S/4HANA and its differences with ECC

Most of us are following the innovations & simplifications in S/4 HANA and wondering about the functionalities & business benefits of implementing S/4 HANA (S4H).Find lot of questions on differences in ECC with S/4 HANA (S4H). Trying to highlight the major(not a full list) differences in digital core of S4H as planned by SAP w.r.t ECC

Hana database

S4H can only be run on Hana database unlike ECC which can be run on Oracle , IBM DB2 etc.  Back bone of S4H’s design is with HANA’s in memory capability and below design principles

• In-memory database means that data is read from memory i.e data always reside in main memory  RAM (though Write happens in hard disk) and hence in-memory database reads data much faster w.r.t traditional databases (fetching the data from hard disk)
• Hana’s column based tables provide faster access (as only affected columns need to be read in a query), better compression (due to few distinct values compared to rows), parallel processing (different columns can be easily processed parallely)
• OLTP and OLAP capability in same system with real time reporting and predictive analysis
• There will be no aggregate (total), index and history tables in S4H.  Aggregates are created dynamically based on line item table instantaneously (on the fly).

Single source of truth

S4H combines the data structures of different components (for FI , AA , CO , CO-PA and ML) into a single line item table ACDOCA, called as Universal journal . It eliminates several aggregate and index tables. Now, data needs to be inserted only a single table instead of several tables thus reducing the data foot print drastically.

MATDOC is also a new line item table for inventory management and it eliminates 26+ tables. Material documents will be stored in MATDOC but not in MKPF or MSEG tables.

Merger of CO and FI

In ECC , FI GL accounts are mapped to CO primary cost elements . In S4H, only one field of universal journal is used to store both GL account and cost element. Cost elements (both primary and secondary) are now GL accounts and hence created / maintained (in FS00) with relevant Cost element category. Reconcilation (as in case of CO to FI) is not needed now. Period end closing also will be faster.

New GL

S4H is technically very similar to new GL of ECC due to its data structure. Customers using classic GL need not use Document split or parallel ledger. However, new GL’s functionality (Parallel ledger) is a pre-requisite for new Asset accounting .

CO-PA

Account based CO-PA is now the default option with Costing based CO-PA as optional. Both options can be run simultaneously. Refer URL http://scn.sap.com/docs/DOC-65828 for more details.

Custom code

Read operations in custom code will be redirected to compatibility views (like V_COEP for CO line item table COEP) via a special setting at database interface level (i.e invisible to source code) so that the custom reports can work without any disruption.

Business partner

All customer and vendor master need to integrated / migrated as Business partner . Probably, SAP is trying to align the concept of business partner as in other SCM applications like APO , EWM , TM etc as these SCM applications also will be natively integrated with core of S4H in future releases. Customer-vendor integration (CVI) is a mandatory step. Refer URL https://websmp201.sap-ag.de/~sapidp/012002523100007374172016E.pdf for more details.

Extension of Material number field : Material number can now be 40 characters from existing 18. It is a optional feature. Impact of this extension on custom coding, interfaces, other SAP applications need to be evaluated before switching on 40 characters. Refer note 2267140 for more details.

Credit management

ECC’s FI-AR-CR is replaced by credit management of FSCM (Financial supply chain management) . FSCM-CR is based on a distributed architecture which allows interfaces with external credit rating agencies.  Traditional FI-AR-CR credit control setting requires high degree of manual work. However, FSCM-CR has advanced features like

• Credit rule engine for automatic risk scoring & credit limit calculations
• Automatic update to master data on approval of credit limit etc.
• Work flow for credit events etc

ATP

ECC provides the option of availability check at the individual or summarized requirements (aggregated at daily or weekly level) , however S4H uses only individual requirements (with no VBBS table) and probably the rationale is that S4H does not have any aggregate table with its simplified data model.

SAP also has plans to integrate APO’s GATP (Global ATP) functionality in S4 core. Not sure whether all functionalities of GATP will be integrated in S4 core.  Rule based ATP (For substitution of location (plant) or material), Multi-level ATP check, advanced check for product allocation with ATP, advanced BOP (Back order processing) etc are some of the unique features of GATP w.r.t ATP in ECC.

Location substitution allows to check the material availability at plant B (as set in master data or business rule) if the material is not available at sales order plant A. If material is available in plant B, then a stock transfer order from plant B to A is created automatically. This rule can be extended to a network of plants also.

SD pricing

There are some changes in data model in pricing and condition techniques like existing table KONV replaced by new table PRCD_ELEMENTS with extended fields etc. Refer note 2267308 for more details.

MRP

MRP in ECC is run through batch jobs and during off peak hours. However, there is no need of batch job in S4H and MRP can now be run in real time with HANA.

MRP can be run on plant and MRP area level, but not on storage location level. In ECC , Storage location can either be excluded from MRP or planned separately . SAP recommends to use MRP area  with MRP type (ND in case of exclusion or VB for re-order point planning) for those scenarios at storage location level. MRP with subcontracting has also been simplified.

SAP has plans to integrate the functionality of APO’s PPDS in core of S4H in future releases and hence probably aligning the APO features like BOM to be selected through production version for in-house ,  unified source of supply (no source list , only info record ) for external procurements with S4H core.

Foreign trade

Foreign trade functionality has been replaced by GTS (Global trade services). Advanced features in GTS w.r.t foreign trade are SPL (Sanctioned party list) screening, automated embargo check (Manual in ECC), automatic & simplified license check (manual and complex in ECC) , Automatic import / export declaration etc.

Material ledger

Activation of material ledger (ML) is mandatory. ML valuates inventory in multiple currencies. Traditionally inventory is mainly valuated with a single currency in SAP ERP. ML allows valuation in two additional currencies. Today’s global organizations operating in different countries desire to valuate inventory in multiple currencies. Like for example, a company in Norway dealing with oil needs to maintain their books in Norwegian currency (NOK), they will also like to evaluate their inventory in USD as oil is traded in international market in USD. This functionality is available in Release 1511 of S/4 HANA.

Refer the blog in URL http://scn.sap.com/community/s4hana/blog/2016/02/22/material-ledger-embedded-in-s4-hana–benefits-and-challenges for more details on ML and its benefits & challenges.

Revenue recognition

ECC SD revenue recognition is being replaced by SAP Revenue Accounting and Reporting (RAR)  due to  new accounting standard released jointly by the Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB). New guide line is also in IFRS 15 issued in 2014.

Existing SD revenue recognition of ECC is based on Generally Accepted Accounting Principles (US-GAAP), International Accounting Standards (IAS) / Financial Reporting Standards (FRS) and it provides the option of recognizing the 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 standard way of realizing revenue on billing. New standard introduces the 5 step model (Identify the contract, separate performance obligations, determine transaction price, allocate transaction price and recognize revenue). SAP’s new Revenue Accounting and Reporting (RAR) solution is in S4H.  for fundamental changes with IFRS 15 and also to meet the requirement of parallel accounting and cost recognition .

Rebate

Customer rebates through existing SD rebate processing has been replaced by settlement management through Condition contracts. Some details on condition contracts are in URL Condition Contract – Compensation Management – SAP Library

Output management

ECC message determination through table NAST is replaced by Business rule framework plus (BRF +) and target architecture is based on Adobe document server and Adobe forms only. Refer OSS note 2228611 for more details.

Warehouse management

Existing WM module will be replaced by SAP’s new application for warehouse management EWM . There will be 2 options

• Native integration i.e inbuilt in S4H
• Side car approach for decentralized deployment

There are several advantages in EWM w.r.t WM like 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 etc.

Native integration of SCM applications

Other SCM applications like  TM etc will be natively integrated with digital core of S4H. Refer URL https://scn.sap.com/community/s4hana/blog/2015/11/19/sap-s-road-map-for-supply-chain-solution-with-s4-hana-and-its-expected-benefits for more details.

User interface

Fiori is a new user interface . Refer URL  https://experience.sap.com/files/SAP_Fiori_UX_Overview.pdf for more details.

Activate implementation methodology

There is no concept of Blueprinting in S4H implementation. S4H has introduced new ‘Activate’ methodology. SAP offers pre-built demo system with SAP’s best practices for specific business processes. Business users can now test in demo system whether it meets their business requirement or not . Fit-gap analysis can be done after initial trial period . Refer URL http://www.akili.com/wp-content/uploads/2016/01/SAP-Activate_Customer_v03.pdf for more details.

Note : All the above information are based on several sources like SAP Documents , Open SAP courses , SCN blogs etc  and hence subject to change. Also the features stated above are target functionalities i.e may not be available in present edition of S4H (Like tables for material ledger have not yet been merged to ACDOCA in 1511).

Will appreciate if you can highlight other important/fundamental differences or if anything is misinterpreted.