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What is SAP S/4HANA? – Detailed Guide

Fundamentally speaking, SAP S/4HANA is the latest and most advanced ERP infrastructure deriving from the ERP software line of SAP. The program is solely based on the SAP Hana database technology. Hence, you won’t be able to use it on another platform at all.

In this article, we are going to discuss –

  • The history of SAP S/4HANA.
  • Innovations related to S/4HANA.
  • The LoBs.
  • The deployment options you can choose.

So, without further ado, let’s get started.


The History of SAP S/4HANA

When it comes to SAP S/4HANA, most people tend to consider it the latest development of SAP’s financial solution armory. However, that’s not true.

SAP S/4HANA was originally launched in 2014 as a next-gen financial solution. And during that period, it had the name – SAP Simple Finance. After all, at its inception, SAP S/4HANA offered assistance related to finance management.

However, the scenario changed entirely after nine months when SAP announced that it would expand the core of the financial solution. 

Since then, it became a full-scale ERP (enterprise resource planning) platform and got a new name – SAP S/4HANA. 

In the year of 2016, SAP introduced brand new logistics functionality in S/4HANA in four crucial areas, including –

  • Procurement and sourcing.
  • Supply chain.
  • Manufacturing.
  • Asset management.

Some other major improvements included in the same update are –

  • Detailed scheduling/production planning.
  • Comprehensive warehouse management.

SAP also included machine learning capabilities in 2017 in order to carry out invoice receipt reconciliation, perform easier goods transfers, and automate invoice assignments. In the same year, SAP S/4HANA also came with transportation management functionality.

In 2018, another new feature, known as predictive accounting functionality, was added here. And the subsequent releases entailed the following –

  • Technological enhancements related to AI,
  • Blockchain, and
  • The IoT (Internet of Things).

As of 2021, an embedded HR (human resources) module went into the development phase, and SAP has launched multitudinous industry-specific offerings, including –

  • Service industries.
  • Natural and energy resources.
  • Consumer industries.
  • Financial Services.
  • Discrete industries, and
  • Public services.

Innovations of SAP S/4HANA

Since its inception, SAP S/4HANA has brought about a huge number of innovations. Here is what you need to know about them –

Simplification List.

SAP S/4HANA was truly an evolution in the world of ERP, as it came with various excellent functions while improving the fundamentals of the core infrastructure. Information regarding these enhancements can be found in the S/4HANA “simplification list.” 

It’s a long and valuable digital document that explains the reasons behind the improvements and how it’s a better alternative than the legacy solution.

New Functionality.

The brand new functionalities of S/4HANA, such as the Universal Journal, enable financial users to access an exclusive source of economic truth where both management and monetary accounting documents are kept. 

It led to better reporting, the use of well-tailored cockpits to help specific end-users to make well-informed decisions, and easier access to KPIs. 

Besides, with the proliferation of process automation, predictive analytics, and machine learning, it made mundane business tasks a little easier and simpler to complete.

S/4HANA – The Lines of Business

The core modules available in SAP S/4HANA are known as LoBs (lines of business). These tools or ecosystems generally include the following –

LoB – 1: SAP S/4HANA Finance.

SAP Finance generally focuses on all the money-related activities and ventures of a business. It may feature –

  • Controlling.
  • Financial accounting.
  • Risk management.
  • Treasury.
  • Financial planning. 
  • Consolidation, and 
  • Financial close.

LoB – 2: SAP S/4HANA SCM and SRM.

Added to the logistics LoBs of SAP S/4HANA, this section comes with various tools related to supply chain management and supplier relationship management. It was done purposefully to distribute the functionalities better and place similar types of processes together.

The SCM and SRM offerings of SAP S/4HANA feature the following –

  • Sourcing and Procurement: It focuses on the activities regarding the acquisition of raw materials required to fulfill orders. It includes – operational purchasing, extended procurement, and supplier and contact management.
  • Supply Chain: The Supply Chain LoB is all about planning and performing critical business activities. For example, it can help you prepare the pre-planning production runs, dispatch the products to the purchasers, etc. It comes with – production planning, warehousing, batch traceability, transportation, and inventory management.
  • Manufacturing: It primarily works on the product creation procedure and includes an eccentric feature or two, like – production operations, responsive manufacturing, and quality management. Tools like delivery planning and scheduling fall under it too.
  • Asset Management: SAP Asset Management focuses on maintaining the fixed assets of a business. It can include – EHS monitoring, plant maintenance, etc.

LoB – 3: R&D/Engineering.

The R&D (research and development) or engineering LoB of SAP S/4HANA centers around assessing the lifecycle of a product. This includes –

  • Product lifecycle costing.
  • Defining the structure of the product.
  • Managing innovation.
  • Maintaining chemical data.
  • Checking the bill of materials.

Apart from these, it can also partake in managing sensitive materials used in application and tool development and staying compliant with health and safety regulations.

LoB – 4: Sales.

The Sales LoB takes care of the activities associated with completing sales orders and making sure that they’re not going haywire. This can include –

  • Salary quotes and inquiries.
  • Sales agreements and contracts.
  • Pricing.
  • Available-to-promise checks.
  • Free-of-charge orders.
  • Incompletion checks.
  • Repair orders.
  • Packing and picking.
  • Revenue recognition.
  • Debit and credit memo requests, etc.

LoB – 5: Human Resources.

The Human Resources LoB is currently being developed by SAP. A report suggests that the solution will be released sometime in 2022. However, there’s no news available on this aspect as of now. 

In any case, we do know a little about the LoB itself. With it, consumers can apparently integrate and incorporate S/4HANA with SAP SuccessFactors to offer a seamless cloud-based human resources experience.

The Deployment Options of SAP S/4HANA

There are more than one option in which SAP can be implemented. Here’s what you need to know about them.

Option – 1: Cloud Deployment (Public Cloud).

Cloud deployment is usually used by net-new customers who want the cloud approach to integrating with regular updates. The upgrades will include new software and configuration.

Here’s how the scenario might look here –

  • Infrastructure: A public cloud structure shared with different consumers and operated or hosted by SAP only. 
  • License: Subscription for SaaS (Software as a Service) is available with RISE with SAP.
  • Scope: Core ERP, 42 countries, and specific industries.
  • Upgrades: Managed by SAP, mandatory and fixed (software and configuration). 
  • Extensibility: Extensions through SAP BTP (Business Technology Platform) and the key user extensibility with whitelisted APIs.
  • Configuration: Use SSCUIs (Self-Service Configuration User Interfaces) developed on fit-to-standard workshops within the Explore phase.
  • Partner Content: All of your partners can add the configuration settings manually.

Option – 2: Cloud Deployment (Extended Edition).

Unlike the former, the extended edition of the cloud deployment provides additional flexibility in how the system is managed and comes with much more control and flexibility as a whole. There’s also more than one standardized procedure available here, alongside some SLAs and services.

Here’s what the changed scenario looks like in this case –

  • Infrastructure: It’s deployed on a dedicated landscape created on cloud infrastructure that is operated by SAP or any other Hyperscaler, like AWS, Microsoft Azure, etc.
  • License: You’ll need to subscribe to the software. 
  • Scope: The same S/4HANA functional scope can be used as available on-premise. In this case, you can operate in 39 languages, 64 countries, and 25 industries.
  • Upgrades: You have to upgrade the software program at least once every two years. The upgrading procedure will be managed by both the customer and SAP.
  • Extensibility: The in-app extensibility can include – some classic ABAP extensibility and key user extensibility. You can’t do any modifications, though.
  • Configuration: The same old IMG process.
  • Partner Content: Partners can add the configuration settings here manually as well.

Option – 3: Cloud Deployment (Private Edition).

Unlike the former, it has various advantages of the cloud, thanks to the capability of moving to a private cloud by using a system conversion procedure. In addition, it features multiple standardized processes, SLAs, and services as well.

  • Infrastructure: It comes with a detailed landscape on a stable cloud structure used and operated by SAP and runs on a Hyperscaler, like Google Cloud or AWS.
  • License: It requires a subscription for the software.
  • Scope: Offers an on-premise S/4HANA functionality scope, including 25 industries, 64 countries, and 39 languages. Some 3rd party apps might have add-on limitations too.
  • Upgrades: An annual upgrade is certainly available in this case. But you can also opt for your own pace. However, in this case, the customer will have to manage the whole upgrade process. SAP will only help with some specific technicalities. That’s all.
  • Extensibility: You can get and employ in-app extensibilities here, including – classic ABAP and key user extensibility. Extensions through the SAP BTP extension suite will be available here as well.
  • Configuration: IMG process.
  • Partner Content: Templates provided by the partners are allowed here.

Option – 4: On-Premise Managed by SAP.

It’s an on-premise solution provided by private and individual infrastructure and hardware hosted by SAP, your own data center, or a hyperscaler. Here’s what it comes with –

  • Infrastructure: A customer-specific infrastructural landscape will be available on SAP HEC in your own or SAP’s data center. 
  • License: In this case, you’ll need to bring your own infrastructure license.
  • Scope: Fully functional for S/4HANA, industry scope, countries, and partner add-ons.
  • Upgrades: The upgrades become available annually. However, you can also choose an upgradation sequence considering your own pace.
  • Extensibility: Modification, customization, and extensibility will be possible with the ERP.
  • Configuration: Use the IMG-based approach within the Explore phase.
  • Partner Content: Templates from a partner are allowed.

Option – 5: Traditional on-premise.

This is the tried and true SAP model. The same way it’s been done in the past. Not much explanation needed here. 


FAQs – Frequently Asked Questions

In this section, we’ll try to cover some questions that may come up to your mind after reading till now. So, let’s get started with it.

1: What is the Time Taken for SAP S/4HANA Implementation?

Generalizing a specific timeline for the integration procedure is quite difficult. After all, it’ll entirely dependent on the type of migration approach you’re attaining to. However, according to reliable sources, almost 75% of people tend to implement within 9 to 12 months.

2: Which Skillsets are Required to Implement S/4HANA?

There’s no need to use designated skill sets to implement SAP S/4HANA. In most cases, the integration solution tends to be managed by the integration partner that works on the project. However, if you are still confused, it might be best to visit SCN (SAP Community Network).

3: Who uses SAP S/4HANA Cloud?

The most prominent users of the SAP S/4HANA Cloud are people who have more than thousands (1000+) employees. Besides them, people who are working in the information and services industry also utilize the tool to get the best out of them.

The Bottom Line

The process of deploying SAP S/4HANA isn’t easy. And, thanks to varying deployment strategies, it also becomes confusing for the customers to choose the right option for them. 

But there’s a trick that can help you choose the right option here. In this case, you must keep an eye on three things –

  • The needs or requirements of your enterprise.
  • The existing infrastructure you have in your company.
  • The size of your organization.

Besides these, you’ll also need to know about the difference between each deployment plan and how they work exclusively for different circumstances. The more you know, the better!