If your company is using the SAP ERP Central Component (ECC), you probably have the date 2027 looming over your head, which is when SAP will end maintenance support for the software.
The logical next step is to migrate to SAP S/4HANA (High-performance ANalytic Appliance)—the next step in the evolution of SAP’s enterprise resource planning (ERP) system.
But what would a move to SAP S/4HANA take, and how should you execute the migration? Here’s what you need to know.
What Is SAP HANA?
SAP HANA is a column-oriented in-memory database that allows companies to process massive amounts of data with no latency. You can bring online analytical processing (OLAP) and online transactional processing (OLTP) together to become a truly data-driven organization.
SAP HANA also offers advanced search, analytics, and data integration capabilities for all data types (i.e., structured and unstructured) to support smart, insight-driven applications.
What Is SAP S4/HANA?
SAP S/4HANA is an ERP business suite that allows companies to perform transactions and analyze business data in real-time using an advanced in-memory database.
It’s the digital core that SAP uses to support its customers’ digital transformation strategies to become an intelligent enterprise.
It helps organizations increase their flexibility, responsiveness, and resiliency to changing business requirements and market demands.
ECC vs. S4/HANA: Similarities and Differences
Both ECC and S/4HANA support multiple business operations, including sales, accounting, procurement, distribution, manufacturing, and plant maintenance. They provide organizations with a unified database to centralize operational information, standardize processes, automate routine tasks, and facilitate reporting. Their modular design means that businesses can select the functionalities they need and configure them to meet unique business requirements.
While ECC and S/4HANA share a majority of their core features, they also have some key differences:
- ECC can run on various third-party databases, such as Oracle, MaxDB, and IBM. S/4HANA only uses SAP HANA, an in-memory, column-oriented, relational database management system.
- ECC, like traditional ERPs, is optimized for transaction processing (OLTP) instead of online analytics (OLAP). The new S/4 Universal Journal (New GL) simplifies the database table / coding block structure by adding additional dimensions into the primary GL table (ACDOCA).
This eliminates the need for separate ledgers (e.g. special purpose ledgers, profit center / cost center accounting), reduces data redundancy, and cuts down on reconciliation tasks. The simplified table structure combined with the lightning-fast Hana database allows for real time analytics directly on your ERP without needing to ETL data to a data warehouse. - ECC maintains separate files on customers and vendors, even if they overlap in roles or functions. S/4HANA’s Business Partner combines common data structure elements into a single view.
- New Asset Accounting S/4 module has several benefits over ECC. First, there’s real time integration with the GL Universal Ledger. This reduces the need to reconcile the asset and g/l ledgers. The depreciation runs are faster and can be done in parallel for multiple valuation areas and currencies. And balance carry forward, fiscal year changes, and plan values are all automated w/o requiring additional processing steps.
- Group Reporting, S4’s new financial consolidation module, resides on the ERP platform and uses the general ledger transactional data directly. Group reporting allows for faster, more efficient, and more transparent consolidations.
Group reporting has the benefits of providing a single financial source of truth, provides the business with the option to have a continuous close cycle, has an improved integrated closing cockpit, and offers real time predictive analytics using SAP Cloud Analytics (SAC). - SAP Cloud Analytics (SAC), S/4s business intelligence and business planning application, is a best in class reporting and data visualization platform that sits directly on the S/4 ERP platform. Combine real time data analytics, business planning, and consolidations into a single lightning-fast reporting tool for the first time in SAP’s history.
- ECC processes rebates through existing special discount (SD) rebate processing, while S/4HANA handles settlement management through condition contracts to provide real-time insights into business volume and accruals.
S4/HANA Migration Approaches: Greenfield vs. Brownfield vs. Hybrid
There are several approaches for migrating from ECC to S/4HANA, depending on how your company uses SAP, the size and state of the data, your deployment method, and your future business requirements.
Here’s a look at the three options:
The Greenfield Approach—New Implementation
The greenfield approach requires a complete reengineering of all SAP processes and workflows. It involves wiping out all customizations on your current ECC to start with a clean slate.
You can adopt this approach for implementation on-premises or in the cloud to lower the total cost of ownership, reduce complexity, and shorten time-to-value. You’ll also have more flexibility to achieve standardization and simplification during the process.
The greenfield approach is best if you have many complex and outdated processes that require a complete renewal of your ERP solution. However, migrating large volumes of data and redeveloping system customization takes time and resources.
To mitigate the uncertainties that make this approach riskier, some organizations use a “selective greenfield” strategy that only creates a blank slate for selected business areas.
The Brownfield Approach—System Conversion
This approach can quickly get S/4HANA up and running as you migrate existing systems and workflows over to the newest version of the software.
You can choose to keep current business processes, data, and customization intact or take the opportunity to evaluate and edit existing workflows.
The approach results in a shorter project runtime and less disruption to business operations by building on existing elements.
However, you may risk perpetuating inefficiencies and complexities while discouraging innovation if you simply port everything over from your previous system without evaluating their business value.
Also, your current system must meet all conversion prerequisites for this approach to be feasible.
The brownfield approach is best for on-premises implementation to allow existing customers to continue using their solutions as they convert to S4/HANA with a phased business roll-out.
The Interim Approach—Central Finance
If your company has grown by merger and acquisition and inherited more than one ERP along the way. Or if you need an all-in-one reporting, financial consolidation, and forecasting solution like SAP S/4HANA on a timeline that precedes your ability to migrate to S/4, implementing Central Finance may be an interim option worth exploring.
S/4 Central Finance is a technology that provides tools to implement S/4 and map transactions into this ledger from existing ERP systems.
Transactions can be replicated in real time in the Central Finance system. This provides the benefit of data being consolidated on a single S/4 platform, makes data available for real-time transaction level reporting, and creates the ability to perform financial consolidations plus business forecasting on the Central Finance solution with the same master data values (e.g., chart of accounts).
Using Central Finance is unnoticeable to the existing ERP business users, allowing the business to run “business as usual” until a permanent S/4 solution can be implemented. Migrating to Central Finance first reduces implementation risk and accelerates the realization of some S/4HANA benefits by the business community.
Make the Most of Your S4/HANA Migration with a Customized Solution
S/4HANA helps you set a foundation to build an intelligent enterprise that meets business demands now and in the future. To maximize your investment, adopt a strategic approach, design a customized solution, and develop a custom migration plan based on your unique business requirements.
PDG Consulting is a recognized leader in Custom Application Development for large enterprises, including CBS, Sony, JAFRA, CEMCO, AT&T, and DIRECTV. We can help you implement SAP S4/HANA from start to finish, guiding you through every phase of the project to ensure that you get the most out of the robust platform.
Get in touch to see how we can help you adapt your internal applications to meet evolving market demands and stay ahead of the curve.
Contact us to discover more