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Author's profile photo Sven Denecken

#S4HANA Cloud use case series: 5 – 2-Tier ERP with SAP S/4HANA Cloud

Welcome back to the SAP S/4HANA Cloud use case series. After learning about machine learning in SAP S/4HANA Cloud and the relevant dimensions and value levers in the last blog, we will illustrate the second use case today. In this blog, we will highlight how 2-tier ERP with SAP S/4HANA Cloud in your subsidiaries will support your road to digital transformation.

What is 2-tier ERP?

As 2-tier ERP we describe the deployment of an independent ERP system for a subsidiary. Many of you might think, why not managing the subsidiary directly from the headquarters system? Well in many cases this is the option of choice, however the more different businesses, across multiple countries need support – the more complex the system gets. Subsidiaries that need to respond very quickly to new market needs might prefer having their own system for higher agility. This nicely fits to the value levers discussed in the third blog of this series. Independent of the headquarters system you will increase the process flexibility, the organizational agility and you are able to assimilate process innovations faster in your subsidiary.

If you go for 2-tier ERP – Why SAP S/4HANA Cloud?

First you need to evaluate the scope of the solution to ensure the requirements of your subsidiary are met, e.g. you can check out the Feature Scope Description for 1702.

If your local sales office, distribution center, manufacturing site or just independent subsidiary can be supported, there are many advantages you can get leveraging SAP S/4HANA Cloud.

The integration of your subsidiary SAP S/4HANA Cloud system is done via application programming interfaces (API’s). Public API’s can be used to connect SAP S/4HANA with third party systems. They are based on standards like OData (Open Data Protocol is a standardized protocol built over existing HTTP and REST protocols supporting CRUD (Create, Read, Update, Delete) operations for creating and consuming data APIs), REST (REpresentational State Transfer to enable access from the SAP cloud solution to an external application by creating an external Web service integration scenario) or SOAP (Simple Object Access Protocol is a lightweight protocol for exchange of information in a decentralized, distributed environment), are published at the SAP API Hub and you can use the integration services of the SAP Cloud Platform. Private API’s are used to privately connect a SAP system on premise with a SAP system in the cloud. These API’s are normally based on BAPIs and IDOCs, message standards commonly used for SAP to SAP integration.

It’s Cloud

SAP S/4HANA Cloud combines all the cloud qualities you prefer: You get Software-as-a-Service (SaaS), so every few months you get the latest version with new innovations, without hassle and any extra effort. And this without worrying about hardware aspects as your provider ensures your solution scales with the usage you need. While cloud solutions in ERP have now moved beyond an early deployment for a proof of concept to become the default for new deployments. Leverage your subsidiary IT to spearhead or accelerate cloud deployments also in your enterprise.

It’s the new digital core

Digital transformation is happening everywhere. New business requirements mandate a significantly simplified digital core that allows you to efficiently and effectively run your business. Often business processes narrow down to the segment of one. This will increase the number of transactions significantly, so higher efficiency of the digital core is a must. Additionally the digital core overcomes the old divide in transactional and analytical systems and their inherent latency that prevented users to get real-time insights before taking the appropriate action. SAP S/4HANA Cloud is natively build leveraging the SAP HANA in-memory database to deliver the new digital core for your subsidiary business.

It’s the easiest way for headquarters running SAP

If your headquarters are already leveraging SAP Business Suite, or if you are even embarking on a route towards SAP S/4HANA in your headquarters? In this case SAP S/4HANA Cloud is the SAP ERP system that from a business process and data semantics perspective and with a common user experience offer the biggest possible similarity. Since the underlying release cycle between SAP S/4HANA Cloud and on premise is synchronized yearly, this will also lower your integration and management efforts of this solution. And you can first innovate in your subsidiaries and then easily duplicate these innovations across your enterprise.

Key Benefits according to Value Levers

If we now take a look at the value levers efficiency, effectiveness and agility, and map this use case to them, you will realize that specifically “increase agility” is most relevant here, as already mentioned. Especially in this 2-tier ERP use case it is obvious, that when working with a flexible and easy to use system in a subsidiary, it increases the process flexibility, the organizational agility and even the assimilation of process innovations. Therefore you have quite a few value levers that will drive your digital transformation.

Stay tuned for the next use case, in which we will examine a SAP S/4HANA Professional Services Cloud use case with focus on Finance and map it against the value levers and their dimensions.


For more information on SAP S/4HANA Cloud, check out the following links:


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