Meaning and definition of SAP S/4HANA
Why was SAP S/4 HANA developed and what are the benefits for the user? IT users and customers ask themselves such urgent questions again and again. S/4HANA is the extended portfolio of SAP SE and largely the successor system to the SAP Business Suite. It should cover the specialist areas of ERP, BI and IoT platforms and thus become the innovative, high-performance, and holistic business solution of the future. For the users of the SAP Business Suite, there is an optional intermediate step for the way into the future, in which the HANA database under the SAP Business Suite replaces previous relational databases: SAP Business Suite on HANA.
What does the term HANA mean?
The SAP term HANA stands for High Performance Analytic Appliance and includes a high-performance analysis application, also known as in-memory technology. SAP HANA is a hybrid of the column-oriented working method of in-memory databases and the traditional row-oriented database technology used in relational databases.
HANA is the new, innovative development and integration platform for software applications from the SAP portfolio, mainly for the modules of the previous version SAP Business Suite and SAP Business Intelligence.
What is the difference to other SAP versions?
SAP S/4HANA is the extended SAP operating system of the latest generation. As a logical consequence of SAP R/2, R/3, SAP ERP, it aims to simplify and reduce complexity. The “S” in S/4HANA stands for simple and is intended to show the simplified data model of the technology on the one hand and the improved usability of the applications on the other.
What are the advantages and disadvantages, opportunities and limitations, benefits of SAP S/4HANA?
A key feature of SAP S/4HANA is the consistent design of the in-memory technology platform. This means that the complete database is already in the main memory and does not have to be copied from a hard disk to the main memory before analysis or processing, as is usually the case with relational databases. This enables the processing of transactional (OLTP) and analytical procedures (OLAP) in one and the same system as well as the analysis and processing of large amounts of data (big data) in real time. SAP HANA thus achieves significant performance advantages and is considered a real quantum leap in the world of business software. Performance and performance gain are currently largely limited by the available performance data of the subordinate hardware.
What are the operating forms of SAP S/4HANA?
There are three types of SAP S/4HANA operation: on-premises, hybrid and cloud.
On-premises traditionally relies on in-house systems for SAP operations.
Since 2014, SAP has also offered the SAP HANA technology platform in various cloud environments. The mixed operation with the operation of parts of the SAP environment on-premises and other parts on Microsoft Azure or Amazon AWS is called hybrid. The SAP HANA Enterprise Cloud enables companies to use business applications such as ERP, CRM, BI etc. as managed services (SaaS) based on the SAP HANA in-memory database platform
The SAP HANA Cloud Platform includes a wide range of in-memory application and database services. Companies have the option of developing their own developments and extensions for applications themselves or using third-party solutions from SAP partners.
What is the architecture of SAP S/4HANA?
S/4HANA was fundamentally redeveloped based on HANA in-memory technology and designed according to the Fiori design guidelines.
Figure 1: Architecture and components of SAP S/4HANA
Source: SAP SE
What technology is SAP S/4HANA based on?
The technical strategy of SAP SE is: merge the previous relational database management systems (RDBMS) and OLAP and OLTP landscapes into a common in-memory database and integrate them as a new system basis.
HANA was originally a hardware and software appliance combined with in-memory technology. This in turn makes it possible to communicate directly with the main memory of the hardware. Although their storage method is volatile, it is significantly faster than that of hard disk technology. Users benefit from this, especially when evaluating large amounts of data and when running programs with extensive amounts of data, as these activities are rapidly reduced.
The originally proprietary SAP HANA technology is now much more flexible and can run on different hardware and cloud platforms.
What are the modules of SAP S/4 HANA?
From the point of view of a user who accesses the menu tree and the underlying functionality via the SAP GUI, little has changed: A production order can still be managed via the “Production” menu item and an order via the “Materials Management” category and to be edited. From this perspective, it can be assumed that the classic modules will still be available in the new S/4 world, provided the functionality has made the transition to S/4HANA.
From SAP’s point of view, it looks completely different. In the future, SAP will use the Lines of Business (LoB) definition for S/4HANA both in the SAP tools (BP Explorer, Fiori Apps Reference Library, What’s New Viewer) and in the communication of the SAP ecosystem Division of functionalities. In the case of S/4HANA main releases, the innovations are no longer grouped and presented within modules, but are divided into business areas such as finance or manufacturing. The following figure, from the SAP release preview for S/4 version 1809, illustrates this procedure.
Although the classic modules are still anchored in the SAP S/4HANA system in the menu tree and in the application components, the new terminology will be used in the future when delimiting functional areas.
This means: the classic ERP modules are replaced by the business areas (lines of business).
Figure 2: SAP Lines of Business
Source: SAP Blog
According to the new categorization, the following business areas exist in SAP S/4HANA (excerpt from the SAP Fiori Apps Reference Library):
- asset management
- commerce
- Finance
- Human Resources
- Manufacturing
- marketing
- R&D/Engineering
- Sales
- service
- Sourcing & Procurement
- supply chain
- Sustainability
What functions, properties and special features does SAP S/4HANA have?
The new S/4 HANA solution architecture is completely innovated, completely based on the business processes in companies and their smart handling.
The new arrangement clearly stands out from the classic structure. In some cases, functional areas that were previously anchored within a module were divided into several business areas. This applies, for example, to inventory management and purchasing – classic in the MM module – in SAP S/4HANA, however, purchasing (MM-PUR) in the Sourcing & Procurement process environment and inventory management (MM-IS) in the Supply Chain process environment.
In addition, there are modules that were not previously integrated in SAP ECC, but in the extended functional area of the SAP Business Suite and were transferred to a new business area with S/4HANA. This applies, for example, to the SAP EWM module, which was transferred from the SAP SCM application to the S/4 core and integrated there in the supply chain business area. Or Product Lifecycle Management (PLM), which was previously a separate application in the SAP Business Suite and was transferred to the R&D / Engineering division after being transferred to the S/4HANA core.
The area of group reporting in business intelligence was greatly expanded. This enables complex evaluations for company-relevant decisions, eg for targeted innovations, strategic business areas, strategies in human resources, logistics, group IT, to be of high quality and on the basis of quickly determined reports. In addition, companies achieve the necessary transparency for relevant company decisions and the continuous improvement of company performance by means of meaningful analyses.
In addition, customer management is gradually being brought closer to the market leader Salesforce with a completely new CRM strategy and product innovations in the CRM area
Conclusion: In S/4HANA, the modules have changed to Line of Business, i.e. process-oriented to business areas.
The former module form in SAP S/4HANA has changed significantly from the perspective of the division of functions. The end user will only notice small changes when using the SAP GUI. However, the methods and procedures of how functions are grouped in the SAP S/4HANA system and the SAP tools (BP Explorer, Fiori Apps Reference Library, What’s New Viewer) have changed significantly.
Figure 3: Comparison: SAP ERP modules vs. SAP S/4HANA business areas
Source: SAP Help
In the coming years, SAP will stop maintaining the previous version ECC 6.0. In addition, companies are also dealing with the topic of SAP S/4HANA for other reasons: in addition to many factual arguments that speak in favor of this new platform, the most important argument is certainly the digital transformation of companies. The S/4HANA platform is SAP’s enabler for future digitized companies.
This fact makes S/4HANA indispensable for every company – every company has to deal with the digital transformation. The new platform creates the conditions for a successful change to digitization, processes transactional and analytical data in one go and also enables the necessary flexibility and speed for digital business models. Highly integrated, digitized and modular architectures replace today’s processes, some of which are still manual. The way is clear for faster and sustainable value creation.
While today’s in-memory add-ons from SAP’s competitors still rely on making copies of data that are loaded into memory and only then processed, SAP does not do this at all. The advantage: If, for example, postings have been made, these payments can be found directly in analyzes drawn up by controlling. Transactional and analytical data come from one source. “Today, SAP has a representation of the data that enables in-depth analysis. If necessary, right down to document level,” explains our SAP expert Franz-Josef Stortz
With this completely new generation of the central database, the SAP HANA platform is suitable for supporting companies in making the transition to the digital economy. Because on this path, an IT infrastructure that is secure, agile, open and absolutely reliable is indispensable.
Migration strategies for SAP S/4HANA
When choosing the right migration approach for the changeover from the previous SAP ERP products R/3 and ECC to S/4HANA, there are essentially three different approaches:
Brownfield
Brownfield approach means the conversion of a system from R/3 or ECC to S/4HANA within the existing modifications and the process and IT architecture structures without having to change them significantly. The modifications are essentially retained. The brownfield approach also transfers the historical data to S/4HANA.
Greenfield
With the greenfield approach, the new implementation of S/4HANA and the corresponding ERP processes takes place. This approach is designed to change the process landscape, for example because the old ERP is too complex or the requirements for business and IT processes have changed. With Greenfield, users are again more oriented towards the SAP standard. Historical data can be included, but it doesn’t have to be.
Mixed forms/colourful
This approach is designed as a hybrid of both approaches for each S/4HANA project. Depending on the function, it is decided individually which migration approach should be chosen.
Figure 4: Main drivers for S/4HANA migration projects.
Source: Lünendonk Studie 2021
Figure 5: Reasons for each migration strategy.
Source: Lünendonk Studie 2021
While in 2019 57 percent of companies still used the brownfield approach, 25 percent the greenfield approach and only 18 percent the mixed approach, the picture changed completely towards the middle of 2020. Only 30 percent of companies want to carry out a purely technical migration (brownfield), i.e. an upgrade of the existing ERP to S/4HANA while retaining the historical data and processes.
From Lünendonk’s point of view, one reason for the sharp decline in brownfield planning can be found in the extended conversion period up to 2027 by SAP, which leaves more time for conceptual considerations. In fact, the time pressure for the ERP conversion is the main driver for S/4HANA migrations for only one in four companies, the implementation of new business requirements and IT modernization for 38 percent of the study participants.
As a result, the proportion of SAP customers opting for a blended approach has increased from 18 percent (2019) to 43 percent.
52 percent of the companies surveyed that are currently preparing the rollout are planning the so-called colorful approach. With regard to the sectors, it is the surveyed companies from industry, the energy sector, the FMCG sector (Fast Moving Consumer Products) and the chemical and pharmaceutical sectors that combine both migration strategies more often than average.
(Source: Lünendonk Study 2021)
Largely identical change and release management in SAP S/4HANA
With all the euphoria about the innovations in SAP S/4 HANA the change and release management in the SAP basis has largely remained the same. The CTMS will continue to be operated under S/4HANA using the traditional and proven DQP installation form of all previous SAP systems. This applies to the classic ABAP Workbench as well as to new development environments such as Eclipse, Jason, Jenkins, and other low code development solutions. Even the striking gCTS approaches cannot hide the fact that everything has remained the same at the base. Regardless of the platform, all developments must first be filed in the quality system. From there, the objects are still transported in transports, first from D to Q and then, after the release, from Q to P, the productive system. The known risks and susceptibility to errors of this method have become even more complex over time. The same applies to the new cloud strategy, with which SAP wants to grow significantly.
The Quality and Security Center for SAP CTMS from Firnkorn & Stortz with the extensive Transport Impact Analysis (TIA) is therefore an indispensable part of the release processes in the Solution Manager, future release processes in the SAP Cloud (Cloud Clean Core Code) and the Business technology platform alike. Firnkorn & Stortz supports SAP-related issues and guarantees well-founded advice on SAP S/4HANA. With tailor-made support, the consultants at Firnkorn & Stortz can achieve a significant improvement in the quality of SAP processes.
Also, read more on related topics
Your contact at Firnkorn & Stortz on the subject of SAP S/4HANA
Firnkorn + Stortz GmbH
Thomas Firnkorn