What is S/4HANA? – The Latest ERP from SAP

The fourth generation of SAP Business Suite is called S/4HANA. S/4HANA is an ERP (Enterprise Resource Planning) system for large companies. SAP S/4HANA is designed as a simplified version in terms of usage and can handle larger data volumes as compared to the earlier SAP ECC. S/4HANA is more end-user friendly thanks to the new Fiori user interface. Also, it offers better performance because most of the database tables are clubbed together and the execution time of transactions is reduced compared to SAP ECC.

The ‘S’ in S/4 stands for ‘Simple’ as it has simplified the business processes and ‘4’ in S/4 is for the fourth generation. S/4HANA is also often referred to as ‘SAP Business Suite 4 SAP HANA’. SAP S/4HANA can be deployed on-premise and in the cloud.

What is HANA?

We now know what ‘S/4’ means in S/4HANA but what about ‘HANA’? HANA is the name of the database that was developed by SAP. It is different from the traditional relational database management systems (RDMS) because of its in-memory and column-oriented architecture. This database architecture requires best-in-class hardware with a significant volume of RAM but also offers much higher performance compared to other RDMS. The primary function of HANA is to work as a database server that stores and retrieves business data for SAP S/4HANA.

What is S/4HANA Database Technology? How is it Different from SAP ECC?

As you already understood, S/4HANA uses the HANA database for storing and managing all data. Following are the changes in S/4HANA database technology as compared to SAP ECC:

• SAP S/4HANA runs only on the HANA in-memory database i.e., data is read from RAM to hard disk.
• S/4HANA database reads only column-based tables and supports OLAP & OLTP resulting in faster access, parallel processing, and more compression of data.
• No total and history tables are resulting in faster access and better system performance in S/4HANA.

What is S/4HANA’s Scope of Features?

SAP S/4HANA offers a lot of features out of the box. It is one of the most (if not the most) comprehensive ERP solutions available on the market. The high-level feature scope includes the following features:

• Asset Management
• Finance
• Human Resources
• Manufacturing
• R&D / Engineering
• Sales
• Service
• Sourcing and Procurement
• Supply Chain
• Analytics Technology
• Enterprise Technology
• Country/Region-Specific Features

Each item in this list represents a dedicated module in S/4HANA with extensive functionality. For a detailed overview of available features, please refer to the Feature Scope Description document on SAP Help Portal.

Industry-Specific Extensions of SAP S/4HANA

SAP recognizes that certain industries have unique business processes and require certain functionality in addition to the standard S/4HANA solution. Therefore, S/4HANA offers extensions that complement the standard functionality for several industries:

• Consumer (Agriculture, Retail and Fashion)
• Discrete Industries (Automotive)
• Energy and Natural Resources (Oil and Gas, Utilities, Customer Management, Waste, and Recycling)
• Financial Services (Banking, Insurance)
• Public Services (Defence and Security, Higher Education and Research, Public Sector)
• Services (Professional Services)

SAP S/4HANA in the Cloud and On-Premise

SAP S/4HANA is available in two deployment options: on-premise and in the cloud. The following table outlines the differences between the Cloud and On-Premise editions of S/4HANA:

On-Premise	Cloud
The client manages the system hosting, set up, and maintenance	SAP controls the system infrastructure, provides hosting, and performs maintenance
The client needs to plan the changes and upgrade of the system	Automatic upgrades are installed quarterly
Unlimited customizing and enhancements. The client has full control over the S/4HANA system.	Pre-defined configuration as per the required business process is already in place and deployment is faster. Limited customizing options.
This is useful for big companies that need more control, full-featured, and flexible customization.	This is used by mid-sized organizations which want simpler and more time to value solution.

Changes in SAP S/4HANA Compared to SAP ECC

For the benefit of SAP consultants who have experience with SAP ECC, we will outline key differences between SAP S/4HANA and SAP ECC in several key modules. The changes in database technology in SAP S/4HANA lead to several changes in SAP core modules when compared with ECC. S/4 has simplified the modules as outlined below:

SAP Material Management (MM)

• Material document transactions like MB01, MB02, MB03, MBST, MB11, MBSU, MB1A, MBNL, MB1B, MB1C, MBNL, MBRL, and MB0A are obsolete.
• Material document tables MSEG and MKPF are replaced by a one simple table MATDOC.
• Vendor Master is replaced by Business Partner. Hence Vendor Master transactions XK01, XK02, XK03, MK01, MK02, MK03, FX01 are replaced by BP.
• Material Ledger is mandatory in S/4 HANA which supports valuation in multiple currencies.
• Purchase Order output NACE in ECC has been replaced by BRF+. Although looking at the complexity of BRF+, customers can choose between NACE and BRF+.
• Material Groups can further be grouped into purchasing categories.
• Material Number length is extended to 40 characters in S/4 HANA (in ECC, it was 18).
• Quota Arrangement is always considered. Its usage selection is turned off.
• New Material type SERV is introduced for Services.
• Order Management is supported by Fiori Apps.
• MRP is planned at the plant level in S/4 HANA. In ECC, it used to plan MRP at the Storage Location level.

SAP Sales and Distribution (SD)

• Status tables VBUK and VBUP are removed. The status field is moved into VBAK and VBAP tables for sales orders, LIPS, and LIKP for deliveries, and VBRK for billing.
• Customer Master is replaced by Business Partner. Hence Customer Master transactions like XD01, XD02, XD03 are replaced by BP.
• Document Index tables are removed. These tables were VAKPA, VLKPA, VLPMA, VRKPA, VAPMA, VRPMA.
• Sales Document Category character is extended to 4 (earlier it was 1 in ECC).
• ATP (Available To Promise) in ECC is replaced by Advanced ATP in S/4 HANA.
• BRF+ is introduced for output management in S/4 HANA.
• Order Management is supported by Fiori Apps.

SAP Finance and Controlling (FI and CO)

• Universal journal ACDOCA table has replaced application index tables which store both GL accounts and cost elements in one field.
• Foreign currency valuation transaction FAGL_FC_VAL  has been replaced by transaction FAGL_FCV in S/4 HANA.
• SAP controlling (CO) is part of the universal journal which creates only one FI document after MIGO posting.
• “Define Variants for Real-Time integration” is removed from the configuration set up in S/4 HANA, meaning there is no need to transfer CO postings into new GL.

SAP Extended Warehouse Management (EWM)

• EWM in S/4 HANA is centralized. It means it is embedded in the S/4 HANA system only. Earlier it was coming as a separate system.
• There is no CIF model for master data distribution to EWM in SAP S/4 HANA.
• In the Outbound process, there is no Outbound delivery request in S/4 HANA EWM.
• In the Inbound process, there is no Inbound delivery notification in S/4 EWM
• No Expected Goods Receipt Notification or Expected Good Receipt document is required in S/4 EWM. The Inbound delivery creation process is the same.
• Account assignment data upload is not required in S/4 EWM.
• In S/4, there are different options for route determination. The route on Outbound Delivery Order in EWM is automatically copied over from Sales Order or Logistics Execution Delivery.

What is S/4HANA Update Cycle?

The schedule of SAP S/4HANA releases (or updates) depends on wether it is an on-premise or cloud version. The cloud version (SAP S/4HANA Cloud) is updated on a quarterly basis. The on-premise version is updated less frequently (once per year) and usually catches up S/HANA Cloud in terms of available features and innovations.

SAP uses a special coding to name versions of S/4HANA according to months and years. The cloud version follows this notation: YYMM. So, ‘2011’ update means that it was released in November, 2020.

Conclusion

As we have seen above, SAP S/4HANA has several new innovative and simplified functionalities and database which improves the system performance, response time, real-time analytics, etc. This latest SAP technology supports the growth strategy to expand the company’s business. SAP has stopped investing in the ECC version and actively investing in S/4HANA only. Moreover, the ECC version is going to be sunset in 2027. Thus, the sooner we move on to the S/4 platform, the sooner we can start building new solutions to meet growing business requirements. If companies wait for a long time to migrate into S/4HANA, there will be a risk to meet the timelines.