A Definitive Guide to

SAP S/4HANA

SAP S/4HANA is being introduced as the intelligent ERP system of the new generation. Thanks to modern technologies SAP S/4HANA is built to help companies standardize processes and make the leap to digitalization.

What is SAP S/4HANA?

SAP S/4HANA is the latest ERP system from SAP's ERP software product line. The software is based on the innovative SAP Hana database technology and was launched as the fourth product generation in 2015. Users can choose between the SAP S/4HANA Cloud and On-Premise solution.

An ERP system is used for demand-oriented business resource planning. It is used to control processes and to link departments and functional areas in a meaningful way. Individual modules include applications for accounting, sales, production and marketing. More complex tasks in customer or supply chain management can also be performed by ERP software. As the successor to the core product SAP ECC, SAP S/4HANA was presented as the intelligent ERP system of the new generation. Thanks to modern technologies, the Software as Service (SaaS) version is designed to help companies standardize processes and make the leap to digitalization.

While previous SAP ERP solutions support the most common databases, SAP S/4HANA uses exclusively the SAP Hana in-memory database developed by SAP. This offers users the greatest technical benefit and they benefit from increased performance. The "S" in S4 Hana stands for "simple", while the "4" refers to the generation sequence. Compared to the SAP core product SAP ECC, which is still used in most companies, SAP S/4HANA offers many innovative functions that revolutionize the system landscape from the ground up. As SAP plans to discontinue the mainstream maintenance of its existing ERP solutions by 2027, many SAP ECC users are already considering a migration to SAP S/4HANA.  

What are the advantages of SAP S/4HANA?

With the introduction of SAP S/4HANA, the provider has completely redefined ERP systems. In fact, the intelligent ERP solution is considered the most groundbreaking SAP innovation since 1992. At that time SAP R3 came on the market, an ERP software in which all processes of a company could be recorded and controlled. Thanks to technical innovations such as machine learning and predictive analytics, SAP S/4HANA is not just a data management tool. It can optimize and automate business processes and prepare companies specifically for a digital future and thus make them more competitive. The concrete advantages of SAP S/4HANA at a glance:

Improved interface: The new Fiori interface concept offers a simplified and personalized user experience. Users have faster access to important information and receive decision support and notifications. This promotes efficient and role-based work. The new design guidelines also enable the applications to be used on mobile devices.  

Increased performance: The SAP Hana in-memory database enables users to access their data in real-time. Instead of being stored on a hard disk, the data is stored in a collective form in main memory, which avoids data redundancy. This simplified data model not only reduces the size of the database, but also allows you to perform ad hoc analyses and transactional procedures in the same system.  

More flexibility: SAP S/4HANA is available in various forms and payment models. In the case of a migration, customers can choose the on-premise version, a hybrid model or the cloud version which is based on a subscription model. The latter is located on an SAP server, allowing customers to save on resources such as hardware and maintenance costs. They also benefit from shorter response times and innovation cycles.

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SAP S/4HANA Migration Challenges and Solutions

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The difference between SAP S/4HANA and SAP ECC

SAP ECC is one of the classic on-premise ERP systems and is characterized by its modular structure. It includes core applications such as CRM, SRM and SCM. One of the biggest differences between SAP S/4HANA and SAP ECC is the fact that S4 Hana only runs on the Hana database, while the Business Suite SAP ECC also supports databases from other providers such as Db2, Oracle or Informix. Although the system is well-tried, it will be completely replaced by SAP S/4HANA in the next few years. The new system enables future-oriented work on-premise and in the cloud.

In contrast to SAP ECC, the intelligent ERP system SAP S/4HANA has much faster reaction times thanks to the in-memory database. Another major difference is that in SAP S/4HANA OLAP and OLTP functions are no longer separated, which allows complex analyses. A simpler data model and the simplification of the entire system landscape eliminate redundant data and interfaces. SAP S/4HANA also uses machine learning and artificial intelligence. This promotes intuitive operation and enables companies to react quickly to changes and automate processes.

The difference between SAP S/4HANA and SAP Hana

New ERP users who have not yet dealt with the topic quickly get confused by the similar sounding terms. However, the difference between SAP S/4HANA and SAP Hana is relatively simple. SAP Hana is a database type, while SAP S/4HANA is an ERP suite developed specifically for SAP Hana. As the successor to SAP ECC, SAP S/4HANA thus uses the infrastructure of the in-memory platform to enable rapid access to and analysis of data. In software development, SAP Hana also serves as a platform for user-defined applications.

 

S/4HANA Editions

SAP S/4HANA is offered as an on-premise or cloud variant. When it comes to content, functionality, support, and industry solutions, the on-premise version corresponds to SAP Business Suite. Here, users have the full range of ERP services and can decide on upgrades themselves. S/4HANA Cloud, which was released two years after S/4HANA On-Premise, offers many features in a slimmed-down form. Users can choose between the Marketing, Finance or Professional Services Cloud. The complete ERP package comes with the SAP S/4HANA Enterprise Management Cloud.

SAP SuccessFactors, SAP Jam, SAP Hybris, SAP Ariba and SAP Fieldglass can be integrated in both the on-premise and cloud variants. The following is an overview of the most important S/4HANA On-Premise editions.

S/4HANA 1610

SAP released this version in 2016, following on from the previous version in 1511. With the integration of SAP S/4HANA for Finance, S/4HANA 1610 offers a wider range of functions and combines all financial data in one system. Thanks to the tile design and new search functions, operation is even more intuitive. In addition to new industry solutions, this version also includes SAP Extended Warehouse Management (SAP EWM), which simplifies the system landscape even more.

S/4HANA 1709

With S/4HANA 1709, SAP introduced further innovations for the on-premise solution in 2017. The second generation of the Hana 2.0 in-memory database ensures enhanced security, new recovery functions and management via the SAPA Hana Cockpit. In addition to an optimized user interface, this version also integrates SAP Leonardo Machine Learning, which enables smart manufacturing and supports the automation of business processes. There are also new functions and apps for production, marketing and sales.

S/4HANA 1809

Version 1809, which SAP released in 2018, contains even more machine learning functions. These are primarily focused on the areas of procurement, production, and sales. New features such as predictive accounting make planning in financial accounting easier by simulating goods issues after a sales order. This on-premise version also integrates the innovations of the S/4HANA Cloud. In total, users benefit from more than 1,500 added functions since the last release.

S/4HANA 1909

S/4HANA 1909 was launched in late 2019 and is the latest on-premise version of S/4HANA. This release also focuses on intelligent automation, forecasting and the provision of best practices. A major innovation is Group Reporting, which supports companies in achieving rapid group reporting. With integration of the SAP Analytics Cloud, financial planning can now be carried out completely in the ERP system. Modeling makes it easy to simulate the financial impact of business decisions.

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What are the challenges of a migration to S/4HANA?

Since SAP will discontinue support for its current ERP systems in the near future, many companies are already preparing for a changeover. However, because the migration to a new ERP system is not a typical IT project, but rather a fundamental system change, the implementation is associated with some challenges. In 2018, LeanIX and PwC conducted a study that identified the biggest migration hurdles for companies.

It turned out that existing complex IT landscapes, unclean master data and company-specific ABAP code that is not compatible with S/4HANA are considered the biggest challenges. Further concerns create inconsistent business processes that need to be harmonized before migration. Furthermore, change management lacks the necessary expertise to develop the right strategy. In some cases, the migration process is also slowed down by individual stakeholders, who must be involved in the coordination process.

 

What is the best way to migrate so SAP S/4HANA?

Before migrating to SAP S/4HANA, a company has to make a few important fundamental decisions that influence the overall migration strategy. For example, switching to SAP S/4HANA Cloud System requires a different approach than switching to SAP S/4HANA On-Premise System. Another crucial question is whether the existing SAP ECC system with its data and settings should simply be converted. In some cases, it may make sense to set up a completely new ERP system that will cause fewer problems in the future. In any case, a migration requires good preparation and a transparent strategy that is understandable for all business areas and stakeholders.

From the study mentioned above, it is clear that the right enterprise architecture (EA) tools are an important tool for a smooth migration. More than half of the companies surveyed stated that they use EA tools to assess the current status and plan the target architecture. As part of the business capability concept, EA tools also provide a detailed roadmap that divides the migration to SAP S/4HANA into individual steps. Enterprise architecture solutions such as LeanIX integrate easily with SAP Solution Manager and bring the necessary transparency to a complex ERP landscape. This is ultimately seen by the respondents as the greatest migration challenge. The specific migration approaches available to a company are explained below.

 

Greenfield approach

If a company decides to adopt the greenfield strategy, it abandons its existing ERP system. This has the advantage that a new, uniform system can be implemented that only contains the processes and data that are actually necessary. If a company completely redefines its enterprise architecture, innovations can also be integrated more easily and a high level of functionality can be achieved. In the study mentioned above, only 14 percent of all respondents chose this approach because it involves more effort. However, when switching to the SAP S/4HANA cloud version, the greenfield approach is unavoidable as the systems are completely replaced.

 

Brownfield approach

With the brownfield strategy, a system conversion takes place. This means that existing business processes are taken over and optimized if necessary. Since most companies do not want to completely abandon their custom ERP system, the brownfield approach is the most popular migration path. According to the study, 44 percent of respondents choose this strategy, while 42 percent opt for a combined greenfield and brownfield variant. To ensure a smooth transition, EA tools are used to divide the conversion into clear phases. The tools also ensure that old processes are rethought so that redundancies and complexity are not adopted. The advantage over the greenfield approach is that the project time for system conversion is reduced.

 

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Landscape Transformation

Strictly speaking, landscape transformation is not an independent migration strategy. It is simply a method that large companies with complex system landscapes can use to prepare for migration. In practice, this means that databases are cleaned up and consolidated to reduce the footprint before the change. Companies can also use this approach to combine several ERP systems from different vendors. Such a simplification is also possible during the actual transformation. Whether this makes sense depends on the system landscape and the target system. In many cases, an enterprise architect works with all three approaches to achieve the best possible approach.

Conclusion

Without doubt, SAP S/4HANA is the intelligent real-time ERP system of the future. It gives companies the opportunity to optimize their processes or to set them up from scratch. They can use the latest technologies such as machine learning and simulation to achieve a high degree of automation and transparency. An intuitive and mobile-friendly user interface, which adapts to the respective user, offers flexibility and allows role-specific work. Unlike previous ERP systems, SAP S/4HANA offers fast access to all data and its analysis thanks to the in-memory database. This enables users to make well-founded decisions in a very short time.

Since a migration to SAP S/4HANA involves a number of challenges, the changeover must be carefully planned. Which migration approaches make sense depends on the actual and target architecture of the company. EA tools help to ensure a smooth migration by closing the gap between strategy and implementation.

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Answers to frequently asked questions on SAP S/4HANA

What is SAP S/4Hana?

SAP S/4Hana is presented as the "intelligent ERP system of the new generation", which uses exclusively the SAP Hana in-memory database developed by SAP.

Thanks to modern technologies, the "Software as Service" (SaaS) version should help companies to standardize processes and make the leap to digitalization.

The "S" in S4 Hana stands for "simple", while the "4" refers to the generation sequence.

Why SAP S/4Hana?

Thanks to technical innovations such as machine learning or predictive analytics, SAP S/4Hana serves not only as a data management tool. It can optimize and automate business processes and prepare companies specifically for a digital future and thus make them more competitive.

Other concrete advantages include an improved user interface called "SAP Fiori", increased performance of the SAP system through the SAP Hana in-memory database, and more flexibility that allows customers to choose SAP S/4Hana as an on-premise version, as a hybrid model, or as a cloud version in a subscription model.

What is the difference between SAP HANA and SAP S/4HANA?

SAP Hana is a database type, while SAP S/4Hana is an ERP suite developed specifically for SAP Hana. As the successor to SAP ECC, SAP S/4Hana thus uses the infrastructure of the in-memory platform to enable rapid access to and analysis of data. In software development, SAP Hana also serves as a platform for user-defined applications.

How to migrate to SAP S/4Hana?

From our study, it is clear that the right enterprise architecture (EA) tools are an important tool for a smooth migration. More than half of the companies surveyed stated that they use EA tools to assess the current status and plan the target architecture.

Concrete migration approaches here are the greenfield and brownfield approach. The greenfield approach means that companies abandon their existing ERP system and build a completely new one through migration.

In a brownfield strategy, a system conversion takes place. This means that business processes are taken over and optimized if necessary.

According to the study, 44% of those surveyed choose the brownfield strategy and 42% would like a combination of the brownfield and greenfield approach. In most cases, EA tools are used to create a smooth transformation.

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