In today’s era, businesses need to consistently connect with their customers worldwide.
The shift to a digital environment has a significant impact on organizations, influencing their business model and how they conduct their operations. But, what does this mean?
The success of an organization usually depends on two elements —
- The overall competence of the company to manage whatever changes it has made to its business model
- The efficiency of the corporation in connecting with its consumers
SAP S/4HANA plays a crucial role in helping organizations adapt to the digital age. It mainly serves as the central hub for carrying out tasks efficiently in the new digital economy. This is achieved through simplifying user interfaces, data models, and applications.
Moreover, SAP S/4HANA enables businesses to connect faster with external entities, such as machines and customers, facilitating accelerated interaction with the outside world.
SAP ECC and SAP S/4HANA – A Fundamental Breakdown
I: SAP ECC
SAP ECC is the older version of SAP’s business software, helping organizations manage various tasks like finance, logistics, and more.
It’s flexible — but can get complicated when making changes. However, the problem is, SAP will stop updating or offering support to ECC after 2027. Hence, you have to move on to the brand new S/4HANA for ongoing assistance and enhanced features.
II: SAP S/4HANA
As the latest ERP system of SAP, S/4HANA comes with a lot of improvements and benefits. For example, it uses the all-powerful HANA in-memory database that can make most of the processes of your business better and more fleshed-out.
Some of the other important features of it can include the Universal Journal, acting as a single source of truth, a new HANA database, and the merging of CO and FI.
There’s also a brand new general ledger and mandatory Business Partners. Some of the other benefits of the same can include the below-mentioned —
- Real-time MRP,
- Global Trade Services, and
- Extended Warehouse Management,
Needless to say, all of these are geared towards making your company much more simplified and improved as a whole. But, it might take some time to implement S/4HANA successfully.
How to Migrate to S/4HANA from SAP ECC?
Given the reasons mentioned earlier, embracing SAP S/4HANA for enterprise processes may become a necessity in the future. For businesses new to SAP, diving into SAP S/4HANA implementation makes sense.
However, for enterprises already using older SAP versions or products, clarifying some questions is crucial before making the switch.
To ensure a smooth adoption of S/4HANA, it’s vital for potential customers to thoroughly assess various options based on key factors and decision-making parameters.
I: The System Conversion Method
Upgrading from SAP ECC to SAP S/4HANA is a straightforward process using the system conversion method.
By following well-documented procedures and utilizing conversion tools, a current SAP ECC system can seamlessly transition into an S/4HANA instance, preserving all historical data.
This approach is much more widely accepted, because of having clear step-by-step protocols, including optimization guidelines for any custom code in the original system.
Switching to SAP S/4HANA involves a process known as in-place migration, where the existing system ID is retained for customization, interfaces, authorizations, and development.
If an organization is currently using SAP ERP 6.0 with enhancement package 0 or higher and has a Unicode system, it can directly migrate to SAP S/4HANA.
With the release of SAP NetWeaver 7.5, only Unicode systems are supported by SAP.
For systems that are not yet Unicode, a conversion to Unicode is required before migrating to SAP S/4HANA.
The migration process is facilitated by SUM-DMO (Software Update Manager with the Data Migration Option), which allows for upgrading and migrating the database in a single step. This approach minimizes downtime, making the transition more efficient for enterprises.
II: A Brand New Implementation of S/4HANA
For some companies, the transition to S/4HANA may not be practical due to less-than-ideal SAP setups and the accumulation of extensive data. Thus, in such cases, it’s more effective to abandon complex efforts and opt for a fresh SAP S/4HANA implementation.
You can transition to SAP S/4HANA through an intermediate step using S/4HANA Finance. This step can be carried out as an add-on for enhancement package 7 in the 1503 version or as an add-on for enhancement package 8 in the 1605 version.
It’s crucial that your system is Unicode for this migration to occur seamlessly in a single step. SAP provides ABAP reports that can be run on your local SAP ERP system to assess the necessity for this kind of migration.
Why Should You Move to S/4HANA from SAP ECC?
When talking about moving from SAP ECC to S/4HANA, there are several benefits that you can enjoy following the transition. Here’s what you need to know about them.
1: Better Performance
SAP S/4HANA’s in-memory technology speeds up data processing, enabling quicker analysis and faster decision-making, ultimately boosting performance.
2: Better Data and Inventory Management
In S/4HANA, the Universal Journal acts as the go-to place for all financial data.
It simplifies the process of finding and analyzing financial information by providing a single, reliable source of truth.
MATDOC in SAP S/4HANA enables organizations to manage inventory in real-time, aiding them in making precise and timely decisions regarding their stock.
3: More Streamlined Processes
SAP S/4HANA’s user-friendly interface and streamlined data models simplify navigation and access to information, making processes more efficient for users.
Bonus: Better Financial Management
Combining CO and FI in SAP S/4HANA streamlines financial tasks, making it simpler to retrieve and analyze financial data for effective management and reporting.
S/4HANA has also been designed solely to decrease the need to use or create custom codes. So, in a way, it will be much less difficult to use than SAP ECC.
The Bottom Line
Companies can choose different approaches when transitioning to SAP S/4HANA.
If a business doesn’t use SAP ECC, they’ll start fresh with a new SAP S/4HANA system. For those currently on SAP ECC, a careful evaluation of their current setup is crucial before deciding on the adoption path.
Converting the existing system is generally the preferred method for efficiency, but there might be cases where it’s not ideal. In such instances, opting for a new SAP S/4HANA implementation following standard best practices is the way to go.
