’s portfolio of market-leading educational and networking events to SAP customers worldwide.

SAPinsider has a decades-long history of producing focused events that educate and inspire its worldwide community of more than 350,000 SAP professionals to think differently and to be better prepared to tackle their most pressing projects, issues, challenges, and decisions. These events include SAPinsider’s flagship Digital Core and Intelligent Platform event, which drew over 2,200 attendees in Las Vegas this past March, and will be continuing on to Amsterdam in June.

IDG is one of the largest tech media companies in the world, featuring well-known brands such as CIO, Computerworld, CSO, and Network World. The company also supports a global events operation that produces more than 700 events across the globe each year.

Drawing on SAPinsider’s unique insights, network, knowledge, and experience in the SAP marketplace and IDG’s global brands, community, and resources, this partnership will bring world-class education and networking experiences to SAP customers across the world. The first events produced by this partnership are slated to kick off later this year in Australia.

“The SAPinsider community will now have unprecedented worldwide access to our premier events, research and member network, thanks to this exciting new partnership with IDG,” said Jamie Bedard, CEO of SAPinsider. “Working together with SAP, we will lead SAPinsider events in more than 20 countries across the world.”

“At IDG, we believe in the power of peer-to-peer content and in connecting users and buyers of technology. We’re proud and excited to be SAPinsider’s exclusive partner for the global expansion of the valuable services of SAPinsider. We invite the global SAP community to become SAPinsiders, to join the upcoming events in the most relevant markets around the globe, and to create and share content with us to make every organization that runs SAP even more successful,” said York von Heimburg, President of International IDG Communications.

What Does It Mean for the SAPinsider Community?

The SAPinsider and IDG partnership is designed to bring SAPinsiders the information and opportunities they need to succeed with SAP technology:

  • No matter where you are located, you will be able to access SAPinsider live education near you.  SAPinsider will be providing event updates in this newsletter and through SAPinsider magazine, and be sure to also keep your eyes on the event calendar.
  • Global SAP organizations will be able to coordinate education, training, and networking locally. You will be able to receive a content experience that’s directly reflective of local market trends and customers. You will gain access to in-person events and experiences to network, discuss the latest trends in the marketplace, and drive important engagement for sales and marketing activities.
  • Global SAP partners will have lead generation and thought leadership opportunities in the areas they are looking to grow and secure their business. A significant portion of the event agendas will be reserved for local experts and partners who have a unique and compelling story to tell.
Meeting SAP Customers and Partners Where They Are

The combined strengths of SAPinsider and IDG offer SAP customers and partners the opportunity to learn how to optimize their investments and make better business decisions through a localized experience that brings them the information they need right where they are.

Follow SAPinsider on Twitter at @SAPinsider.

How to Prevent Complexity from Taxing the Customer Experience

The adjective “seamless” now goes hand-in-hand with the phrase “customer experience” for a good reason: these capabilities deliver a competitive advantage to most business-to-consumer (B2C) and business-to-business (B2B) companies across all industries, and particularly in the retail industry.

Top-notch customer experience proficiencies can be difficult to achieve in the omnichannel era, however. New complexities make it challenging to accurately calculate and report sales tax and value added tax (VAT) in compliance with a dizzying number of constantly changing indirect tax rates and rules in the US and throughout the world. While the term “seamless” refers to qualities like “unified,” “smooth,” and “continuous” when describing the customer experience across multiple channels and touchpoints, the term translates to “accurate” and “invisible” when applied to a company’s tax management capabilities. When tax calculations for online transactions are inaccurate or so noticeable as to be disruptive, they can give rise to customer experience problems and potentially costly compliance risks.

As a result, it is vital for e-commerce systems to include streamlined tax calculation, reporting, and compliance functionality. This need has intensified over the past year due to a sweeping legal change concerning the taxation of e-commerce in the US, as well as new digital taxation rules in the European Union (EU) — with many more such changes all but guaranteed to follow.

Although chief marketing officers (CMOs) and their marketing teams are primarily responsible for designing and delivering customer experience, the execution of this strategy requires the involvement and support of the entire organization, including the tax function. Right now, most tax functions are contending with a volatile combination of compliance issues that e-commerce systems must help address if retailers and other companies are to attain and sustain customer experience excellence.

Wayfair and Other Drivers of E-Commerce Complexity

In June 2018, the US Supreme Court’s South Dakota v. Wayfair ruling determined that individual states can now require online sellers, regardless of where they are based globally, to collect sales tax on out-of-state transactions. Since that decision was finalized, numerous states have been busily updating their sales tax rules. Under these new and emerging post-Wayfair rules, online sellers and “marketplace facilitators”  — online platforms through which transactions are conducted — that surpass specified revenue and transaction-volume thresholds must collect and remit sales tax.

The confusion surrounding changing state tax rules for online sales has become so intense that one state tax agency, the Pennsylvania Department of Revenue (DOR), recently turned to social media to make an important clarification: “If you receive a letter from a business letting you know that you may owe Pennsylvania use tax,” according to the tax agency’s Facebook post, “it is not a scam.”

Of course, managing B2C e-commerce transactions from a tax compliance standpoint involves a number of complexities beyond Wayfair­-related rules changes, including:

  • Rapidly changing US sales tax rules and rates: The onslaught of post-Wayfair changes to state tax laws is causing high levels of confusion, in part, because so many changes to state, municipal, and local sales tax rates occur each year. In 2018, 619 standard sales tax rate changes occurred throughout the US. During the past decade, there were a total of 5,886 standard new and changed sales tax rates — with an average of 588 changes annually during that stretch. Determining the correct sales tax on a product in accordance with the many tax jurisdictions whose rules apply to each online transaction, depending on where the buyer and seller are located, is a non-trivial matter. Depending on where, say, a candy bar is purchased, it may be designated by tax authorities as a standard grocery item, a sugar item, or even a nutritional food; each of those product categories may have a different sales tax rate, and those rates vary across different states, cities, and local jurisdictions. This complexity increases exponentially when companies have customers in multiple countries.
  • New global tax rules: Tax functions in global companies also must contend with new VAT rules in Europe and a surging movement among global tax authorities to tax e-commerce transactions within the jurisdiction where the customer resides. Increasing numbers of countries in Europe and Asia have either implemented new tax rules targeting digital activities or are considering doing so. The UK’s digital tax rules take effect in 2020, for example, while approval of France’s new digital taxation proposal is expected in the spring of 2019. Additionally, the Organization for Economic Co-operation and Development (OECD) has invested several years in developing digital taxation rules it intends to finalize by 2020. Other global regulatory changes also affect the processes through which organizations calculate tax and protect customer data — which explains why Gartner recently identified regulatory pressure as one of four hidden forces that will shape marketing activities and influence the customer experience in 2019.
  • Large product mixes and customer expectations: Retailers that offer thousands of products through their storefronts also face the ongoing challenge of categorizing and managing those products to ensure taxes are accurately calculated on each product depending on a range of factors, including product types, transaction locations, and tax exemption status. As most B2C companies are well aware, customers expect these calculations to occur accurately and invisibly regardless of where and how —  via mobile phone, in a physical store, or through a marketplace facilitator, for instance — they buy, return, or service their purchases.
4 Questions That Quell Complexity

Ideally, an e-commerce system should contain functionality that mitigates those areas of complexity while also improving sales tax capabilities — without costly custom integration development. When assessing the degree to which a current e-commerce system delivers that capability, or when considering a new solution, it helps to ask the following tax-related questions:

  1. Are all relevant tax rules and rates continually and automatically updated? All domestic and global rates and rules required for accurate calculation of sales and use tax as well as product taxability should reside in the system in a centralized manner. By avoiding the need for tax functions to manually update this “tax content” in response to constantly changing rules and rates, tax professionals have more time to invest in more strategic planning and analysis activities.
  2. How much custom work is needed to integrate sales tax functionality and the e-commerce system? Answers to this question should range from “not much” to “barely any.” Complicated, time-consuming integrations between sales tax applications and e-commerce systems can, and should, be avoided.
  3. Regardless of the online storefronts a company uses, is tax accurately calculated on all products the first time? Every transaction that moves through the e-commerce system needs to be taxed appropriately. Ensuring the accuracy of these tax calculations should not require manual work by the tax function.
  4. How does the sales tax functionality handle the proper identification and assignment of jurisdictional rules? This is a crucial question. With any e-commerce solution, the single most critical aspect of tax calculation is jurisdiction identification. That process should be automated to ensure that every single transaction has the proper jurisdiction assignment to trigger the accurate tax calculation rules. When a new customer address is entered into the e-commerce system, the tax functionality should examine that information, flag and correct any inaccuracies, and (for US transactions) return full 9-digit ZIP codes and the relevant tax area identifications.

Given the staggering complexity confronting retailers and most other companies, it should come as welcome news that combining Vertex and SAP technology enables a seamless solution for automated sales and use tax calculations.The combined solution — where Vertex tax calculation functionality integrates with SAP Commerce Cloud provides best-in-class tax automation, either in the cloud or on premise. To learn more, visit our website or the SAP App Center.

Simplified Archiving for SAP S/4HANA- A Case Study and Path to Archiving in an SAP S/4HANA World with TIA

With maintenance for SAP Business Suite ending in 2025, and the need for speed and innovation growing for businesses to remain competitive, many SAP customers are in the midst of preparing for a move to SAP S/4HANA; SAPs next-generation business suite. Wh

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How to Prepare a Successful, Secure SAP S/4HANA Deployment to the Cloud

As the 2025 deadline to migrate to SAP S/4HANA approaches, companies are ramping up their plans for making the move. A key decision during the planning process is how to deploy the solution, and for many organizations, the flexibility, scalability, and co

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How to Digitally Transform Finance with SAP S/4HANA and Ensure Tax Compliance

The digital transformation of business processes; such as accounts payable (AP), accounts receivable (AR), and tax processes; is no longer a nice-to-have feature. Governments around the world; from the US, with its 10,000+ tax jurisdictions, to Latin Amer

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