SAP ECC vs SAP S/4HANA: Which ERP is Right for You?

Choosing the right ERPs can be an arduous task for an organization that wants to unify its operations and drive future growth. If you are considering your ERP options with SAP, this article will help differentiate between SAP ECC and SAP S/4HANA. We'll explain the core differences between the two types of systems, how S/4HANA's advanced HANA database offers improved performance, and whether it makes sense to upgrade from ECC to S/4HANA altogether.

What is SAP ECC?

SAP ECC is an acronym for ERP Central Component, the legacy ERP platform for enterprise infrastructure before the release of the new SAP S/4HANA. SAP ECC uses a modular-based architecture, so a company is able to select and choose the modules relevant to their business, allowing the enterprise flexibility and adaptability aligned with their size and industry.

The modules in SAP ECC are all modular and work together to make business process connections that affect many different functions. For instance, an update to the Material Management (MM) module impacts the distribution mechanics in the Sales and Distribution (SD) organization, and the Financial Accounting (FI) organization's financials.

SAP ECC is mostly deployed on-premise infrastructure, where companies maintain their servers, infrastructure, and database (supporting multiple databases such as IBM DB2, Microsoft SQL Server, and Oracle database), allowing for deep integration, flexibility, and scalability of business functions that companies use to manage operational processes such as finance, human resources, and supply chain.

History and Evolution of SAP ECC

SAP ECC was the next iteration of SAP R/3, which was the solution introduced in 1992 that first introduced a client-server ERP and allowed a company to break free of mainframe computing. With SAP R/3, SAP had introduced modularity and scalability to the ERP solution. SAP R/3 made a fundamental difference as the first solution to integrate financial, logistics, and HR operations all on the same platform— increasing data consistency and improving workflow automation.

Over the years, many different versions of ECC were brought out, but SAP ECC 6.0, released in 2005, was the most adopted by enterprises.

SAP ECC Features and Functionalities

The SAP ECC solution supports a wide range of functions and modules so that different departments can work interactively. Important business functions include Financials, Logistics & Supply Chain, and Human Capital Management.

SAP ECC 6.0

Version 6.0 is the most stable and feature-rich version of SAP ECC. It offers enhanced ERP (Enterprise Resource Planning) functions and a scalable architecture and can be run on-premises. Version 6.0 was developed using the SAP NetWeaver integration platform.

The NetWeaver platform links the SAP internal applications as well as allowing organizations to integrate external applications, business processes and data from other business applications into the organization's SAP environment. When organizations integrate different data sources into SAP, they will be able to make more informed decisions, as those decisions will be based on real-time apps with unified views. SAP ECC has made analytics and reporting a part of the application, not only for tracking current performance but also for continuous improvement.

What is SAP S/4HANA?

SAP S/4HANA (or S4 HANA) is the next generation of ERP software products from SAP. It is marketed as the successor to SAP ECC and runs on the in-memory database, the SAP HANA database, which provides immediate business process efficiency, insight, and automation.

SAP S4 HANA has several new features and enhancements compared to SAP ECC, including:

• Introduces the Business Partner Model by replacing customer/vendor master records, which combine supplier and customer records to make transactions easier.

• Reduces data redundancies and increases data consistency to ensure that customers can easily transition from SAP ECC to SAP S/4HANA through customer vendor integration (CVI).

• SAP UI5 allows SAP Fiori to be the default user interface, which also provides a modern web-based user interface across multiple devices, including desktops, mobiles, and tablets.

• SAP S/4HANA includes an automated approval process for flexibility in Sales, HR, and Finance workflow processes. The customer can continuously adapt the workflow design without knowledge of coding.

• SAP S/4HANA allows the use of the SAP HANA in-memory database, which includes high-speed data processing, eliminating dependency on legacy databases and IT complexity.

• SAP S/4HANA also allows the use of AI to assist organizations in detecting patterns and optimizing operations, processing live data to make faster decisions.

Launch of SAP S/4HANA

Development for the SAP HANA database, the in-memory database for S/4HANA, began as early as 2005. But its pre-release and announcement by SAP SE took place in November 2010, and SAP SE also offered it to 10 select customers. One of the first customers began using the SAP HANA platform in 2011.

SAP HANA was initially used along with the ERP ECC repository and databases, such as SQL or Oracle support. By December 2012, the number of clients reached 345 and the certification of SAP HANA meant greater penetration in the ERP market.

SAP S/4HANA was announced as a next-generation enterprise suite in Q3 of 2015 during the general availability of SAP HANA 2.0. SAP HANA 2.0 incorporated SAP HANA in-memory database processing only and stopped support for external databases.

SAP S/4HANA became available in both cloud and on-premise versions. It also adopted AI and machine learning capabilities, and as a result, enabled enhanced automation, AI-driven analytics, and machine learning capabilities.

Advantages of Migrating to SAP S/4HANA

Business Benefits

• Greater Efficiency: Real-time reporting as well as automating repetitive tasks and workflows, enables organizations to deliver their business processes more efficiently, reducing manual work and process delays.

• Increased Customer Satisfaction: Organizations will develop better services, and customer satisfaction will increase because they can create real services more efficiently and flexibly with real-time order processing, faster lead and response time, and advanced ATP.

• Better Dependability on SAP Products: Since the S/4HANA model is unified, organizations are able to connect to different SAP products more dependably, such as SAP CRM, SAP SuccessFactors, SAP Ariba, SAP Fiori, SAP Cloud, and SAP IBP.

• Lower Operational and Overall Costs: SAP's use of cloud computing and hybrid deployment environments lowers operational costs of infrastructure and IT services and lowers the total cost of ownership.

• Lower Data Storage: Because unified databases are usually a lot smaller than the datasets they unify, the costs of data storage go down and performance goes up.

• Automation, Process Enhancement, Productivity Improvement: The automation of finance, HR, and supply chain processes with embedded RPA, Machine Learning, and AI often improves the productivity of the overall ecosystem.

• Faster and Smarter Decisions: Real-time analytics, Predictive analytics, and Big data analytics together produce reports that lead to making decisions faster and smarter.

• Overall Profitability Excellence: Organizations will experience an improvement in Profit, overall Financial Performance through lower costs, higher operational efficiencies, and faster closing of business transactions.

Data Improvements

• Greater Flexibility and Greater Scalability: Organizations will experience greater flexibility and the ability to scale operations across multiple locations, enabled by a SAP HANA database driven, cloud-based ecosystem.

• Improved Data Integration: Having a single in-memory database with a universal journal, material ledger, and business partner model allows for greater data integration across applications and easier access to a single source of truth.

• Customer Intelligence: Improved predictive capabilities with AI-driven predictive analytics related to demand forecasting and customers.

• Real clarity of business Intelligence: Immediate access to performance data and KPIs that are available in real-time in the cloud and instant cloud-based access to SAP Fiori dashboards and SAP Analytics Cloud (SAC).

Moving to S/4HANA: A Necessary Step

SAP’s Deadline for SAP ECC Maintenance is Dec 31, 2027

The release of S/4HANA is now ten years in the past, and SAP has communicated that SAP ECC will not have maintenance support after 2027 (this means that after 2027, SAP ECC will not receive any form of updates that relate to security, patching, or fixes). After this date, those organizations that wish to retain successful and effective competitive standing will have little option but to go to S/4HANA so as not to be on an unsupported system and to capitalize on the new generation of ERP software with greater flexibility, scalability, and support.

Organizational delays in the implementation of S/4HANA can lead to surplus costs and significant operational risk.

Preparing to Move

Here is a series of key steps that organizations can take to help with the transition:

• Evaluate the current data landscape.
• Determine custom development, dependencies, and legacy data.
• Clean, archive, delete, and standardize the data. Lots of legacy data in transition could make the mapping process more difficult and more inconsistent; redundant data equates to a greater chance for errors.
• Identify your migration option (Greenfield, Brownfield, or Bluefield (Hybrid)).
• Educate the users and IT staff on the new S/4HANA business processes with the new Fiori UI.
• Plan for downtime and testing; you want to minimize surprises before you go live.

Summary: The Future is S/4HANA

S/4HANA is the next generation of enterprise resource planning with real-time insights, AI-driven decision-making & automation.

S/4HANA: Process Streamlining and Reducing Redundancy

S/4HANA simplifies ERP by lowering redundant data and combining processes. Multiple tables in legacy systems, such as ECC modules, are reduced to S/4HANA modules. For example, FI and CO can be combined for transaction recording and real-time calculations, streamlining very complex business, data, and operational processes.

‘Doing Less’ for Better Efficiency and Customer Experience

S/4HANA automates repetitive work through AI, robotic process automation, and machine learning. This advances productivity and improves customer experience by reducing manual workloads in finance and logistics, and real-time insight can vastly improve the decision-making process.

A Compelling Reason to Invest: S/4HANA is More than Just a New System

Integration and implementation of S/4HANA is more than just an upgrade; it is about leveraging new features that unlock growth and digital enterprise transformation. From a business case perspective, the move to S/4HANA has strong benefits.

Key Differences Between SAP ECC & SAP S/4HANA