18 questions about SAP S/4HANA

What is SAP S/4HANA? What are the advantages of SAP S/4HANA? Or how to make the switch to the new ERP suite from SAP? Questions over questions. Here you will find the answers.

SAP S/4HANA is the SAP product of the hour - an integrated and intelligent ERP system with which companies can measurably improve and significantly accelerate their business processes.

SAP S/4HANA offers a user-friendly interface, state-of-the-art analysis functions and maximum flexibility in the choice of operating model. The basis for this is the SAP HANA in-memory database and a significantly simplified data model.

What exactly SAP S/4HANA is all about, where the advantages of SAP's latest ERP suite lie, and how best to make the switch - the answers to these and other questions can be found here.

1. What is SAP S/4HANA?

SAP S/4HANA is the core product of SAP SE. It is a comprehensive software solution for companies, also called ERP suite. SAP S/4HANA was introduced in 2015 and is the successor to SAP ECC 6.0 (SAP ERP).

The abbreviation SAP S/4HANA stands for SAP Business Suite 4 SAP HANA. The "S" in the product name means simple, the "4" stands for the fourth ERP product generation and "HANA" for the HANA database on which the product is based.

The abbreviation ERP stands for enterprise resource planning. Companies use an ERP system like SAP S/4HANA to plan and control their resources and business processes. SAP S/4HANA is therefore software for business applications - for smaller companies as well as for corporate groups, for existing SAP customers as well as for new SAP customers.

The goal of such an ERP system is to ensure an efficient value creation process and to continuously improve all processes in the company.

As the digital core of companies, SAP S/4HANA is the basis for all essential, mission-critical business processes. These include areas such as finance and controlling, procurement, logistics and sales.

One of the key differences to other ERP solutions is that SAP S/4HANA is based on an in-memory database with SAP HANA. Such an in-memory database uses the main memory as a permanent data store. The processing speed is thus significantly higher than with classic database architectures.

Since processes can be processed and analyzed in real time, SAP S/4HANA is also referred to as a real-time ERP suite.

Various operating models are available for SAP S/4HANA: For example, SAP S/4HANA can be operated on-premise (on-site in the company) or in the public or private cloud.

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2. Why did SAP develop the SAP S/4HANA ERP suite?

SAP S/4HANA is not just an upgrade of SAP's previous ERP system.

The new, intuitive user interface, the use of the SAP HANA in-memory database as the basis for real-time processes, the simplification of processes, the use of artificial intelligence - all of this required a fundamentally new architecture and a simplified data model.

In other words, adaptation was not enough due to these fundamental changes. Due to the simplified architecture, SAP S/4HANA can now support processes that were previously not feasible - also and especially with a view to the development of digital business models.

3. Why should companies migrate to SAP S/4HANA?

One of the reasons for the changeover to SAP S/4HANA is the end of maintenance for Business Suite 7 (SAP ECC 6.0 and others) at the end of 2027 (optionally by the end of 2030).

More important than the end of maintenance, however, is the alignment of SAP S/4HANA with the requirements of digitization - with digital business processes, with trends such as digital platforms, with the user experience, or even with new technologies such as cloud computing and machine learning.

In this sense, the change from SAP S/4HANA is the opportunity for a fundamental, strategic realignment of companies.

SAP S/4HANA creates the opportunity to turn the benefits of digitization into measurable results. In addition, companies can reduce the complexity of IT landscapes and deal with further increasing data volumes more efficiently than in the past.

The basis for all this is the in-memory technology of the SAP HANA database, which marks a technological breakthrough in the ERP segment and for SAP.

With its help, time-consuming aggregations of data are no longer necessary, for example in the run-up to analyses. The database can perform queries in real time and process and analyze even large volumes of data in fractions of a second.

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4. What does SAP HANA stand for?

SAP HANA is the name of the database on which SAP S/4HANA is running.

The HANA database is based on in-memory technology. This technology also uses the working memory as data storage. This increases the speed of data access and data processing.

But HANA is more than just a database - in recent years, SAP has developed SAP HANA into a platform for integrating and developing applications. One advantage over other databases: SAP HANA is already optimized for business applications.

In-memory technology makes it possible to perform transactional (OLTP) and analytical operations (OLAP) in the same system simultaneously.

In contrast to other databases, the data for this is available in both a row-oriented and a column-oriented format - and not exclusively in a row-oriented format, as in many other databases. Column oriented databases have proven to be more efficient, especially for analysis-oriented applications.

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5. What are the advantages of an in-memory platform?

For a long time it was the case that large amounts of data could not be stored in main memory. The working memory was expensive and its capacity limited.

As a result, companies had to store their data primarily on hard disk drives. Parts of the data were only loaded into the working memory when they were needed. However, the processing of the data was slowed down by the hard disk access required.

This changed with the technical development of hardware. Main memories became more and more powerful and cheaper. In addition, multi-core processor architectures were developed that made it possible to parallelize memory accesses.

In-memory databases take advantage of these developments: The main memory also serves as a permanent data storage. This leads to significantly higher processing speeds because the data is available more quickly. On the hard disk, the data is only backed up and archived.

The advantages of an in-memory database such as SAP HANA are therefore above all a significantly higher speed in data processing. With SAP HANA, transactions and analyses can be carried out in real time on just one platform.

In addition, SAP HANA reduces data redundancy and lowers the space and hardware requirements of a company.

In addition - due to the high speed and accuracy of SAP S/4HANA - possible machine breakdowns or imminent stock shortages in the warehouse can be detected and eliminated earlier.

6. What functions does SAP S/4 HANA have?

With SAP S/4HANA, all of a company's business processes can be managed and controlled, monitored, networked and analyzed. The functions of the ERP suite cover all essential areas of a company.

Key functions include finance, human resources, logistics, manufacturing, R&D and design, sales, procurement, asset management, marketing and service. These functions are now referred to as Lines Of Business (LoB) rather than modules.

Certain functions are already included in the digital core, others are available as additional solutions. These Lines of Business solutions offer an extended range of functions, but may have to be licensed and installed separately.

SAP Fiori also provides users with a uniform, role-based user interface. Companies can also develop new applications with Fiori.

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7. What are the SAP Best Practices?

SAP Best Practices are preconfigured, immediately available business processes.

As part of SAP Activate (the framework for implementing SAP S/4HANA), they can be "activated" and used immediately.

Best Practices are particularly interesting for new implementations of SAP S/4HANA. Here, they form the basis on which the system is built.

The advantage: companies save time, use standards that have been proven many times over, reduce the complexity of their entire system architecture, and can go live more quickly.

Best practices exist for almost all of a company's requirements: for migration, integration, analyses or the user experience with SAP Fiori.

They help to accelerate the implementation of SAP S/4HANA, provide guidance for improvements and, as mentioned, are available as turnkey standards of business processes for a variety of sectors and industries.

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8. What actual benefits does SAP S/4HANA bring?

The concrete benefits of SAP S/4HANA depend on the individual goals of each company. But one thing is clear:

  • SAP S/4HANA ensures more speed in data processing,
  • simplifies processes ("Run simple"),
  • reduces the risks,
  • creates new possibilities for analysis and simulation and
  • thus ensures better results overall.

Until now, if companies wanted to create a forecast or needed data for their material planning, they had to fall back on legacy data and laboriously determine and compile it first.

SAP S/4HANA, on the other hand, can process and analyze data in real time. Companies can thus use SAP S/4HANA to create a database with which faster and better decisions can be made in the area of corporate strategy ("SAP Digital Boardroom").

In addition: With the help of the SAP Business Technology Platform, innovations in the company can be developed and implemented more quickly.

The added value of SAP S/4HANA can also be demonstrated in figures:

  • The effort for the inventory is reduced by up to 15 percent.
  • The costs for logistics are reduced by 10 to 15 percent.
  • The production cycle is 25 to 30 percent shorter.
  • Companies can increase their productivity by 10 to 15 percent.
  • The total cost of ownership is also reduced. The storage requirements for data, for example, are 10 times lower.

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9. What are the advantages of SAP S/4HANA?

SAP S/4HANA is the next generation ERP system. In many ways, the system ensures faster and more efficient processes, real-time analyses and thus creates added value throughout the company.

SAP S/4HANA also enables the development of digital business models and the use of new technologies such as AI and Machine Learning.

With SAP Fiori, SAP S/4HANA also offers a user-friendly, intuitively operable, contemporary interface. Fiori is role-based and can be used on various devices - whether on a laptop in the office or on tablets or smartphones.

One of the advantages of SAP S/4HANA is that the system - based on the SAP HANA database - is much simpler than SAP ERP. This applies to both the system architecture and the data model.

Among other things, the simplified functionality results in lower IT and maintenance costs and a higher reaction speed. The simplification of the data structure increases the performance of the entire system.

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10. What types of SAP S/4HANA operation are there?

SAP S/4HANA can be used both on-premise and in the cloud (private or public cloud). Hybrid scenarios are also possible.

  • On-premise means that the software is operated with a company's own hardware in its own data center. The company itself is responsible for operation and administration. The advantage of such a solution is that the company has complete control over the hardware and software. The disadvantages include the fact that the company must also bear the full costs - for personnel, maintenance or renewals of the hardware.
  • With a cloud solution, companies buy or rent the software or even the infrastructure from an external provider. The company therefore uses the services of a provider. The cloud solution provides more flexibility and creates transparency in costs. The company no longer needs its own hardware.
  • The hybrid scenario is a mixture of on-premise and cloud - the company moves parts of the business scenarios to the cloud, while others remain on-premise.

The service models for cloud solutions are divided into Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), Infrastructure-as-a-Service (IaaS) and Software Subscription. If the service and hosting are provided by the provider, for example, and the software is subscribed to and provided via the Internet, this is a SaaS solution.

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11. How is the changeover to SAP S/4HANA done?

Usually, the changeover takes place in two phases:

  • firstly, a preliminary study (also called pre-study, proof of concept) to develop a suitable roadmap and
  • secondly, the actual implementation (usually as a technical system conversion or new implementation).

After the first fundamental preliminary considerations (such as the question of the suitable operating model), the planning and development of a roadmap usually follows as part of a pre-study.

Among other things, the initial system is first analyzed and evaluated, for example with a view to industry-specific enhancements or third-party applications. In this phase, the strategic goals, budgets, risks, costs and operating models are also analyzed and evaluated.

A live demo system can also be set up during this phase, allowing a company to test the new system with its own data.

At the end of the preliminary study, the consulting company summarizes the results in a report, which is again analyzed and discussed. This is followed by a concrete offer from the consulting company on how the migration can be implemented in practice.

The pre-study is followed by the actual implementation, which naturally depends on the implementation path. During the system conversion, for example, technical adjustments are made to the source system and the existing data is consolidated and harmonized.

Then the SAP HANA database and the SAP S4/HANA applications are installed, for example, real-time reporting and the provision of the required Fiori apps. This is followed by training and testing, cutover and the go-live.

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12. What are the available implementation paths?

Basically, there are three ways to migrate to SAP S/4HANA:

  • the new implementation (New Implementation or Greenfield)
  • System conversion (brownfield), and
  • the selective migration (Selective Data Transformation, Color-Field approach or hybrid strategy, formerly: Landscape Transformation).

During the reimplementation, SAP S/4HANA is completely reinstalled, "on the greenfield", so to speak. Such a complete redesign is always carried out close to the SAP standard and best practices.

The advantage is that companies can use the full potential of SAP S/4HANA in this way. The path makes it possible to part with legacy systems and arrive at a new and up-to-date architecture in one fell swoop.

In a system conversion, the existing SAP system is converted to S/4HANA - so there is no complete rebuild. Existing processes and developments are transferred to SAP S/4HANA. The sometimes high complexity of the existing system is thus retained.

Selective migration is based on system conversion. In this process, the migration experts create a copy of the previous system without data. They then convert the empty system to SAP S/4HANA and then "selectively" fill it with legacy data via data migration.

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13. Do companies have to pay license fees for both the running SAP ERP system and SAP S/4HANA?

There are basically two ways to acquire the rights to use SAP S/4HANA - but without having to pay license fees twice.

  • One variant is the Flat Fee (Product Conversion),
  • The other variant is Contract Conversion.

With the Flat Fee, a customer pays a flat fee. In return, SAP ERP customers receive the rights to use the SAP S/4HANA Enterprise Management solution. As the name Product Conversion implies, customers convert the license for SAP ERP into a license for SAP S/4HANA.

However, this does not apply to all other licenses: companies must purchase separate licenses for the engines (i.e. LoB & Industry Solutions of SAP S/4HANA such as Cash Management, Enterprise Product Engineering, etc.) that are not part of the "core" of SAP S/4HANA. In addition, license costs are incurred for all "Named Users".

As an alternative, the so-called Contract Conversion is available. This means: companies switch with all SAP licenses from the previous license model to the new SAP S/4HANA license model.

This new licensing model is no longer based on the number of users, but on the resources used. The new licensing model (Digital Access Adoption Program) differentiates between direct (human access) and indirect user access (digital access).

14. Can Z-developments or in-house developments be saved or will they be lost during the migration to SAP S/4HANA?

Over the years, many companies have not only adapted their ERP systems with new SAP enhancements, but have also supplemented and individualized them with in-house developments by their own software developers or by external IT experts - the so-called Z-developments.

Many companies want these solutions to be preserved when they switch to SAP S/4HANA, partly because they have sometimes cost a lot of money. Or they even avoid the change because they fear losing their in-house developments.

In principle, the adoption of in-house developments is possible. They can usually be technically adapted and integrated into the new environment after a precise analysis in advance.

However, companies should consider whether it would not be a better option in the long term. After all, every in-house development that is adopted increases complexity and causes higher maintenance costs. In addition, the requirements can often already be covered by corresponding apps.

It is therefore possible that the "cut" with a new implementation is strategically the better path: The changeover is a unique opportunity to fundamentally restructure and simplify the company's own systems and processes.

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15. How will SAP SE further develop SAP S/4HANA in the future?

Yes, SAP is constantly developing SAP S/4HANA.

SAP's strategic path is clearly leading in the direction of the cloud. Strategically, the monolithic core ERP system is being replaced by increasingly flexible cloud network architectures, the composable suites.

One focus here is on integration and enabling end-to-end processes. For SAP, the SAP Business Technology Platform is the basis for integration and extension.

SAP also unveiled RISE with SAP 2021, a new offering with which the Group aims to make it easier for companies to undergo digital transformation and move to SAP S/4HANA and the cloud.

With RISE with SAP, SAP offers "Business Transformation as a Service". The core and central part of the offering is the cloud - i.e. either the SAP S/4HANA Cloud (public cloud) or the RISE with SAP S/4HANA Cloud, private edition (private cloud).

16. What is RISE with SAP?

RISE with SAP has been available since the beginning of 2021.

With this solution, SAP offers its customers a package of various solutions, methodologies, and services to support them in their digital transformation and facilitate their path to the cloud.

RISE with SAP consists of five core elements:

  • der SAP S/4HANA Cloud (Public oder Private Cloud),
  • Business Process Intelligence (BPI),
  • der SAP Business Technology Platform (SAP BTP),
  • dem SAP Business Network (Ariba Network, SAP Logistics Business Network, SAP Asset Intelligence Network)
  • und diversen integrierten Tools und Services (Readiness Check, Custom Code Analyzer u. a.).

RISE with SAP can be used by both existing and new SAP customers, regardless of their size, industry, or the system they currently use (e.g., SAP ECC 6.0 or even an SAP S/4HANA on-premise system).

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17. When do companies need to convert to SAP S/4HANA?

A quick changeover is recommended.

The old SAP ERP 6.0 will no longer be supported from the end of 2027 at the latest. Optionally, companies can only take advantage of a maintenance extension until the end of 2030.

Exceeding the maintenance limit can have serious consequences: Errors and vulnerabilities will then no longer be eliminated in SAP ERP. This creates considerable risks for the operation of the systems and the operational processes.

In addition, the effort required to prepare for and convert to SAP S/4HANA should definitely not be underestimated.

If companies wait too long with the conversion and implementation, they also risk - with increasing demand from companies towards the end of maintenance - limited capacities of implementation partners.

In addition, competitive pressure is increasing due to digitization and globalization. So the sooner companies set the course for a modern IT architecture and efficient processes, the better.

18. What is the SAP S/4HANA Cloud?

SAP offers various cloud solutions. A distinction is made between two cloud solutions in particular, the

  • SAP S/4HANA Cloud (Public Cloud) and the
  • RISE with SAP S/4HANA Cloud, private edition (Private Cloud).

The SAP S/4HANA Cloud (or RISE with SAP S/4HANA Cloud) is a software-as-a-service (SaaS) offering. Earlier names for this solution were Multi-Tenant Edition, SAP S/4HANA, Essential Edition (Cloud ES) or also Public Cloud.

In the case of this public cloud solution, the provider (in this case SAP) provides the hardware. It also takes care of the infrastructure and the installation of the applications. The operation and maintenance of the software as well as the administration are also carried out by the provider.

Overall, the cloud significantly reduces the operational effort for companies. In addition, they no longer have to provide, operate and maintain their own hardware. Companies subscribe to the provider's services as a service.

Companies thus become more flexible and can react more quickly to changing conditions. SAP regularly provides its customers with updates, industry-specific core functions and innovations - in this way, cloud customers are always "up to date".

The second main solution is RISE with SAP S/4HANA Cloud, private edition (formerly: Single Tenant Edition or just Private Cloud).

The private cloud variant is licensed as a software subscription. The software is provided by SAP and hosted by a hyperscaler or - depending on the variant - also by SAP.

The great advantage of the private cloud is that the scope corresponds to the on-premise variant. The solution thus combines the full range of functions and expandability of an on-premise solution with the advantages of the cloud.

Companies can introduce the private cloud using the greenfield or brownfield approach or choose the path of selective migration.

If a company opts for this variant "with RISE", it benefits from a whole range of tools and methodologies. These solutions facilitate the digital transformation and the path to the cloud - regardless of the starting point and the chosen pace.

In addition to RISE with SAP S/4HANA Cloud, private edition, there is still SAP S/4HANA Cloud, extended edition (Cloud EX), which all in all differs only slightly from RISE with SAP S/4HANA Cloud, private edition.

RISE, however, is not included in the Cloud extended edition.

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