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It’s been seven years since SAP launched its biggest update with the launch of its enterprise resource planning (ERP) software – SAP S/4HANA. Nothing has caused the same amount of excitement, confusion, and uncertainty for SAP customers as S/4HANA has.
Companies have found this process difficult, from understanding the basics to transitioning to S/4HANA. Why wouldn’t it be difficult? S/4HANA was a major upgrade to the current ERP solution, and overhauling the former ERP system is no easy thing.
Despite the pain, there are many reasons why businesses should migrate to SAP S/4HANA. 37% of companies have noted a revenue boost from S/4HANA. Forrester estimates a revenue increase of nearly $156 million in three years of using S/4HANA. Simpler data models, friendlier user interfaces, better integration, and advanced real-time analytics will make you wonder how you survived without S/4HANA.
Read on to learn more about SAP S/4HANA’s updated features and benefits to understand why the newcomer is overrunning the legacy ERP.
SAP S/4HANA At A Glance
S/4HANA is the fourth generation of SAP’s Business Suite and has three crucial building blocks.
- The HANA database: The in-memory database makes real-time analytics possible.
- The S/4HANA or the HANA business suite: This updated version of Business Suite 7 is built on the HANA database.
- Fiori: The new user interface helps create user-friendly business apps.
S/4HANA is the natural evolution of SAP Business Suite software and its ERP Central Component (ECC).
It should be noted that ECC is not the SAP business suite. Rather it is the central ERP component of the SAP business suite. The business suite includes other non-ERP components too. S/4HANA is the redesigned ERP and has merged some of the non-ERP components into its core functionality too.
Evolution of S/4HANA
The evolution of S/4HANA started with the SAP HANA database launched in 2011. Originally designed to be a data warehouse, the in-memory database has simplified data models and embedded analytics. Read the ins and outs in our blog post, What is SAP Hana?
SAP offered Suite on HANA (SoH), building on the HANA database. Here, applications for business operations like finance, logistics, and human resource ran on HANA. But since the applications were designed to be database agnostic, the apps weren’t getting the most out of the database.
S/4HANA solves this problem. Business applications are designed to run only on the HANA database. It also simplified the applications and improved user experiences with Fiori, a significant upgrade to the current business suite.
S/4HANA also resolves common problems with traditional ERP systems, like batch latency and data sprawl. Based on business needs, S/4HANA can be deployed in a public or private SAP cloud or on-premise, or through a hybrid model.
SAP S/4HANA vs. SAP ECC
Knowing the similarities and differences between S/4HANA and its predecessor SAP ERP, ECC is key to understanding the benefits S/4HANA offers.
SAP S/4HANA vs ECC: Commonalities
Both share components that target specific business processes like:
- Finance
- Sales
- Material management
- Product procurement
- Quality management
- Plant maintenance
- Customer service
- Human resource management
- Manufacturing
- Plant maintenance
ECC and S/4HANA provide a centralized database of business operations that serves as the single source of truth across the organization.
ECC and S/4HANA are modular systems allowing businesses to use the necessary components.
SAP S/4HANA vs. SAP ECC: Four major differences
Here are the four major distinctions that make S/4HANA much better than ECC.
HANA Database
ECC runs on any traditional relational database management system while S/4HANA runs exclusively on the HANA database.
HANA’s in-memory computing, parallel processing, and better data compression enable S/4HANA to read data much faster than traditional ERPs. It also boosts real-time online transaction processing (OLTP) and online analytics processing (OLAP) capabilities.
Simplified data structures
S/4HANA has simplified data models drawn from different business functionalities.
Consider the business process of managing finance and accounting across a company. S/4HANA has a universal journal called ACDOCA. This journal serves as the single source of truth for accounting. Unlike ECC, where entries for different sub-functions are entered in different tables, ACDOCA has just one table recording data from functions like:
- General ledger (GL)
- Asset accounting (FI-AA)
- Material ledger (ML),
- Profitability analysis (CO-PA)
Similarly, a single table called MATDOC eliminates more than 26 other data tables for inventory management.
Better User-friendly Fiori experience
S/4HANA has a refreshing and user-friendly design supported by the new Fiori system. With Fiori, businesses can design role-based apps that work on any device. For instance, a company can have separate apps for sales inquiry, order overview, and sales fulfillment, and then provide access to these apps based on the sales personnel’s role. Businesses can deploy one or many apps across user roles and lines of business, including sales, human resources, finance, etc.
Fiori also has an app library that users can leverage to build their own. While Fiori can also be used on top of ECC, S/4 HANA offers better integrations and an intuitive experience.
AI, ML, Big data, and IoT
S/4HANA has in-built artificial intelligence (AI) technologies like predictive analytics, machine learning (ML), tools for robotic process automation, and the internet of things (IoT). It has a predictive analytics library (PAL) with several algorithms for frequently used predictive analytics use cases. HANA also has advanced deep learning and extended machine libraries (EML).
ECC, on the other hand, requires data models and predictive models to be built externally either by using HANA or additional systems like SAP BW/BI or other third parties. This separation of ERP and analytics makes it a cumbersome process.
7 reasons why your ERP should move to SAP S/4HANA
Now that you know the differences let’s look at the benefits of the new features of S/4HANA. After all, 20,000 SAP customers have chosen the S/4HANA ERP package already.
Simplified business process
Imagine you are in the finance department of a multi-national company with multiple subsidiaries and different product lines across geographies. Preparing annual financial reports for such a company is not an easy job. You have to connect with different groups, collect data, and prepare reports. It is tedious work, consuming time and resources.
But with S/4HANA, you can easily leverage the already built process closing task app. You can plan to monitor, access, and analyze data from different groups, connect with other people and groups, and close books faster.
This is just one example of how S/4HANA simplifies complex business tasks. S/4HANA has simplified apps for different business functionalities, from finance and logistics to warehouse management.
Modern and intuitive user experience
People today expect the software they use at work to operate on par with the apps and programs they use at home, but many businesses aren’t there yet. S/4HANA gives a hand here. It lets users easily create and access business processes and data via apps across devices.
And thanks to Fiori, the apps have a much simpler and cleaner look similar to the mobile apps we use. With mobile apps, it’s easy for users, whether in a remote location or in the office, to input data and track the progress of a task. The apps also provide collaboration options using tools like Microsoft Teams and Google Workspace. As a result, employees can work together in real-time and reduce inefficiencies caused by information lags.
Cost-effective
S/4HANA saves unwanted hardware and software license costs, making it a cost-effective ERP solution. HANA database’s advanced data compression reduces server needs, cutting hardware expenses. With all analytical, transactional, and operational functions available in the S/4HANA platform, there’s no need for middleware software, which lowers software expenses. Businesses can save 37% on the total cost of ownership (TCO) over just 3 years without counting the business benefits from S/4HANA.
Faster insights
The new in-memory processing of HANA makes instant insights and actions a reality in S/4HANA. With embedded analytics, S/4HANA gathers and processes live data and makes it possible to apply insight into the business process in real-time.
There are 500+ ready-made Fiori analytics apps that can be accessed via mobile. Businesses can build their use cases and add them to their system as needed. Performing real-time planning, execution, reporting, and analytics based on live data are all possible using Fiori.
The centralized data also provides better and faster cross-functional coordination across business departments.
Ease of use and flexible deployment
S/4HANA supports business agility with ease of use and flexible deployment options, be it on-premise or on a cloud platform. The system makes it easy for companies to update their business process. Be it adding a new sales channel or new acquisition or a merger, S/4HANA makes integration easier.
For instance, consider an organization with S/4HANA buying a company that uses SAP and non-SAP IT systems. Typically aggregating data, indexing, and integrating them would take immense time and resources with old ERP.
S/4HANA provides the option to bring the system into SAP cloud without integration. Organizations can leverage applications like Simple Finance to get aggregate data from all acquisitions and subsidiaries without hassle.
Automation
In S/4HANA, businesses can automate repetitive tasks with Robotic process automation (RPA) solutions. This frees employees from mundane, time-consuming work and helps them focus on high-value, high-priority tasks. There are more than 150 RPA bots that users can take advantage of in S/4HANA. Businesses can take it further by integrating AI and ML technologies to get intelligent insights from data collected via automation.
Innovation
S/4HANA streamlines business operations. As its features improve the productivity and efficiency of the organization, they create room for businesses to rethink their process and business models, focus more on customer needs, and innovate to stay ahead of the competition. The availability of embedded analytics, real-time data processing, AI, and ML within S/4HANA ensures that business operations are future-ready as the company innovates. These benefits make upgrading to S/4HANA essential for companies embarking on digital transformation.
The only way forward
Migrating an ERP is no easy job, and not every organization is ready for the big bang. After all, it requires substantial time and money and impacts current business operations.
However, S/4HANA has significant advantages, like revenue boosts, cost savings, and innovations. Instead of deliberating on whether your business needs to migrate or not, you might as well bite the bullet and reap the benefits of S/4HANA now rather than later.