What is the difference between SAP S/4HANA and SAP ECC ERP? (SAP S/4HANA vs SAP ECC)
SAP introduced SAP S/4HANA in 2015. Since then, most of us are following the innovations & simplifications in SAP S/4HANA. We also wonder about the the functionalities & business benefits of SAP S/4HANA. However, even now, questions do arise in SAP S/4HANA vs SAP ECC (SAP S4H vs SAP ECC) discussions as to what is different between SAP ECC and SAP S/4HANA. So, what is the difference between SAP S 4HANA and SAP ECC?
In this blog post, I will cover some of the key differences between SAP S4H and SAP ECC. Therefore, by the end of the blog, you will have a brief overview of the SAP ECC SAP S/4HANA difference.
Database Factor of SAP S/4HANA and SAP ECC
SAP S/4HANA can run only on the HANA database. This is completely different from SAP ECC. SAP ECC can run on Oracle, IBM DB2 etc. SAP S/4HANA leverages on SAP HANA’s in-memory capabilities and design principles.
- The HANA in-memory database reads data faster than traditional databases which fetch data from the hard disk. This is because data is read from memory, i.e., data resides in the main memory RAM (though Write happens in hard disk).
- HANA’s column based tables enable faster access (since only affected columns need to be read in a query), better compression (because only distinct values are compared to rows), parallel processing (different columns can be easily processed parallely)
- OLTP and OLAP capabilities are available in the same system. They offer real time reporting and predictive analysis.
- There will be no aggregate (total), index, and history tables in SAP S4HANA. This is due to dynamic aggregate creations on the fly based on line item tables.
Single Source of Truth and SAP S/4HANA Universal Journal
SAP S/4HANA combines data structures of different components such as FI , AA , CO , CO-PA and ML into a single line item table. This table is ACDOCA, also known as the Universal Journal. The presence of the universal journal eliminates several aggregate and index tables. Now, data insertions occur into a single table instead of several tables. Hence reducing the data foot print by a huge margin.
In addition, the MATDOC, the new line item for inventory management, eliminates 26+ tables. Material documents are stored in MATDOC but not in MKPF or MSEG tables.
New Functional Capabilities
New functional capabilities are available to work with SAP S4H and the HANA in-memory computing. A few examples are Central Finance, SAP Cash Management, and SAP BPC Optimized for SAP S/4HANA. However, these require additional licenses.
Addition of standalone solutions to SAP S/4HANA Core
Some standalone SAP Solutions are now available as a part of the SAP S/4HANA core. Two common examples are SAP Transportation Management and SAP Extended Warehouse management.
Unison of CO and FI
In SAP ECC, we could observe FI GL accounts mapped to CO primary cost elements. However, in SAP S/4HANA, the universal journal uses only one field to store both GL accounts and cost elements. Cost elements (both primary and secondary) are now GL accounts. Hence, a relevant cost element category is used when they are created and maintained (in FS00). Reconciliation (as in case of CO to FI) is not needed now. Therefore, period end closings will be faster.
Introduction of a New GL in SAP S 4HANA
SAP S/4HANA is technically similar to the new GL of SAP ECC. This is beacuase of it’s data structure. Customers using the classic GL need not use the document split or the parallel ledger. However, the new GL’s functionality (Parallel ledger) is a prerequisite for new Asset accounting.
Account based CO-PA vs Costing based CO-PA
Account based CO-PA is now the default option. The costing based CO-PA is now available as an option. However, both options can also be run simultaneously. Please use http://scn.sap.com/docs/DOC-65828 for more details.
What about Custom Code?
In SAP S/4HANA, custom code read operations redirect to compatibility views due to a special setting at the database interface level (i.e invisible to source code). Therefore, custom reports work without any disruptions.
Business Partners and Material Number Extensions
In SAP S/4HANA, Customer and vendor master data need to be integrated/migrated as Business Partner. Customer-vendor integration (CVI) is a mandatory step to run business with SAP S/4HANA.
One key difference between SAP ECC and SAP S/4HANA is that the Material number can now be 40 characters instead of the existing 18 in SAP ECC. This is an optional feature. Therefore, impacts of this extension on interfaces, custom coding, and other SAP applications must be evaluated. This must be done before switching to 40 characters. You can refer to note number 2267140 for more details.
New Credit Management System
There is a new credit management system in SAP S/4HANA by the name of FSCM-CR. It is the credit management of Financial supply chain management. It replaces SAP ECC’s FI-AR-CR. FSCM-CR is built on a distributed architecture. This allows interfaces with external credit rating agencies. Traditional SAP ECC’s FI-AR-CR credit control setting requires high degree of manual work. In addition, FSCM-CR has valuable advanced features like
- Automatic risk scoring & credit limit calculations with a credit rule engine
- Automatic update to master data based on the approval of credit limit
- Work flow for credit events
SD Data Model Changes
There are changes among data models in pricing and condition techniques. For example, the new PRCD_ELEMENTS table with extended fields replaces the the existing KONV table. Please refer to note 2267308 for more details.
Live Material Requirement Planning (MRP)
In SAP ECC, MRP runs occur through batch jobs during off peak hours. However, there is no need of batch jobs in SAP S/4HANA. In SAP S/4HANA, MRP runs can occur in real time by leveraging the power of SAP HANA.
One key point of difference between SAP S/4HANA and SAP ECC is that while MRP can be only be run on plant and MRP area level, it cannot be run on the the storage location level in SAP S/4HANA. In SAP ECC, storage locations can either be excluded from MRP or they can be planned separately. For SAP S/4HANA, SAP recommends usage of MRP area with MRP type for scenarios at storage location level. In addition, MRP with subcontracting has been simplified in SAP S/4HANA.
Global Trade Services for Foreign Trade
GTS (Global trade services) in SAP S/4HANA replaces the foreign trade functionality in SAP ECC. A few of the features in GTS w.r.t foreign trade are
- SPL (Sanctioned party list) screening.
- Automated embargo check. A process which requires manual effort in SAP ECC.
- Automatic & Simplified license checks in SAP S/4HANA. License checks in SAP ECC were complex and required a lot of manual effort.
- Automatic import/export declaration
Material Ledger Mandate
In SAP S/4HANA, activation of the material ledger (ML) is mandatory. ML valuates inventory in multiple currencies. Traditionally, in SAP ERP, a single currency valuates the inventory. In SAP S/4HANA, ML allows valuation in two additional currencies. This is essentially helpful for global organizations operating in different countries. They tend to valuate their inventories in multiple currencies.
Revenue Accounting and Reporting
SAP S/4HANA’s Revenue Accounting and Reporting (RAR) replaces SAP ECC SD Revenue Recognition. This is due to new accounting standards released jointly by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). The new guideline is also in IFRS 15.
SAP ECC’s SD Revenue Recognition is based on Generally Accepted Accounting Principles (US-GAAP), International Accounting Standards (IAS)/Financial Reporting Standards (FRS). Therefore, it provides the option of recognizing revenue based on an event (like Goods issue, proof of delivery ) or over a period of time (based on specific set of dates) apart from the standard way of realizing revenue on billing.
The new standard introduces a 5 step model.
- Identify the contract
- Separate performance obligations
- Determine transaction price
- Allocate transaction price
- Recognize revenue
Revenue Accounting and Reporting (RAR) in SAP S/4HANA accounts for fundamental changes with IFRS 15. Moreover, it also meets the requirements of parallel accounting and cost recognition.
Settlement management through Condition Contracts in SAP S/4HANA replaces customer rebates through existing SD rebate processing in SAP ECC.
SAP S/4HANA’s Business rule framework plus (BRF +) replaces SAP ECC’s message determination with the NAST table. In addition, the target architecture is based on Adobe Document Server and Adobe forms only. Please use OSS note 2228611 for more details.
Extended Warehouse management
SAP’s new application for warehouse management, EWM replaces the existing WM module. There will be 2 options
- Native integration i.e inbuilt in SAP S/4HANA
- Side car approach for decentralized deployment
Some Advantages of EWM over WM
- Complex warehouse processing through Process oriented storage control (POSC)
- Improved (easily customisable) RF functionality
- Value added service like kitting
- Enhanced wave & replenishment processes
- Labour management
A key difference between S4H and ECC is that SAP Fiori is the new user interface in S4H to offer a rich and intuitive user experience.
You can now understand that there are some significant changes in SAP S/4HANA. Therefore, IT leaders should understand the functional and technical differences and build their best business use case on why their firm should move to S/4HANA.
Having completed a variety of SAP and SAP S/4HANA projects across multiple industry verticals, Kaar Technologies can help you with this process. If you want to understand our SAP customer success stories, take up an SAP S/4HANA readiness assessment or need a consultation on the path to digitization with SAP S/4HANA, please get in touch with me at firstname.lastname@example.org or send us a message on our website.